State and local laws pertaining to landlord and tenant relationships are clear on the basic information that should be part of a standard lease agreement. In some states, a written lease is not required to lease a property. However, common sense dictates that a written agreement should be the basis of landlord and tenant interaction because legally renting real estate is a complicated transaction involving many details.

Understandably, a lot of personal information is collected and recorded in processing a lease. Usually, the landlord of residential properties will require the name, social security numbers and driver’s license numbers of all adults who will be occupying unit. In some states, all the adults named in the lease are equally responsible for the rent and any charges that may accrue during the lease term. Although landlords are allowed to list the names of minors accompanying the adult renters, social security numbers and other identifying information of these minors should not be collected and recorded.

Landlords should not have bank and credit card account numbers listed in the rental agreement. If tenants
agree to automatic debits on their accounts, these transactions are best covered in a separate document. Even better, tenants can include rent payments in their automatic bill pay services with their banks to avoid having their account numbers listed on lease contracts.

Diligent landlords may also ask for emergency contacts. There are no laws requiring or restricting this information from getting on lease agreements. It is a reasonable request on the part of landlords but caution must be exercised in passing this information to unauthorized persons.

Landlords should refrain from collecting any extraneous information from prospective tenants. These information may refer to matters concerning legal and marital relations between tenants and gender preferences.

Typically, landlord and tenant each get a copy of the signed lease. Landlord should ensure that all information provided by tenant is treated with the strictest confidentiality. Copies of the lease should be secured so that access is limited only to those who have a need to know some information about the tenant.

There are times when tenant needs to use the lease agreement to prove residency. These cases may include updating information on driver’s licenses and voter registration cards, acquiring new credit, library cards and membership in local organizations. It is tenant’s responsibility to redact private information prior to sharing with other entities as the information contained in a lease agreement can be mined for identity theft purposes.

Professional property managers and experienced landlords recognize the importance of using a uniform lease agreement that will collect as much information as needed to establish a solid relationship with tenant. Along with apprising tenants of their rights and responsibilities, rental contracts should also define lease agreement privacy policies as they relate to both parties.

Managing residential or commercial real estate can be a bit overwhelming since a lot of information and disclosures need to be covered. It will help landlords and property managers if forms were standardized using a professional lease agreement template.

What is the Purpose of a Security Deposit?

A security deposit protects the landlord in the effect that if property is damaged in the rental home, the deposit can help to offset the cost of repairing the damage. In addition to this, a security deposit also is a guarantee the landlord receives rent if the tenant leaves the rental agreement without the agreed upon notice. If the tenant skips out and does not pay the last month’s rent, the landlord can keep the security deposit. If the tenant fulfills the lease agreement template, gives proper notice of moving out, and leaves the home in good condition, the landlord refunds the deposit. A lease agreement template can provide a professional contract form to include the amount and conditions of the security deposit.

How Much Should Be Charged for a Security Deposit?

Most landlords will charge the amount of one month’s rent for a security deposit. If the rent is six hundred dollars, it is very common for the security deposit to be six hundred dollars. If the tenant has been an ideal tenant and the apartment or house has been maintained well by the tenant, the landlord can allow the tenant to use the security deposit as the last month’s rent. Some landlords will also provide an allowance for the tenant to pay the security deposit over the first two months of renting the property to make it more affordable. A lease agreement template can be helpful to create this contract with security deposit agreements.

What Are the Risks of Not Including a Security Deposit in the Lease Agreement Template?

Landlords who fail to include a security deposit in the lease agreement template put themselves at risk of not being able to recuperate costs for any damage done to the rental property. A security deposit shows commitment on behalf of the tenant and is a motivation for the tenant to leave the apartment clean and in good condition so the tenant may get his or her deposit back after moving out.

Using a lease template agreement can be beneficial to a landlord and provide the person with proper legal coverage. A lease agreement also clearly outlines the terms of the lease. This provides the tenant and the landlord with agreeable conditions that are listed in the contract lease and makes it easier to settle any disputes that may arise.

Commercial lease agreements outline the specifics of the property rental contract and are difficult to have in standard form. A lease template acts as the skeleton and will streamline the process of preparing a lease by including standard information. The property owner’s information should be included in the lease agreement template because that information is consistent. Once both the tenant and owner or owner representative signs the lease agreement, the contract becomes legally binding.

There are several elements that should be included in a commercial lease agreement. Both the tenant and property owner’s name should be spelled correctly on the agreement. The property address should be identified on the lease agreement as well. If more than one property address is being leased, there can be a lease agreement for each address or the two locations outlined in one agreement.

The contract must also list the dates when the contract starts and terminates. The date the contract starts may not be the day the tenant moves in to the property. The termination date is the date when the tenant will vacate the property. One of the most important details of a commercial lease agreement is the determined amount of rent. The rent amount and dates due must be outlined. If a rent deposit has been paid the payments date and amount need to also be listed on the agreement.

The length of the agreement can be for whatever length of time the parties agree upon. Normally the owner has a preset lease term and the term can vary. A lease term can be a period of one, two or ever five years. Oftentimes, tenants will select a longer lease period if the terms of the lease are favorable. There are situations when a tenant and landlord will agree to a short term lease. A short term lease typically has a duration of a year or less.

The interval or rent payment is a vital component of the commercial lease agreement. Since commercial rental amounts are typically determined according to rental area calculations, the amount of space rented should be included. Ideally the rental amount should be the sum of the total square feet of the area.

Two terms that can impact the information included in a commercial lease agreement template are the use clauses and exclusivity clauses. The use clause will explain how the property is to be used. The exclusivity clause explains whether there will be exclusive rights to the space or whether other businesses or similar services with operate in the same space. These clauses are significant portions of the commercial lease agreement; it is not in the best interest of property owners to have competing businesses in one space. The success and survival of the business renting the commercial space is beneficial for all.

It is important that both the lessor and lessee fully understand the terms of the contract. The information included in the lease agreement template should be read carefully and tenants should seek clarification if there is anything outline in the document is not understood. Not all commercial tenants have a real estate lawyer to review lease contracts so the contract details should be stately as simply as possible.

Things to Consider Before Writing the Lease Agreement Template

Before subleasing, determine if the original lease allows subleasing. Contact the property manager to explain the reason for subleasing and receive permission. He or she may wish to assess the subleasing tenant before granting permission. The original tenant should investigate the character and financial history of the subleasing tenant. Perform a credit check and verify employment to ensure the subleasing tenant can afford to pay the rent. Because the original tenant remains responsible for damages to the room or rental space, ensure the subleasing tenant will treat the property with respect and willingly pay for any accidental or intentional damages.

Create the Template

Upon verification of the subleasing tenant, create a lease agreement template. This form is absolutely necessary in order to avoid negative legal repercussions and protect the original tenant, subleasing tenant and property manager. Include the names of the original and subleasing tenant. Record the start and end date of the sublease, and take care not to exceed the end date of the original lease. Describe the exact condition, dimensions and furnishings that are part of the sublet room or space.

Determine financial responsibility and payment due dates. Specify the amount, if any, of a security deposit. Include exact amount of rent and division of utility costs as well as other fees associated with the room or space to be sublet. Discuss the acceptance of pets, arrangements for private vehicles and property modification allowances. Specify if the subleasing tenant can later sublease his room or space.

Reiterate that the terms of the original lease remain in effect for the duration of the sublease. The subleasing tenant must abide by the terms, conditions and ordinances of the original lease or be eligible for release from the sublet agreement. On the completed sublease agreement template, obtain notarized signatures of the subleasing tenant, original tenant and the property manager. Each party receives a copy of the signed agreement for future reference.  This will ensure that the lease is legal and binding.

Subleasing proves to be a wise financial move for both the original tenant and subleasing tenant. Before subleasing, determine the subleasing tenant’s responsibility level. Prepare a detailed lease agreement template for both tenants to sign. A lease agreement provides both tenants and the property manager with protection in case of property damage, insurance claims and negligent behaviors. The subleasing arrangement provides both tenants with an affordable living or rental space and saves both tenants money.

Written Leases Only

In most states, leases must be in writing to be valid. Oral leases and agreements are difficult to enforce because there’s no evidence of what the actual agreement was, and misunderstandings can occur because both parties had a different interpretation of the terms of the agreement. For example, if you and your tenant have a verbal agreement about the day he is to pay his rent and he doesn’t pay on the first day of the month because he thought the agreement was that he has until the 15th of each month, it’s difficult to evict him. Get all important facets of the lease in writing to protect yourself against problems resulting from these types of misunderstandings.

Rental Agreement Technical Requirements

State laws vary when it comes to technical requirements, such as what fonts and font sizes the lease may be written in and what size paper the lease should be printed on. In general, however, all lease types must be written in a font size that the landlord can reasonably expect a tenant to be able to read. For example, leases should not be written in fonts that are less than eight points in size because that makes them difficult to read. Landlords should use everyday language that the tenant can be expected to understand, and the lease must be written in a language that the tenant can comprehend. For example, if a Spanish-speaking tenant knows only a few words of English, his lease should be written in Spanish.

Unenforceable Clauses

If any clause of a lease is in conflict with state law, that clause is unenforceable because landlords can’t require tenants to do anything illegal in order to fulfill the terms of the lease. For example, if a lease says that a tenant must pay three months rent as a late fee if he is more than five days late on his rent, that provision is probably unenforceable. In most states, late fees are limited to a percentage of that month’s rent. It’s also illegal for landlords to require tenants to remain single or childless or interfere with the tenant’s right to take legal action if the landlord breaks the lease.

Required Lease Agreement Clauses

Similarly, the landlord must provide certain information in the lease. The lease must clearly state the name and address of both parties, how much rent is to be paid each month, what the tenant’s other obligations are regarding the apartment and what the procedure is if the tenant doesn’t want to renew his lease or wants to move before his lease term is up. Landlords have an obligation in most states to ensure that tenants understand these clauses before asking them to sign. Both parties must sign the lease for it to be valid, but neither party must be compelled to sign under duress, and being required to sign a document he doesn’t understand would constitute a signature under duress.

DISCLAIMER: This article provides general information and does not constitute legal advice. If you have specific questions about lease laws in your state, please contact an attorney licensed to practice in that state to ensure that you get the most relevant information for your situation.

Today we have a video from Dale Willerton of theleasecoach.com.  In the video he talks about some tips to keep in mind when negotiating your rental agreement template with prospective landlords.  This is good info to have as someone who is looking to lease a property because these negotiations go both ways.  Knowing what your tenents will be asking will make you more prepared to offer a fair lease agreement. Have a look and let us know what you think in the comments.

http://www.youtube.com/watch?v=r1e-daH52RA

Transcription:

Millions of business owners, entrepreneurs and professionals lease their location. There are tens of millions of square feet of commercial space for lease right across North America.

Hi. I’m Dale Willerton, founder of The Lease Coach, a network of certified lease consultants who exclusively helps tenants all across North America. If you’re planning on negotiating a lease for a brand new business or if you have an existing location and you need to negotiate a renewal, these are some tips you will want to jot down.

Tip number one. Create competition for your tenancy. It would be a mistake to negotiate on just your favorite location. You want as many landlords as possible desiring your tenancy. That will give you a negotiating advantage. If you’re faced with a lease renewal, do not hand your renewal over to your existing landlord on a silver platter. Make them re-earn your tenancy. Look around. See what’s new on the market and create some competition.

Tip number two. Give yourself enough time. For a brand new lease agreement, it will often take up to six months to get the business open. A month and a half for site selection, maybe a month if you go over the offer to lease and negotiate the formal lease agreement then the space needs to be designed and eventually built out. Five or six months can go by very quickly.

For a renewal, we recommend that you start 9 to 12 months in advance. The key here is to do as much negotiating as you can before you have to decide whether or not you should exercise your renewal option.

Tip number three. Do your homework. Talk to as many tenants as you possibly can. They will share valuable information with you about how their lease negotiations went. Some of those tenants may be moving out of the building and you need that information before you sign a five-year lease and move in yourself. As well, when you’re negotiating the term or the length of your lease agreement, remember it does not have to be five years in length.

If you’re planning on opening up a retail business say in a shopping center, a good time of year to open up is October but if your lease agreement comes up for renewal, five years later, right again in October at the peak season, you will be at a disadvantage. Rather than take a 60-month lease, consider taking a 63-month lease or perhaps a 56-month lease. The general rule of thumb is that your lease agreement should begin going into your peak season and your lease agreement should terminate going into your slow season. Also remember a deposit is not mandatory. They may call it a security deposit but in fact, you may not be a security risk at all. Deposits are very negotiable.

Tip number four. Don’t be afraid to ask for more than you expect to get. If you’re negotiating for a tenant allowance, that’s the amount of money a landlord will give you as an incentive or as an inducement to help you build out the location. If you’re negotiating a tenant allowance for $30,000, it makes sense to start by negotiating for $40,000 or $50,000 giving yourself some room to go back and forth. I was able to get a tenant 12 months of free rent because I wasn’t afraid to ask for 18.

Tip number five. Evaluate the real estate agent’s role. Traditionally, real estate agents represent landlords. The landlord is the one who traditionally pays the real estate agent’s fee. If the real estate agent is showing you all over town various locations that are listed by other real estate agents, there will be fee splitting or commission splitting and that may put you at a disadvantage. It’s really important to ask yourself, “Is this real estate agent representing me or is he representing the landlord?” Who is paying that individual? Real estate commissions are typically six percent in commercial real estate. If the tenant pays a higher rent, the real estate agent gets a higher paycheck in most cases.

Tip number six. Measure your space. Landlords traditionally rent their locations by the square foot. Often, tenants will find that they don’t have as many square feet as they thought. That’s called phantom space. We recommended that a client of ours have their space measured. They thought they had 4400 square feet. When we finished measuring it, there was only 3600 square feet. They were 800 square feet short and paying over $1000 a month more in rent than they needed to.

Sometimes the discrepancies are only 25 or 35 square feet but over the term of a lease agreement, 5 or 10 years, that can mean tens of thousands of dollars.

Tip number seven. Have your lease documents professionally reviewed. I estimate that approximately half of all commercial tenants don’t have anyone review their lease documents. That lease document is a very, very valuable asset. At some point in time, you may want to sell your business or assign your lease agreement. You may want to take on a partner or get rid of a partner. The terms and conditions listed in your lease agreement are there for a reason, mostly to protect the landlord. If there’s problem with your lease agreement now, those problems will still be there five years from now.

Remember, tenants don’t get what they deserve. They get what they negotiate.

Preparing the Lease Agreement

Maintaining the Property

One of the biggest responsibilities of a good landlord is upholding a regular maintenance schedule. The following items need preventive maintenance: electrical and gas mechanisms, water heaters, sanitation and heating systems. Additionally, the landlord is responsible for arranging annual safety inspections by gas fitters and electricians. He also needs to ensure that security and safety measures like fire extinguishers, alarms, and locks are fully operational.

Responding to Repair Requests Promptly

When things do break down, it is rarely at the landlord’s convenience. Even if a phone call comes in the middle of the night or while at work, he needs to handle the call. Timely repairs are required whether the landlord sees them as minor or not. If there is a delay in getting something fixed, use good communication skills to convey the reasons for the holdup and state when repairs will be made. Keep in contact with the tenant until the issue is resolved.

Observing Extra Courtesy

While common courtesy should be extended to anyone, landlords often see their roles as authoritative and treat tenants like subjects. Since renters are truly paying customers, they should be treated with extra courtesy, especially when things go wrong. Tenants commonly hesitate in bringing repair issues to the landlord’s attention out of fear. Treating them with courtesy can prevents inexpensive problems from turning into expensive ones.

Treating Tenants as Individuals

While it is easy to expect the worst, especially if the landlord had bad prior experiences, it serves no purpose to treat all tenants alike by assuming the worst. For example, a specific tenant may have to pay rent late once because of an emergency. In this case, evaluate the situation based on how he handles it. If the renter gives plenty of notice and follows up appropriately, treat him with the credibility he deserves.

Another tenant may habitually pay late and avoid communication. In this situation treat him according to his behavior by enforcing the terms of the lease agreement.

The same concept applies to repairs. Do not assume something broke down because the tenant was careless. A landlord’s major responsibility is to keep everything in working order. That is why it is important to have a properly formatted inventory sheet and checklist at the time of move-in for every tenant. While having this list does not protect things from breaking down of course, it maintains order and discourages tenants from making false reports.

Inspecting the Property

Since many renters may see regular inspections as an invasion of privacy, state the terms of these assessments clearly in the lease agreement. Usually regular inspections occur every six months. Give at least 24 hours of notice and offer different time options in respect to work schedules and private lives.

Proper preventative maintenance and completing timely repairs will increase property values and attract a better clientele. Treating tenants with courtesy will give landlords a good reputation to attract future occupants. These combined efforts will also keep current renters from moving out and keeping the rental income flowing without interruptions.

For more info on being a good landlord, here’s a video from Damon Thompson:

http://www.youtube.com/watch?v=W1Mv8OXUnIA

There are several reasons to use a lease agreement template. With a professionally drafted template a property owner has the following benefits:

Legality

Using a lease agreement saves you the hassle and cost of having to consult a real estate attorney. These pre-written, pre-formatted agreements are customized to your particular jurisdiction. That means not having to address special regulations and laws governing your specific locality. In many states, laws can vary within different counties or even cities. Using a lease template eliminates the need for writing a lease agreement that is compliant in your area.

All responsibilities of each party are clearly delineated. If a tenant breaks the provisions set forth in your template lease agreement, you have written, signed proof of their responsibilities.

Cost

The cost of a template lease agreement is far less than the cost of one produced by an attorney or real estate management company. These documents are available at all times, unlike those sold in office supply stores. Moreover, they are easy to send from one party to another. That can save a property owner the cost and time of meeting renters.

Convenience

Template lease agreements are also convenient for all parties involved. Rather than shuffling through rental laws in your area, these documents have all you need. You can download them when and where needed. You will not have to dedicate a whole drawer in a file cabinet just to store lease agreements. Why write a lease from scratch? It is likely that not all the pertinent information will be remembered and included. A lease agreement template will save you time by enabling you to avoid the need to add an addendum for forgotten or overlooked details.

Customization

Though template lease agreements contain all the framework, they are fully customizable. These documents can be reused for different properties or used in the future because they are modular. You can add or change names, add or change addresses, add or change the lease term and add or change the monthly lease payment. You can also modify the security deposits and other specifics within the document.

To protect your property and your financial interests as an owner, a lease agreement template is the best and safest way to lease or rent a residential or commercial space.  It will not only save you time and money, it will be your lifeline in the unfortunate event that legal action needs to be taken.

Pest Control

Pest control can place a burden on your budget as a landlord. Therefore, it is to your benefit to include terms within the lease agreement template that stipulate that the tenant is responsible for any required pest control services. Prior to renting the apartment to your new tenants, hire a pest control company to perform an examination of the apartment in order to ensure that the premise is free from any pest infestations. Therefore, in your agreement you can outline that the apartment has been examined by a professional and deemed pest-free. Should any pest infestations occur while the tenant is residing in the unit, the tenant is responsible for payment of pest services.

Late Fees

A nonpaying tenant or a tenant that is habitually late with their payment is every landlord’s nightmare. In order to encourage your tenants to make their rental payments on time, include a section that discusses late payment fees. For example, you can include that if your tenants are late on their rental payment by three days, you will tack on a $35 late fee. Or, you can choose to charge a daily late payment fee, within reason, until the payment is received.

Pets

Many landlords choose to completely disallow pets of any kind, while other landlords only allow their tenants to have cats. If you do choose to allow dogs, it is within your rights as the landlord to enforce breed restrictions as well as size restrictions and restrict the number of total pets a tenant can have. Furthermore, it is also in your best interest to charge a non-refundable pet deposit, or charge a nominal monthly pet fee that will help protect you against damages inflicted upon the property by pets.

Penalty for Bounced Checks

When a tenant’s rent check bounces, it can be a great inconvenience to you. And, if there is no financial penalty for bouncing a check, it can be all too easy for a tenant to get into the habit of bouncing checks. In order to discourage such behavior, it’s important to include a section in your lease agreement that states that the tenant will be charged a penalty fee each time a check is bounced. A penalty fee in the range of $20 to $35 per bounced check is appropriate, though many landlords lean towards the latter end of the scale.

Alterations to the Property

You have likely poured thousands of dollars into upgrading your rental property. Therefore, in order to protect your investment, it is in your best interest to strictly prohibit the tenant from making any permanent changes to the unit. Permanent changes, such as changing flooring, painting cabinetry or adding built-in appliances should be prohibited. However, allowing semi-permanent alterations, such as painting walls or changing out light fixtures may actually help you retain tenants for a longer period of time, as it will make them feel more at home, without sacrificing the design/structural integrity of the unit. You may even choose to include stipulations about semi-permanent changes, such as only allowing tenants to choose from a selection of preapproved-by-you paint colors.

Because the standard lease agreement template is most often geared towards the rights of tenants, adding these optional items into your lease will help ensure that your interests as a landlord are also well represented in the rental agreement. Furthermore, including these optional items also ensures that there are no gray areas in your agreement that the tenant can take advantage of. This works towards ensuring that your property is well taken care of, and that rent is paid within the agreed upon schedule.

Name And Contact Information Of All Tenants

As a landlord, you need to know who is renting your property and how to get in touch with them. If there is a problem with the premises, or a tenant fails to pay rent, you need to make sure you can get in touch with that tenant. If anything were to happen, and there was no communication, it could lead to problems down the road for all parties.

Lease Terms

Is this a month to month tenancy, or is there a lease period involved? For a month to month tenancy, the landlord or tenant reserve the right to terminate the arrangement with 30 days notice. Most leases will run for a fixed amount of time, usually 1 year. Knowing this ahead of time will eliminate confusion and clarify the responsibility of each party.

Rent Amount And Penalties For Failure To Pay

There should be an itemized rent statement in the lease agreement template. Rental amounts per month, and the total for the entire year should be included. If any security deposit is needed, the amount paid should also be reflected on the lease agreement. This will ensure that both parties understand how much is owed and what the terms are for failure to pay rent.

Right To Enter Property

A landlord has the right to enter a property with 24 hours notice given to tenant. Make sure this is stated on the lease agreement template so that your tenant cannot claim you violated his right to privacy.

Your Lease Is A Legal Document

Make sure that all parties sign the lease and that all parties are eligible to sign the lease. Usually a lease is only signed by anyone over the age of 18 as minors cannot be held to any contract. If the lease is not signed by all the tenants, it cannot be enforced in court should anything happen.

Your responsibilities as a landlord go beyond just making sure your place is occupied and that you are getting paid. As a landlord, you must spell out what rights you have to your property as well as what your expectations are of your tenant, no matter what type of lease agreement you have. Most tenants are responsible and will pay the rent, but if not, you need to make sure you have some recourse available to you.