What Every Landlord Should Know About Residential Lease Agreements
Occupants Should Complete a Written Rental Application
As a landlord, you can and should require that your occupants complete a residential lease application. You may also choose to require an application fee, which can be non-refundable. This fee is usually used to cover the cost of checking an occupant’s references, including past landlords, employers, credit scores, etc.
Housing Discrimination is Prohibited in a Residential Lease
While it’s a good idea to require a rental application, there are certain things you cannot ask about on a residential lease application. For example, both state and federal law prohibit discrimination on the basis of race, color, national origin, religion, sex, family status, handicap status, or status with respect to public housing. Your residential lease application, therefore, cannot ask questions about those subjects.
In the context of rental housing, discrimination includes:
- refusing to rent a house or to negotiate with a potential occupant
- setting different terms or conditions
- offering different facilities or services
- falsely denying that housing is unavailable
- persuading owners to sell or rent (blockbusting) for your own gain
With respect to people with disabilities, it is illegal for a landlord to:
- refuse to allow the occupant to make reasonable modifications to a dwelling or common area (at the occupant’s expense)
- refuse to make reasonable accommodations that are necessary for the occupant to use the housing.
The Fair Housing Act generally exempts owner occupied buildings with no more than four units, single family homes sold or rented without the assistance of a real estate broker, and housing that is operated by an organization or private club that limits occupancy to members.
Agreeing to Lease the Property
Before you sign a residential lease agreement with an occupant, you should give the occupant a chance to visit the rental unit before they give you any money. They should be allowed to inspect the entire unit, including appliances, light fixtures, plumbing, carpet, windows, flooring, etc.
You should also provide a move-in checklist that describes the condition of the property on the day they move in. This should also allow the occupant to document any damages to the property. This avoids later misunderstandings and disputes.
Once you agree to rent your property to an occupant, you have a contract with the occupant or occupants. The residential lease agreement is legally binding on the landlord and the occupant and cannot be changed without the consent of both parties.
A residential lease agreement can be written or oral; however, for the protection of both parties it is strongly encouraged to make a lease agreement in writing. You should also include a clause indicating that any changes to the lease agreement must also be made in writing.
The lease agreement should specify who will be responsible for the payment of utilities. The party who is paying for the services should be the one who is obligated to contact the utility provider about who will be paying for those services.
If you choose to require a security deposit, the security deposit cannot exceed the amount of one month’s rent. You should hold the security deposit in an interest-bearing savings account. The rental agreement should specify how the deposit will be used, where the money will be held, when and in what circumstances it will be returned, and the interest rate that will be paid.
You can require an additional security deposit if the occupant has a pet; however, the pet deposit cannot exceed $2,500 or an amount equal to 2 months’ rent.
Landlord Obligations in a Residential Lease
As a landlord, you are required to comply with the requirements of building and housing codes relating to health and safety. You are required to:
- Maintain the premises in a fit and habitable condition.
- Keep all common areas in a clean and safe condition.
- Maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning systems and other facilities and appliances, including elevators, supplied or required to be supplied by the landlord.
- Provide and maintain appropriate receptacles and conveniences for the removal of ashes, garbage, rubbish, and other waste incidental to the occupancy of the dwelling unit and arrange for their removal.
- Provide running water and reasonable amounts of hot water and heat.
- Provide smoke detectors in each unit.
Your occupants have obligations as well. Chief among those is the duty to pay rent on time. If an occupant misses a due date, a landlord may require a late fee. This should be spelled out in the rental agreement.
If there is more than one occupant, each occupant is responsible for paying the entire amount of the rent. If the occupants disagree and one moves out, the remaining occupants are responsible for paying the entire amount of the monthly rent. Responsibility for paying the rent may be altered by the lease agreement.
In addition to paying the rent, occupants must:
- Comply with relevant building and housing codes, and health and safety regulations
- Keep the unit clean and safe;
- Regularly remove all garbage and waste from the unit and dispose of it appropriately;
- Keep plumbing fixtures as clean possible;
- Make reasonable use of all utilities, including electrical, plumbing, sanitary, heating, ventilation, and appliances (including elevators);
- Not deliberately or negligently damage or destroy the premises
- Conduct themselves in a way that does not violate other occupant’s right to peaceful enjoyment of the premises.
If repairs are necessary, the occupant must inform the landlord, and give the landlord a reasonable amount of time to make the repair.
The occupant has a right to the exclusive use of the unit during the term of the lease. The landlord may only enter the unit in certain circumstances, such as:
- In case of emergency
- If the landlord reasonably believes the occupant has abandoned the property or is in substantial violation of the terms of the lease
- To inspect the property, make repairs, or show the rental unit to purchasers or potential occupants, but only during reasonable hours and after giving reasonable notice to the occupant
Unless it is impractical to do so, the landlord must attempt to get the occupant’s consent for an agreed time of entry. The landlord may not abuse the right of access or use it to harass or intimidate the occupant.
Terminating a Residential Lease
Most lease agreements are for a fixed period of time and terminate at the end of the lease. This is known as a term lease, and usually lasts for one year, but is negotiable.
After the initial one-year term, many lease agreements change to a month-to-month lease that can be terminated at any time by either party, with appropriate notice.
The lease agreement should include a provision about how much notice is required if either party wishes to terminate the lease early. If there is no early-termination provision, either party may terminate the lease by giving at least one calendar month’s written notice.
If an occupant moves out before the lease expires, the occupant may be responsible for paying the remaining rent. However, a landlord has a legal obligation to use reasonable efforts to try to re-rent the property.
While it is common to rent residential property, there are numerous legal requirements that a landlord must follow. Failure to comply with the law can be costly, and you could end up in court.
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