As a landlord, you can and should require that your tenants 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 a tenant’s references, including past landlords, employers, credit scores, etc.
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:
With respect to people with disabilities, it is illegal for a landlord to:
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.
Before you sign a residential lease agreement with a tenant, you should give the tenant 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 tenant to document any damages to the property. This avoids later misunderstandings and disputes.
Once you agree to rent your property to a tenant, you have a contract with the tenant or tenants. The residential lease agreement is legally binding on the landlord and the tenant 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 tenant has a pet; however, the pet deposit cannot exceed $2,500 or an amount equal to 2 months’ rent.
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:
Your tenants have obligations as well. Chief among those is the duty to pay rent on time. If a tenant 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 tenant, each tenant is responsible for paying the entire amount of the rent. If the tenants disagree and one moves out, the remaining tenants 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, tenants must:
If repairs are necessary, the tenant must inform the landlord, and give the landlord a reasonable amount of time to make the repair.
The tenant 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:
Unless it is impractical to do so, the landlord must attempt to get the tenant’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 tenant.
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 a tenant moves out before the lease expires, the tenant 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.
At Fremstad law, our mission is to move our clients forward. To protect yourself, avoid costly mistakes, and reduce your risk of a lawsuit, contact Fremstad Law today. Call us at (701) 478-7620 or complete our online form.
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