The way you structure your lease agreement is going to set the tone for the entire term of your Potomac tenants’ stay.
In fact, the lease is often considered the crux of your entire rental property business.
However, drafting your own lease agreement from scratch can be challenging if you self-manage your rental properties and don’t know what to include.
Lease agreements need to have a lot of information built into them to make sure they’re strong enough to enforce with your tenants and in court, should a landlord-tenant dispute ensue.
That’s why knowing the basic steps for creating a strong lease agreement is crucial for maintaining a successful rental property business.
If you are wondering how to create an airtight lease agreement that addresses all of your needs, and protects yourself, your investment property, and your tenants, keep reading for pro tips.
1. Hire an Attorney
If you are not using Potomac property management to help you draft a solid lease agreement, the next best thing to do is enlist the help of a local, experienced real estate attorney.
Having a lawyer on hand to help you draft your lease agreement is a good idea.
Because in addition to federal rental property laws you must follow, every state and city has their own specific landlord-tenants laws that you also must abide by in your written lease agreements.
The last thing you want to do is include something in your self-drafted lease agreement that violates a law.
Worse yet, you don’t want to have such a loosely stated lease agreement that clauses you have included can be used against you by knowledgeable tenants looking to take advantage of those not well-versed in the law.
Having an attorney look over a finalized lease agreement is not going to break the bank, and can end up save you lots of time, money, and hassle in the long run.
It is always a good idea to educate yourself about the rules and regulations that apply to you and your rental properties, so that you can always protect your own interests, whether you have a property management company or real estate attorney helping you out.
2. Have Multiple Copies of Your Lease
The beauty of modern technology and digital bookkeeping is a bonus for keeping your business organized and secure.
However, digital lease agreements have the potential to be altered, whether by accident or on purpose, by either the tenant or the software.
It is critical you have a paper copy of the lease agreement kept on file at all times to refer to in the case of a dispute. This way your tenant cannot make the claim that a clause in the lease agreement says something entirely different from what you originally drafted.
It is important to have your Potomac property manager discuss this paper copy lease agreement with your tenant at the time of move-in, as well as have them sign the document so you have hard proof that everyone involved knew exactly what was expected of them at all times throughout the lease term.
3. Address Lease Changes
Sometimes lease agreements change during the course of a tenancy.
However, in order to create a strong lease agreement that prevents changes of all kinds from sneaking into the lease agreement, you must include a clause stating that any changes to the lease agreement will only be considered valid if in writing.
Do not give your tenants the power to “add” lease changes to the original lease agreement from verbal conversations you or your property manager have with them. This can lead to a lot of miscommunication, and changes to the lease you did not approve.
For example, your tenants may have moved into your rental without any pets. And, the lease agreement may clearly state no pets are allowed.
However, perhaps halfway through the lease your tenants approach you or your property manager with a request to get a puppy. And, you agree to this.
Make sure to add a pet policy provision into the lease agreement and have your tenants sign it so they know the rules regarding this new lease clause. Include things like breed and size restrictions, pet deposits and fees, and the consequences if the pet damages your property during their lease term.
If you don’t do this, you could end up with 10 dogs roaming your rental property damaging everything from the interior of your property to the exterior landscaping, all because you verbally said to your tenants that they could have a dog.
The pet policy is just one example of how your written lease agreement can falter if you allow verbal changes to change it.
Protect yourself and your investment by only allowing written changes to be incorporated into the original lease agreement.
4. Make Your Writing Clear
Your lease agreement should be extremely clear for anyone that reads it.
Use simple terminology, make it short and to the point, and never leave any open-ended clauses that allow room for interpretation.
If things are not clear, and your tenant can poke holes in each lease provision, chances are the written document you thought was in place to protect all parties will actually be used against you.
Some of the most important provisions to outline clearly in each lease agreement you draft include:
- Security deposit collection, use, and return procedures
- The rent amount, when it is due, and the consequences for late or non-payment
- Maintenance and repair procedures, what will and won’t be covered by you, and what the tenants are responsible for
- Whether temporary alterations are allowed, and which ones
- What to do in the case of an early lease termination
- Your right of entry procedures, complete with notice information
- Roommate, use of property, and code of conduct rules
- What happens should any lease provision be breached throughout the lease term
This is not a comprehensive list of the important lease clauses to include in your lease agreement.
Rather, it is a list of some of the most important ones that have the potential to create many legal problems for you, should they not be addressed correctly.
5. Customize Your Template
Using a lease agreement template is okay, especially if you self-manage your rental property. However, you should be aware that lease agreement templates are not one-size-fits-all forms that apply to every landlord in the country.
Both Maryland and Potomac have specific rules and regulations you must follow when it comes to lease drafting. That’s why customizing your template to fit your individual needs, and address the state and local laws is a must.
If you are looking for a high-quality property management company in Potomac, MD to help you write a strong lease agreement for your rental properties, contact Bay Management Group now.
We have the knowledge to make sure your lease agreements are legally compliant. We will take the time to address every personal provision you want to include in your agreements, and make sure that your tenants understand exactly what is expected of them at all times during their tenancy.