Though having one universal lease agreement satisfying every type of lease term possible would be great, in reality, every lease is different.
And, while using a universal lease form is possible, it is important to note that whether you self-manage your Dundalk rental property, or enlist the help of a property management company, there are going to be specifics that you need to address while drafting your property’s lease agreement.
As a landlord, there are many things to think about while filling a vacant rental.
To name a few, you must consider: advertising the property as available, performing the tenant screening process, conducting move-in inspections, and of course drafting the lease agreement.
Unfortunately, with all of the things you need to tend to, and the desire to rush the process of filling a vacant rental property, some landlords make dire mistakes in their rental agreements that can wreak havoc on their rental property business.
Don’t let these common mistakes plague your rental agreement while trying to quickly place someone in your vacant property.
Instead, learn from these mistakes (that others before you have made), and find out what makes a lease agreement one that protects you, your investment property, and your tenants.
Avoid These Mistakes While Drafting Your Lease Agreements
1. Not Properly Identifying the Tenants
Although this may seem obvious, you would be surprised how many landlords fail to address their tenants correctly in their lease agreements.
Remember, a rental agreement is a legal document, and should refer to your tenants by their full legal names.
No nicknames, shortened names, or names other than what are listed on driver’s licenses or identification cards should be allowed in the lease agreement.
In addition, you should have your tenants names located somewhere in the beginning of the document (typically in the first paragraph), as well as at the end of the document where the signature blocks are placed.
If you fail to name your tenants correctly on the lease agreement, you may find it difficult to enforce your lease agreement.
This is especially true if you land in court due to a landlord-tenant dispute.
If your tenants make claims that the people listed are not really them, you are going to have a hard time winning your case.
2. Not Researching Rent Rates
One of the key elements in a lease agreement is the monthly rent rate that your tenants are responsible for paying each month.
Failing to research the market rent rates properly and instead placing a random rent rate in your lease agreement will is something you want to avoid.
This mistake may cause you to over- or underprice your rental property.
If you overprice your rental, your tenant pool will shrink sizably, and any tenants that you have currently residing in your property are not likely to renew if you continue to raise the rate sporadically.
On the other hand, underpricing your rental property will harm your bottom line.
A great way to ensure you name the right rent rate in your lease agreement is to talk to your Dundalk property manager.
They will have insight into things such as current market trends, demographics of the area your property is located in, and the rates that similar properties are going for so you remain competitive.
Lastly, in order to avoid another mistake some landlords make, you should re-evaluate your rent rates every time you place a new tenant in your property to make sure to keep in line with current trends.
3. Not Personalizing the Agreement
Universal lease agreement forms don’t come with every lease provision you can think of. That’s why simply filling in the blanks is a bad idea, and is one that your Dundalk property management company will discourage.
Now is the time for you to be specific about the rules as they pertain to your rental property.
Take a look at some of the specific clauses you might want to include in your rental agreement:
- Whether your tenants can smoke in the property
- What type of interior alterations (temporary or permanent) tenants can make
- If your tenants can have pets, and if so, which type, how many, what size, and what the deposits will be
- Which maintenance responsibilities your tenants will be responsible for
All of this lease agreement personalization will ensure your tenants know exactly what is (and isn’t) expected of them while residing in your property. It will also outline the consequences for not following your rules.
However, as important as personalizing your lease agreement is, make sure you follow your state’s rental property laws.
For example, make sure you don’t overcharge on the security deposits and fees.
In addition, don’t ask your tenants to violate their tenant rights, such as forfeiting the notice of entry, so that you can do as you please.
Avoid these mistakes at all costs, as they will land you in some serious legal trouble.
4. Not Addressing Late Rent
Earlier we mentioned the importance of setting an appropriate rent rate and placing it in your lease agreement.
That said, it is equally important to mention what will happen should the rent not get paid on time.
Failing to detail the consequences for late or non-payment of rent is a huge mistake.
This not only sets you up for continuous late payments, it makes it very difficult for you to receive compensation in court for non-payment of rent, should your tenant stop paying altogether.
Make sure to include the rent rate, grace period, late fees, and eviction process for non-payment of rent in your lease agreement, so that should you run into an issue with a tenant, you have the legal document backing you up that states both parties agreed to the terms and your tenant owes you money.
Late payment lease provisions are used to inform and motivate your tenants to pay their rent on time.
After all, you rely on their timely payment and often cannot afford to wait for them to pay when it is convenient for them.
In addition, this section not only protects you in the case of non-payment, it protects your tenants from illegal eviction proceedings.
5. Not Setting a Lease Term
In your rental agreement, it is crucial you designate a lease start and end date.
This way your tenant knows exactly when they can move in, and when they have to be out of your property, should they choose not to renew their lease with you.
In addition, there are some lease renewal options that some see as mistakes, that you and your Dundalk property manager should carefully consider while drafting a lease agreement:
- Allowing for automatic lease renewals (how can you be sure you will want your tenants to renew one year from now?)
- Including a month-to-month renewal option (both parties have the option to break a month-to-month lease with 30 days’ notice, leaving you little time to find new tenants)
- Not requiring a 60 days’ notice of intent when it comes to renewals (leaving it to the last minute might leave you with no time to fill a vacancy, should your tenants decline your offer)
Altogether, none of these options are necessarily dire mistakes. However, they may cause you extra stress that can be avoided with a well thought out and thorough lease agreement.
Having an airtight lease agreement that addresses all of your concerns is important for everyone involved.
After all, the lease agreement is the document that both you and your tenants will refer to when there is an issue.
Therefore, the more thorough it is, the less confusion you and your tenants are bound to encounter.
If you own rental property in the Dundalk region, and want help drafting a comprehensive and legally compliant lease agreement, contact Bay Management Group today.
With years of experience drafting lease agreements for property owners, and extensive knowledge of the landlord-tenant laws, you can rest assured that every provision you want included will be integrated into each rental agreement so they you, your investment property, and your tenants are fully protected.