Why have a Lease Agreement?
Signing a lease has to be one of the most important steps in renting a property. Yet so many landlords neglect to take the steps necessary to protect themselves and their property. Ultimately, this can leave them with a financial burden and may force them to give up their rental investment.
Why is having a lease so important? Very simply, it states the agreements between the owner and the tenant that must take place during the term of the lease. How much the rent is, when it is due, who is responsible for repairs and when will the security deposit be returned are just some of the items that need to be covered. The lease helps to set expectations for the tenants and answers a lot of questions that may come up during the rental term. Some landlords may feel that they save time by not reviewing a lease with tenants before they move in. Later on, the tenants have to contact the landlord because they have questions.
Letís face it, you rent your property for one reason - to make money. Everything you do with respect to renting that property should be aimed at maximizing the amount of income the property will generate. Obtaining a full security deposit and explaining exactly what types of items will be deducted will save lots of money when tenants move out and windows, doors and walls are damaged. Spelling out what utilities are not included and giving them a good estimate of previous year costs will help them to budget their finances and avoid you paying later. Collection of rent and treatment of late or returned checks will help you to avoid bank charges because your tenant. This can be avoided if you explain all of the charges in your lease. Even fines that you get from the city or town that are the result of something the tenant did should be discussed in the lease.
If your tenants continuously trash your property, it will not retain its value over time and will be worth less than it should when you go to sell it. This is where your lease comes in handy. You can spell out exactly what the expectations of your tenants are in terms of upkeep to the property. Who takes out the garbage, maintains the lawn and landscape, shovels snow are all important elements in keeping your property looking good, and safe. Occasional inspections should be allowed to make sure that garbage in not being stored, damage such as leaking pipes, or broken windows are quickly repaired or see that no unsafe conditions exist. Your lease will help you to be well on your way to maintaining a well-conditioned property.
Another important factor in having a lease is to help you keep your sanity. If you do not spell out exactly how certain situations are handled, you will get calls at the worst possible times from angry tenants. "We have no oil left and itís cold in the house", "we got a fine for putting the garbage out on the wrong day", "where can I get a parking sticker?" These are all situations that could be avoided if clearly explained in a lease. Why would you ever want to waste your time getting these calls and dealing with the issues if you could avoid it?
Perhaps you donít live in or near the property that you are renting. But that does not mean that an "anything goes" attitude should apply for your tenants. Your neighbors could end up being your best friends, or worst enemies if you let your property become an animal house. This is another thing that you can control by added some terms in your lease on when your tenants can congregate on porches, where they can park their cars and what you allow to be displayed from windows and doorways. Ultimately, if your rental property goes unnoticed by someone passing by you will likely experience a lot less grief from neighbor or the town.