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Property Management Blog

Published on Friday, May 16, 2014

What Should Be Included in a Residential Lease?

The lease must cover day-to-day issues, including subletting long-term guests, and maintenance or repair issues.

The residential lease also will include provisions regarding eviction of the tenant. In today’s environment, it’s important that a landlord can evict the tenant who is disruptive or commits a crime on the property.

Some provisions in a residential lease form seem unnecessary, buried deep in the fine print. But those little provisions carry a lot of weight.

Unfortunately, some leasing errors occur simply because the landlord omits or modifies paragraphs in the “boiler plate”” those seemingly unimportant provisions at the end of most rental forms that no one ever reads.

But by making changes to the fine print, a landlord could change the inevitable outcome of a lease dispute.

Here are a few things to watch out for:

Your signature on the lease is not the one that matters. Unless you can show the tenant’s signature on the lease, it is not a lease.

Be especially careful when using fax or email that you don’t forget that signature on the dotted line. If the signature gets dropped, the same may be true of your legal options. Also, when using online landlord forms, be sure to tailor the signature lines — which may be blank — by creating a printed signature block with the tenant’s name and information.

Landlords and tenants often speak in person after the lease is signed. Misunderstandings can lead to disputes over the contract terms. One important safeguard is to provide in your lease that any modifications of the terms must be in writing, with signatures, to be valid.

Buried in the fine print, the modification clause restricts verbal modifications. If your tenant gets the wrong impression that you have changed the lease, with the modification clause in place, chances are they can’t bring up that argument.

Often a lease is more than one document. There are add-ons, like house rules, a no-smoking policy, pet addendum, disclosure pages, or other landlord forms. An integration clause is a piece of fine print that serves as a legal paper clip, tying all those documents together.

At the same time, the clause prohibits the tenant from slipping in other pages that they claim were a part of the leasing forms. Look for language that provides that the lease being signed ” and all attached pages, make up the full and final agreement between the parties.

A severability clause states that if one provision of the lease is deemed illegal, the rest of it can stand. While this seems like legal mumbo jumbo, this clause can save the day in a situation where an inadvertent illegality is not central to the rental form. Without it, the entire lease could be unenforceable.

Many lease forms place the all-important remedies provisions of the lease in the fine print. This can create the impression that these terms do not have to be customized.

For example, don’t assume that you can evict a tenant, charge interest, add attorney’s fees, or the costs of a dispute to the claim against a tenant without first checking your local law. These terms must be included in your leasing forms, but at the same time, they cannot contradict the law. If they do, let’s hope that you have a severability clause!

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Author: Web Master

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Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.

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