What’s Missing From Your Lease?

VOLUME VIII

By Rebecca Elena

(Shamontiel L. Vaughn contributed to this post.)

The lease is the backbone of every landlord-tenant relationship. A good lease can protect the landlord from facing any undue burden caused by the tenant. A bad lease leaves the landlord vulnerable and makes it difficult to hold the tenant accountable. Here are some commonly overlooked rules that every landlord should consider when drafting a new lease.

Repair Deductibles

Reserving the right to charge a flat fee for each maintenance request can help landlords save time and money. Doing this puts the onus on the tenant, not the landlord, to decide if it is worthwhile to make a repair. When tenants have a financial stake in the maintenance of the home, they may be more likely to take good care of their unit. They will also be less inclined to rely on the landlord to take care of frivolous wear and tear such as chipped paint or a clogged drain.

While hot markets like Plano, Texas or Orlando, Florida may not face as much hesitancy, landlords in less competitive markets may have tenants who are less likely to agree to pay for these additional fees. Ultimately though, if the fee is fair and the tenant really likes the property, then a repair deductible may not stop them from signing. It also ensures that tenants who do sign a lease are just as invested in the property as the landlord.

Subletting

Subletting can increase a landlord’s risk of getting stuck with a less-than-desirable tenant. In Florida, statutory laws do not expressly prohibit or allow subleasing. That means the best way to prevent a tenant from subletting is to include a specific rule about it in the lease.

Though the Texas Property Code Sec. 91.005 already prohibits subleases without permission from the landlord, landlords are highly encouraged to explicitly state that subleases are not allowed so that renters are aware.

Despite the downsides of subletting, some landlords are open to the option because it saves them the trouble of having to find a new tenant. If this is the case, then the lease should set clear parameters for sublease arrangements. One rule that can help minimize potential risks for landlords is requiring subletters to pass a screening test before they are approved.

Condo Board Rules and Regulations

Condo association members who are landlords need to make sure that all leases reflect both the condo bylaws and the Rules and Regulations. If not, when a tenant violates condo rules, the landlord may end up being fined.

For example, the condo board may allow association members to have pets but not tenants. If the tenant gets a pet after seeing other residents with pets, the landlord would be held responsible and potentially fined. (Note: Landlords have the right to choose whether their units are pet friendly even after the condo bylaws or Rules and Regulations allow pets for either group.) If the landlord does not clearly state pet specifications in the lease (including pet breeds allowed, pet security deposits, etc.), this may be vague enough for a tenant to think it’s OK to get any pet without an additional cost.

Other Rules and Regulations to look out for in multi-units include:

Use of recreational spaces (especially as it relates to children and play areas)
Proper garbage disposal (ex. key access for dumpster locks, not discarding trash into recycle bins)
Guest parking and permit parking for tenants

Utilities

Leases should already state which utilities a landlord covers versus a tenant. Although utility payment is not required in Texas or Florida, landlords who do decide to pay for specific utilities should state their responsibility in the lease and list all included utilities (i.e., heat, water, electricity, waste management, etc.)

However, if a landlord does not choose to include utilities in the rental agreement, the lease should state that the tenant is responsible for arranging and paying for all utility services.

"If the utilities are active when the tenant moves in, the landlord cannot deactivate them," said Jonathan Coleman, the owner of Go4Rent. "Tenants must transfer them into their own name. If they neglect to do so, the landlord is stuck paying the bill and trying to get reimbursed each month from the tenant."

For this reason, Coleman advises disconnecting all utilities prior to a new tenant moving in. Or, make sure the lease confirms that tenants must immediately show proof that the utilities will immediately be transferred into their own names. Then follow up to make sure it’s done.

Smoking

Adopting a no-smoking policy is a good way to prevent property damage and create a safer living environment. It can also be a selling point for non-smokers who wish to live in a smoke-free community.

In addition to being a fire hazard, it can become a nuisance for neighbors who may fall victim from the effects of secondhand smoke. (According to the Centers for Disease Control and Prevention, since 1964, approximately 2.5 million non-smokers have died from health problems caused by secondhand smoke exposure.) Additionally, new and non-smoking renters may be deterred by the lingering smell.

All this can be prevented by requiring a no-smoking rule on the property. Or, limit smoking to designated areas. Landlords should also specify that if tenants violate the no-smoking policy, they may be evicted and will be required to pay for any damages caused as a result of their smoking.

Although marijuana of any kind is still illegal on a federal level, both Texas and Florida have legalized medical marijuana statewide. However, the Texas Compassionate Use Program only allows low tetrahydrocannabinols (THC) cannabis, which is limited to swallowing, not smoking. Florida accepts a broader range of medical marijuana usage, including THC prescriptions, edibles and smoking medical marijuana. This means landlords will need to specify with tenants whether they will waive medical marijuana in the no-smoking clause.

Jury Trial Waiver

Although the lease is intended to make sure both parties agree on all terms, there may be a time when tenants and landlords just aren’t on the same page. In the event that both parties must go to court, the lease should state ahead of time if the landlord prefers a judge or arbitrator to handle the case instead of a jury trial—the latter of which may increase legal expenses due to jury selection and lengthier deliberation.

Adding wording about collecting attorney fees may be a touchy subject though. Why? Typically, the party that the judge favors in the dispute can recover “reasonable” attorney fees and court costs from the non-prevailing party (in simpler terms, the person who lost the case). However, in both Florida (Chapter 83) and Texas, recovering attorney fees largely depends on the terms and the procedures followed between the tenant and the landlord beforehand.

For example, in the case of an eviction in Texas, the landlord would have to give the tenant a written demand by registered mail or certified mail to vacate the home. If the tenant is still there by the 11th day after the written demand is sent, attorney fees could be recovered. In Florida, certified mail and a registered receipt are also a necessary procedure for landlords disputing unpaid rent by tenants.

While a lease cannot cover every instance of potential litigation and recovering from frivolous lawsuits, connecting with a licensed real estate attorney beforehand who can guide the landlord through common problems like unpaid rent or property damage will help in the long run.

Though many of the terms in a standard rental agreement may seem obvious, it’s important for landlords to carefully consider each detail in order to avoid headaches down the road. No two properties are alike. Even if starting out with a lease template, make sure to read it line-by-line to customize for professional preference and any state laws. If there are additional questions, consulting with legal counsel before adding new changes to a previously approved lease may help too.

The Ins and Outs of Working with Investors

While tenants of rental properties focus on factors such as property quality, location and monthly rent, investors may focus on one overarching factor: return on investment. Here’s what Realtors need to know about how investors generally decide whether they want to invest in rentals.

Rental Inspections: Don’t Wait Until Move-Outs Only

Move-in/move-out inspection and periodic inspections are important aspects of managing a rental property. By better understanding what to look for during inspections and how often to schedule them, it is possible for landlords to avoid common mistakes.

Creating a Go-To Contractor List

Agreeing to a contractual relationship, such as a service maintenance agreement, with a vendor could significantly speed up any frantic searches—especially during emergencies and late-night hours.

Navigating Out-of-State Rental Properties

Today’s housing market is a bit of a seesaw. In 2022, the Federal Reserve hiked its benchmark interest rate six times. Higher interest rates mean loans are more expensive for consumers. But no matter what happens with inflation, people need a place to live. This is leading property owners to look for a means of disposable income. And sometimes the real estate investor may choose a property from another state.

Is That Emotional Support Animal Legit?

It can be difficult for landlords to tell if someone has a legitimate ESA or simply a pet. Banning a tenant with an ESA could lead to legal action against the landlord. Fortunately, there are ways that landlords can fairly differentiate between the two to comply with the Fair Housing Act.

Repairs: Who Pays for What?

For a landlord, a rental property is an uphill battle against mishaps, calamities, the hands of time and sometimes nature itself. To guard their investment, property owners must plan ahead, maneuver tactfully and sometimes be prepared to cut their losses.