Top Lease Agreement Mistakes Landlords Make
1. Not Personalizing Things
With a lease agreement template, it’s likely it will address you as the “landlord” and your tenants as “tenants.” But if you fail to personalize the rental agreement with actual names, it comes across as unprofessional. It also makes this legal document a little less valid. After all, your tenants can always claim that the agreement doesn’t apply to them since their names are nowhere to be found. Though this argument probably won’t hold up in court, it’s a waste of time and money to even get to that point. Here are some of the best ways to personalize your lease agreements and make sure there is no confusion:- Include full names (no shortened or nicknames) at the beginning and end of the document
- Add the tenant’s name throughout the document in place of the word “tenant”
- Include a cover letter addressed to the tenant with important information
- Create a welcome package with the tenant’s name on it that accompanies the lease agreement
2. Ignoring the Law
Just because you’re in charge of your rental property doesn’t mean you can put any provision you want in the lease agreement. There are laws that you must understand and follow when it comes to lease drafting. And ignorance will not be an excuse should you violate any laws. Here are some of the Arizona lease agreement regulations to be aware of:- You must disclose things like the purpose of any non-refundable fees
- You must identify anyone acting on behalf of you (g., your Scottsdale property manager)
- There are security deposit collection and return limits
- Leases don’t automatically renew, they convert to month-to-month if there is no renewal
- There are rules about entering the property (non-emergency)
- Lease agreements must include the full name and address of landlord and length of lease term
- And many more
3. Setting the Wrong Rent Rate
The amount of rent you charge tenants plays an important role in the lease agreement. For instance, you’ll need to set the monthly rent amount and outline late rent consequences. But your tenants are ready to sign the rental agreement and already know the rent rate, so what’s the big deal? The problem with not researching rent rates before setting it and adding it to the lease is twofold:- If you underprice your rental, you’ll lose out on money
- If you overprice your rental, your tenants will find somewhere else to live at the end of their term for cheaper, and you’ll have a vacancy on your hands
4. Failing to Designate a Lease Term
Every lease agreement should have a start and end date. This way tenants are never confused about their move-in or move-out dates. Also, you should avoid the following mistakes while drafting your lease agreements:- Automatic Lease Renewals. You don’t know if your tenants will want to renew their lease with you at the end of their tenancy. Forcing an automatic renewal can get messy. Plus, you’ll want the chance to reevaluate some provisions, such as the rent rate, when offering a lease renewal to good tenants.
- Month-to-Month Renewals. If you allow a month-to-month lease renewal term, your tenants can provide a 30 days’ notice to leave, which leaves you little time to find new tenants.
- No Notice of Intent to Leave/Renew. The more time you can give your tenants to decide to renew with you or not, the better. This way, should they decide to leave at the end of their tenancy, you have plenty of time (g., 60 days) to market your property and find new tenants. And if they decide to stay, you have time to draft a lease renewal.
- Not discussing the lease agreement in full with tenants and setting clear expectations
- Failing to address late rent procedures
- Forgetting to add provisions related to smoking, painting, pets, and behavior
- Not including the maintenance and repair procedures
- Not requiring renter’s insurance