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Landlord Tips: What NOT to Put in Your Leases

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For any rental property landlord, the apartment lease is one of the most critical tools in the proverbial toolbox.  Its criticality stems from the fact that it’s a legal agreement between you and your tenants, and since you really do not know much about your tenants beyond the tenant screening process, it makes a good safety net.

However, if your lease is improper it could actually be counterproductive.  This is especially true if you inadvertently include some sort of illegal lease provision, because 1 bad provision could potentially invalidate your entire lease…even the ‘good’ provisions.  Having provisions that do not comply with local laws often happens when the landlord downloads his lease template from the Internet, as many times they are applicable to another state or may be so generic that few of the provisions are enforceable at the state level.  This can also happen if you try to stuff your lease with your own customized provisions.

Here are a few things to eliminate from your lease as soon as possible:

  1. Any language that removes a tenant’s legal rights; for example, restricting the tenant’s right to sue for unacceptable living conditions.  Another example would be an aggressive security deposit provision that contradicts the security deposit rules and regulations for your state of operation.
  2. Any language that contradicts the occupancy requirements for your local area.  One example of this would be overly-strict language surrounding new occupants to the premises.  Another example would be a landlord trying to stuff a family of four into a 1-bedroom apartment.
  3. Customized lease termination fees.  Remember that whatever you collect via security deposit deductions, and how you do it, is strictly controlled by state laws.  So do not customize these provisions.
  4. Customized eviction reasons.  Again, how and why you can evict a tenant is dictated by state laws, so avoid the temptation to go overboard here.

The bottom line is that you must study your state’s landlord-tenant laws and then make sure your lease fully complies.  Then, as an added precaution, it’s usually a good idea to have an attorney review it.  Although this will consume a bit more time and energy upfront compared to simply downloading a lease template online, it’s worth it because you’ll be reducing your overall risk.  And that, of course, is always one of your primary goals as an investor (second only to making money and/or building equity).

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