One good thing I learned from corporate life was filing and the importance of legal documents. Usually, tenants I meet to sign a rental agreement are surprised with the number of other documents I have them sign. I always tell them that this is my business, and I feel it is best to disclose and discuss before we move forward in the business relationship.
Every tenant I sign will have these items in their tenant folder:
Month-to-Month Rental Agreement - I use the agreement provided from the state association, mainly because I know they are up to date with the laws and it will address issues that a custom agreement might not catch. Remember, laws change - and part of risk management is to keep up with those changes. I also don’t like long-term leases; my preference is monthly. The reason is simple: after hundreds of tenants, I discovered that I was the one who had to wait if I wanted to increase rents or evict a bad tenant. A month-to-month rental agreement gives me the power to terminate a bad tenant, one who was causing problems to others in a complex, is consistently late with the rent or who complained too much. If the tenant wants to break the lease, they do - and if they leave the state, then good luck on collecting your lost rent. Anyway, you are required to minimize your losses by actively trying to re-rent your property, which you would want to do anyway; so there is no real benefit to keeping a tenant who does not want to stay and who you might not want to have stay.
Completed and signed Rental Application - If you pulled a credit report, you are required by law to have a signed application authorizing this from the tenant. Make sure the rental application you use includes the following information, and authorizes you to obtain it:
- Full name, including maiden name or aliases of all intended residents
- Dates of birth
- Social security numbers
- Driver’s license numbersRental history: previous addresses, with landlords’ contact information and amount of rent paid
- Total number of vehicles and tag numbersIncome and financial information
- Employment
- CreditCriminal history
- Pets
- Smoking
Lead Addendum - you are required to provide a booklet, “Protect Your Family from Lead in the Home,” to every tenant who occupies a rental built before 1978. The booklet is provided for free downloading at [http://www.epa.gov/lead/pubs/leadpdfe.pdf]. You can buy the book, but I print the pages and hand it to the tenant. Once the tenant receives the book, they sign a Lead Addendum acknowledging receipt of the book and your disclosure of lead on the property.
Mold Disclosure - This is a new addendum to my package; I recommend you check with your state association for a Mold Addendum that discusses what causes mold, and that you advise the tenant to take action if there are concerns about mold. And very important - agree that it is the tenant’s responsibility and not the landlord’s. I included a sample Mold Addendum in the sample form section.
Pet Addendum - I rent to tenants with pets. I have had no problems, as long as the tenants understand they are limited to the number and type of pets on the premises. Under no circumstances will I rent to a dangerous breed - Chows, Dobermans, Rottweilers, wolf hybrids, and Pit Bulls - since my insurance will not cover these animals. I make it a point to visit the dog to verify the breed type and see if it has an aggressive nature. If I discover the tenant lied to me, I speak to the tenant and tell them to get rid of the dog or they will be evicted immediately for breach of contract. I have used this twice, and it worked both times with no fuss or lawyers. The sample form I used is in the sample form section.
Rules & Regulations - This is a must for every package. I call it my “common sense” clause. This covers all the little and big things that can cause issues with other tenants, like working on their car, having furniture in the front yard, the policy for guests, the times of the day when they will be quiet, etc. You never know what peculiar obsession your tenant might have, but at least you are covered when you need to remedy a situation between tenants. A sample of the Rules and Regulations are provided in the sample form section.
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