Lease agreements can be tricky, especially for first-timers. There are many things to keep in mind, and if you make even one mistake, it could cost you big time. Many people have found themselves in hot water because they didn’t take the time to understand lease agreements and what goes into them. According to Nolo, a legal website specializing in landlord-tenant law, about 20% of tenants end up in court over their leases. In addition, about 25% of landlords have to take their tenants to court over lease violations. With that in mind, here are three beginner mistakes to avoid when creating a lease agreement.
1. Not Defining Tenant Maintenance Responsibilities
One of the most important things to include in your lease agreement is a clear definition of tenant maintenance responsibilities. This will help avoid any misunderstandings down the road about who is responsible for what. For example, if you don’t specify that the tenant is responsible for mowing the lawn, they may assume you will take care of it. Likewise, if you don’t specify that the tenant is responsible for changing the lightbulbs, they may assume you will do it. You can avoid many potential problems by being clear about maintenance responsibilities from the outset.
2. Not Including a Late Fee Policy
Another mistake many landlords make is not including a late fee policy in their lease agreement. This can come back to bite you later if a tenant falls behind on rent. Without a late fee policy, you may find yourself struggling to recoup the money you’re owed. On the other hand, if you have a late fee policy in place, it will be much easier to collect the money you’re owed. In addition, it’s essential to make sure that your late fee policy is legal in your state. Some states have laws limiting the late fees landlords can charge. You’ll need to research this before including a late fee policy in your lease agreement.
3. Skipping the Cosigner Clause
If renting to someone with bad credit or no credit, you may be tempted to skip the cosigner clause. However, this mistake could come back to bite you later. Without a cosigner clause, you may find yourself stuck with a tenant who stops paying rent. In addition, if the tenant damages your property, you may have difficulty recouping the cost of repairs. Including a cosigner clause in your lease agreement will protect you if your tenant stops paying rent or damages your property.
By avoiding these three beginner mistakes, you can help ensure that your lease agreement is airtight. This will protect you from potential problems down the road and help you keep your rental property in good shape. Many landlords mistake thinking that they can wing it regarding lease agreements. However, this is a risky proposition. It’s always better to err on caution and take the time to create a well-crafted lease agreement. Doing so will pay off in the long run.