Spring is a transitional period for both tenants and real estate investors alike. The market picks up in March and peaks in the subsequent months, resulting in a greater amount of real estate transactions, and a higher number of tenants who are looking for homes to rent.
With college students packing up for the summer and many lease terms coming to an end, it’s common for property managers to take advantage of vacancies to spruce up their properties while the weather is warm and to review the terms of their rental agreements while “in between” tenants.
Keeping your contract up-to-date can help to protect you against the liabilities of an outdated rental contract, and while it’s vital to revisit your lease every time a new tenant moves in, there are also other situations where it is important to review your rental paperwork:
1. You’ve acquired new rental property
Preparing a new rental property for tenants means you will need a new agreement to govern the responsibilities of you and your tenant.
Why can’t you use the same one you’ve used for other investment properties?
Every property is different, which means rent prices and other terms may vary. If you have been using the same rental agreement for all of your investment properties, you should tailor your agreement(s) to accommodate any specifics of that particular property. For instance, maintenance responsibilities for a residential home are very different than those of a condo building.
2. You’re allowing a tenant to sublet the rental space
Not only does the tenant need your permission to sublet, but it’s important to specify in the lease agreement that you are consenting to the tenant subleasing the property if you have not already done so. The same applies to the assignment of a lease. If your tenant is assigning all of their lease rights over to a third party, record your permission in writing. Just note that you cannot alter the master lease if it is under a fixed term and it is being transferred to an assignee.
When it comes to assignment and subletting, it’s best to cover these terms at the beginning of a lease term to prevent any future confusion with a tenant.
3. You’ve remodeled a rental unit
An upgraded rental can increase the value of the space, and potentially allow you to charge more for rent. Make changes to your lease accordingly before allowing new tenants to move in.
4. You’ve been using the same lease for years
If you are a seasoned investor, and have been using the same standard agreement for many years, it’s probably time for an upgraded agreement because renting laws may have changed and the market may has fluctuated during this period.
5. Bad tenant experiences
There’s nothing like a bad tenant experience to make you want to review your lease terms. As anyone in property management understands, being a landlord is a learning experience. There’s no better way to learn what you don’t want through experience, and by making those terms clear in the next round. For instance, if you encountered problems with allowing pets in your suite, specify a “no pets” clause in your new agreement.
6. Additional occupants
If your tenant has a roommate move in, they should always seek your permission beforehand, and you should adjust the lease accordingly if you agree to this change by adding the occupant to the lease.
7. Neglecting to review the Landlord-Tenant laws
Whether you got yourself into trouble by not adhering to legal regulations, or you noticed your methods were more casual than practical—always confirm that your lease is legally binding by regularly reviewing your state/region’s laws.
8. Changed lease terms
For amending lease terms (fixed or automatic renewal), you will need to change the rental terms in your lease before the tenant moves in. Stating clear rental terms prevents your tenant from skipping town on account of you having no record of a fixed date, or because you had no written proof of this agreement. If you wish to change terms during a lease, you must get the tenant’s approval beforehand.
9. Environmental disclosures
You are legally required to disclose any environmental hazards in the lease agreement. This includes lead based paint or asbestos hazards if your property was built before 1978, and any other environmental concerns in your rental.
If your property has incurred severe damage (flood, fire, natural disaster, or pest problems) and you’ve had it cleaned and approved for living, your lease might need an update if you expect to conduct ongoing renovations to get your place back in shape.
When enlisting renters, provide full disclosure of the damage and make sure they are fully aware of the ongoing improvement. Write it as a condition in the lease with any other additional clauses that pertain to the remodel, such as decreased rent, or hours of construction, and get the tenant to sign off on it.
Since demand is high this time of year, you shouldn’t have a problem finding new tenants during the spring and summer months.
Between property upgrades and new tenants, you should always ensure that your lease reflects your current rental situation. It’s your responsibility to keep up with the current laws and any other changes that could affect your investment property.
Be aware that you cannot simply change your lease mid-term without having your tenant comply with any amendments if it affects their tenancy. Keep open lines of communication with your tenants, and always get their approval before making any changes to the lease.
Have any peculiar circumstances caused you to change your lease? Share your story below!