Leases & Rental Agreements 6th edition by Marcia Stewart & Attorneys Ralph Warner & Janet Portman SIXTH EDITION November 2005 COVER DESIGN Toni Ihara BOOK DESIGN Terri Hearsh PRODUCTION Margaret Livingston PROOFREADING Susan Carlson Greene INDEX Jean Mann PRINTING Consolidated Printers, Inc. International Standard Serial Number (ISSN) 1555-5291 ISBN 1-4133-0349-8 Copyright © 1996, 1998, 2000, 2001, 2003, 2004, and 2005 by Nolo All rights reserved. Printed in the USA. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or other- wise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo at 950 Parker Street, Berkeley, CA 94710. Table of Contents 1 Being a Successful Landlord 2 Preparing a Lease or Rental Agreement A. Which Is Better, a Lease or a Rental Agreement? 2/3 B. Completing the Lease or Rental Agreement Form 2/5 C. Signing the Lease or Rental Agreement 2/36 3 Choosing Tenants: Your Most Important Decision A. How to Advertise Rental Property 3/2 B. Renting Property That’s Still Occupied 3/4 C. Accepting Rental Applications 3/4 D. Checking References, Credit History, and More 3/10 E. Avoiding Illegal Discrimination 3/16 F. Choosing—and Rejecting—an Applicant 3/17 G. Choosing a Tenant-Manager 3/18 H. Property Management Companies 3/20 4 Getting the Tenant Moved In A. Inspect and Photograph the Unit 4/2 B. Send New Tenants a Move-In Letter 4/8 C. Cash Rent and Security Deposit Checks 4/8 D. Organize Your Tenant Records 4/11 E. Organize Income and Expenses for Schedule E 4/11 5 Changing or Ending a Tenancy A. How to Modify Signed Rental Agreements and Leases 5/2 B. Ending a Month-to-Month Tenancy 5/3 C. How Fixed-Term Leases End 5/10 D. Returning Security Deposits When a Tenancy Ends 5/15 Appendixes 1 State Landlord-Tenant Law Charts State Landlord-Tenant Statutes Notice Required to Change or Terminate a Month-to-Month Tenancy State Rent Rules State Security Deposit Rules States That Require Landlords to Maintain a Separate Account for Security Deposits States That Require Landlords to Pay Interest on Deposits Attachment to Florida Leases and Rental Agreements (Security Deposits) State Laws on Landlord’s Access to Rental Property 2 Tear-Out Forms Month-to-Month Residential Rental Agreement Month-to-Month Residential Rental Agreement (Spanish version) Fixed-Term Residential Lease Fixed-Term Residential Lease (Spanish version) Disclosure of Information on Lead-Based Paint or Lead-Based Paint Hazards Disclosure of Information on Lead-Based Paint or Lead-Based Paint Hazards (Spanish version) Protect Your Family From Lead in Your Home Pamphlet Protect Your Family From Lead in Your Home Pamphlet (Spanish version) Rental Application Consent to Background and Reference Check Tenant References Notice of Denial Based on Credit Report Information Landlord-Tenant Checklist Move-In Letter Tenant’s Notice of Intent to Move Out Move-Out Letter Index CHAPTER 1 Being a Successful Landlord 1/2 LEASES & RENTAL AGREEMENTS T he rental agreement or lease that you and your tenant sign is the contractual basis of your relationship. Taken together with the landlord-tenant laws of your state—and, in a few areas, local and federal laws—it sets out almost all the legal rules you and your tenant must follow. Your rental agreement or lease is also an immensely practical document, full of crucial business details, such as how long the tenant can occupy your prop- erty and the amount of the rent. Given their importance, there’s no question that you need to create effective and legal rental agree- ments or leases with your tenants. This book shows you how, by providing clearly written, fair, and effective tear-out lease and rental agreement forms, along with clear explanations of each clause. Our agreements are legally accurate and up to date, based on careful research of every state’s landlord-tenant laws. They can be tailored to fit the details of your situation using the 50-state law charts in Appendix 1. Throughout the book, we suggest ways to do this. In addition to showing you how to prepare a lease or rental agreement, this book also covers key legal issues that landlords need to understand, including how to legally choose tenants and start a tenancy. It also highlights the legal and practical issues involved with changing or ending a tenancy. This book provides forms that supplement a lease and a rental agreement, including a rental application designed to help you choose the best tenant. Other forms, such as a Landlord/Tenant Checklist (used to document the condition of the rental unit at the beginning and end of the tenancy), will help you avoid legal problems with tenants, such as disputes over security deposits. Who shouldn’t use our lease or rental agreement? Don’t use the forms in this book if you’re renting out property that is subsidized by the government, such as the Section 8 program of the federal Department of Housing and Urban Development. You may need to use a special government-drafted lease. Also, our forms should not be used for renting out mobile homes, townhouses, hotels, or commercial property. If you are renting out your condominium or townhouse, use this book in conjunction with your homeowners’ association’s rules and regulations (called CC&Rs, or covenants, codes, and restrictions). These CC&Rs may affect how you structure the terms and conditions of the rental and how your tenant uses the unit. Other Nolo Books for Landlords A lease or rental agreement is only one part of a landlord-tenant legal relationship. For example, many state (and some federal and local) laws are also extremely important. A comprehensive explanation of these laws, and the practical steps rental property owners can take to comply with them (while at the same time running an efficient and profitable busi- ness), is covered in Every Landlord’s Legal Guide, by Marcia Stewart, Ralph Warner & Janet Portman (Nolo). Every Landlord’s Legal Guide covers most key laws affecting landlords in all 50 states, including your repair and maintenance respon- sibilities and your liability for crime and envi- ronmental hazards such as lead. Every Landlord’s Legal Guide covers rules and proce- dures for collecting and returning security deposits, anti-discrimination laws, privacy rules, employment laws affecting managers, how to resolve problems with tenants or begin the evic- tion process, and more. It includes over 20 legal forms on CD and in tear-out form. In addition, Nolo publishes two books spe- cifically for California and New York landlords: The California Landlord’s Law Book, by David Brown, Ralph Warner & Janet Portman, and The New York Landlord’s Law Book, by Mary Ann Hallenborg. You can order these landlord books from Nolo’s website (www.nolo.com) or by phone (800-728-3555). You can also find Nolo books at bookstores and public libraries. BEING A SUCCESSFUL LANDLORD 1/3 Ten Tips for Being a Successful Landlord 6. Respect your tenants’ privacy. Notify tenants whenever you plan to enter their rental unit, and provide as much notice as possible, at least 24 hours or the minimum amount required by state law. 7. Disclose environmental hazards such as lead. Landlords are increasingly being held liable for tenant health problems resulting from exposure to environmental poisons in the rental premises. 8. Choose and supervise your manager carefully. If a manager commits a crime or is incompetent, you may be held financially responsible. Do a thorough background check and clearly spell out the manager’s duties to help prevent problems down the road. 9. Purchase enough liability and other property insurance. A well-designed insur- ance program can protect your rental prop- erty from losses caused by everything from fire and storms to burglary, vandalism, and personal injury and discrimination lawsuits. 10. Try to resolve disputes with tenants with- out lawyers and lawsuits. If you have a conflict with a tenant over rent, repairs, your access to the rental unit, noise, or some other issue that doesn’t immediately warrant an eviction, meet with the tenant to see if the problem can be resolved informally. If that doesn’t work, consider mediation by a neu- tral third party, often available at little or no cost from a publicly funded program. If your dispute involves money and all attempts to reach agreement fail, try small claims court, where you can represent yourself. Use it to collect unpaid rent or to seek money for property damage after a tenant moves out and the deposit is exhausted. 1. Don’t rent to anyone before checking their credit history, references, and back- ground. Haphazard screening too often re- sults in problems—a tenant who pays the rent late or not at all, trashes your place, moves in undesirable friends, or worse. 2. Get all the important terms of the tenancy in writing. Beginning with the rental applica- tion and lease or rental agreement, be sure to document important facts of your relationship with your tenants—including when and how you handle tenant complaints and repair problems, notice you must give to enter a tenant’s apartment, and the like. 3. Establish a clear, fair system of setting, collecting, holding, and returning security deposits. Inspect and document the condi- tion of the rental unit before the tenant moves in to avoid disputes over security deposits when the tenant moves out. 4. Stay on top of repair and maintenance needs and make repairs when requested. If the property is not kept in good repair, you’ll alienate good tenants. And they may have the right to withhold rent, sue for any injuries caused by defective conditions, or move out without notice. 5. Don’t let your tenants and property be easy marks for a criminal. You could well be liable for the tenant’s losses. Landlords are sued more than any other group of business owners in the country. The average settle- ment paid by a landlord’s insurance company is $600,000, and the average jury award is $1.2 million. 1/4 LEASES & RENTAL AGREEMENTS Get a Little Help From Your Friends Many landlords have discovered the value of belonging to a local or state association of rental property owners. These organizations range from small, volunteer-run groups to substantial city, county, or even statewide organizations with paid staff and lobbyists. Many offer a wide variety of support and services to their members, including the following: • legal information and updates through newsletters, publications, seminars, and other means • tenant-screening and credit check services • training and practical advice on compliance with legal responsibilities • a place to meet other rental property owners and exchange information and ideas, and • referrals to knowledgeable and appropriately priced professionals, including attorneys, accountants, maintenance firms, and prop- erty management companies. If you can’t find an association of rental property owners in your phone book or online, ask other landlords for references. You can also contact the National Apartment Associa- tion (NAA), a national organization whose members include many individual state associations: National Apartment Association 201 North Union Street, Suite 200 Alexandria, VA 22314 703-518-6141 www.naahq.org The National Multi-Housing Council, a national organization of many of the country’s largest landlords, may also be helpful: National Multi-Housing Council 1850 M Street, NW, Suite 540 Washington, DC 20036 202-974-2300 www.nmhc.org Icons Used in This Book Related Topics This icon refers you to organizations, books, or other resources for more information about the particular issue or topic discussed in the text. Warning Slow down and consider potential problems you may encounter when renting out residential property. Fast Track You may be able to skip some material that doesn’t apply to your situation. Form in Appendix A blank, tear-out copy of the form discussed in the text is in Appendix 2. Tip A practical tip or good idea. Rent Control A rent control ordinance may address the issue discussed in the text. Briefcase You probably need the advice of a lawyer who specializes in landlord-tenant law. ■ CHAPTER 2 Preparing a Lease or Rental Agreement A. Which Is Better, a Lease or a Rental Agreement? 2/3 1. Month-to-Month Rental Agreement 2/3 2. Fixed-Term Lease 2/3 B. Completing the Lease or Rental Agreement Form 2/5 Clause 1. Identification of Landlord and Tenant 2/6 Clause 2. Identification of Premises 2/6 Clause 3. Limits on Use and Occupancy 2/9 Clause 4. Term of the Tenancy 2/9 Clause 5. Payment of Rent 2/12 Clause 6. Late Charges 2/14 Clause 7. Returned Check and Other Bank Charges 2/15 Clause 8. Security Deposit 2/15 Clause 9. Utilities 2/20 Clause 10. Assignment and Subletting 2/20 Clause 11. Tenant’s Maintenance Responsibilities 2/22 Clause 12. Repairs and Alterations by Tenant 2/24 Clause 13. Violating Laws and Causing Disturbances 2/25 Clause 14. Pets 2/27 Clause 15. Landlord’s Right to Access 2/28 Clause 16. Extended Absences by Tenant 2/29 Clause 17. Possession of the Premises 2/30 [...]... the lease or rental agreement 2/6 Clause 1 LEASES & RENTAL AGREEMENTS Identification of Landlord and Tenant This Agreement is entered into between (“Tenant”) and (“Landlord”) Each Tenant is jointly and severally liable for the payment of rent and performance of all other terms of this Agreement Every lease or rental agreement must identify the tenant and the landlord or property owner—usually called... renting to pet-owning tenants a satisfying and profitable experience The SPCA offers landlords: • checklists to help screen pet-owning tenants • pet policies to add to standard leases and rental agreements, and • free mediation if landlords and tenants have pet-related problems after moving in For more information, contact the San Francisco SPCA at 2500 16th St., San Francisco, CA 94103, 415-554-3000,... clean, sanitary, and in good condition and, upon termination of the tenancy, return the premises to Landlord in a condition identical to that which existed when Tenant took occupancy, except for ordinary wear and tear; (2) immediately notify Landlord of any defects or dangerous conditions in and about the premises of which Tenant becomes aware; and (3) reimburse Landlord, on demand by Landlord, for the... nuisance by annoying, disturbing, inconveniencing, or interfering with the quiet enjoyment and peace and quiet of any other tenant or nearby resident This type of clause is found in most form leases and rental agreements Although it contains some legal jargon, it’s probably best to leave it as is, since 2/26 LEASES & RENTAL AGREEMENTS courts have much experience in working with these terms As courts define... housing laws governing landlords’ repair and maintenance responsibilities (Appendix 1 includes citations for the major state laws affecting landlords Check your statutes under headings such as Landlord Obligations to Maintain Premises.) 3 Clearly set out the tenant’s responsibilities for repair and maintenance in your lease or rental agreement (See Clauses 11, 12, and 13 of the agreements in this chapter.)... remind tenants of their repair and maintenance responsibilities Respond promptly and in writing to all repair requests, keeping copies in your file 9 Once a year, inspect all rental units for safety and maintenance problems, using the Landlord-Tenant Checklist as a guide Make sure smoke detectors, heating and plumbing systems, and major appliances are, in fact, safe and in good working order (Keep... the duration of the tenancy, and to furnish proof of insurance on a yearly semiannual basis Several times in this book, we recommend Every Landlord’s Legal Guide by Marcia Stewart, Ralph Warner & Janet Portman (Nolo) It is especially useful for its detailed discussion of landlords’ and tenants’ rights and responsibilities for repair and maintenance under state and local laws and judicial decisions It... said what to whom, when, and in what context PREPARING A LEASE OR RENTAL AGREEMENT B Completing the Lease or Rental Agreement Form This section explains each clause in the lease and rental agreement forms that are provided in this book Both forms cover the basic terms of the tenancy (such as the amount of rent and date due) Except for Clause 4, Term of the Tenancy, the lease and rental agreement forms... dangerous conditions on the property and fix them promptly Reduce risk exposure as much as possible—for example, by providing sufficient lighting in hallways, parking garages, and other common areas, strong locks on doors and windows, and safe stairs and handrails 2 Scrupulously comply with all public health and safety codes Your local building or housing authority and health or fire department can provide... by state law and, sometimes, also by city ordinance The law of most states dictates how large a deposit you can require, how you can use it, when you must return it, and more Several states require you to put deposits in a separate account and pay interest on them The use and return of security deposits is a frequent source of disputes between landlords and tenants To avoid confusion and legal hassles, . Deposits States That Require Landlords to Pay Interest on Deposits Attachment to Florida Leases and Rental Agreements (Security Deposits) State Laws on Landlord’s Access to Rental Property 2 Tear-Out. Successful Landlord 1/2 LEASES & RENTAL AGREEMENTS T he rental agreement or lease that you and your tenant sign is the contractual basis of your relationship. Taken together with the landlord-tenant. in writing. Oral leases or rental agreements are perfectly legal for month-to-month tenancies and for leases of a year or less in most states. While oral agreements are easy and informal, it