Tip #55

A Lease Must Be Fair and Reasonable

Written on July 30, 2015 by , updated on February 13, 2016

Fair and ReasonableOver the years, and with multiple lawyers, I have meticulously crafted a rock-solid lease agreement.

It’s the foundation for the entire landlord-tenant relationship, and though I realize my lease is not perfect, I do believe it equally protects the rights of both myself and my tenants.

A Hard Lesson

In my newbie years as a landlord, my lease was incredibly slanted in my favor – to the point where it was blatantly unfair (why not, right?).

I had used a “free” lease template that I found on the internet, and plugged in my specifics, and tweaked the clauses to say whatever I wanted. I was 25 years old, and was a live-in landlord. I thought, “it was my house, I can do whatever I want”.

“it was my house, I can do whatever I want”

I thought it was okay to disregard my state’s statutes on landlord-tenant law, and figured that I was “safe” because they signed the contract. Right?!?!

Little did I know that a Judge could throw out my contract, with a blink of an eye, if it’s not “fair and reasonable. Those “free” leases aren’t so free when you are being sued by your tenants!

Those “free” leases aren’t so free when you are being sued by your tenants!

The difficult lesson that I learned was that a proper lease agreement is both fair and reasonable.

A lease should specify the rules by which both parties must to play the game, but doesn’t force either the landlord or tenant to waive their legal or natural rights.

Unfair Leases Create Strife

Every single day, I receive dozens of emails and comments from tenants who signed into an unfair lease.

Common examples of unreasonable lease clauses include:

  1. Excessive late fees that are more than 10% of the rent.
  2. Landlord can drop by whenever, without notice.
  3. Landlord can terminate a “fixed” lease at any time, for any reason.
  4. Landlord forces tenants to waive the right to seek legal help or file a court action against the landlord.
  5. The tenant must hire a professional cleaning company more than 1-2 times a month.
  6. Forfeiture of the security deposit if the tenant violates any rules – even if the landlord doesn’t have any damages.
  7. Ability for the landlord to change the locks and throw the tenant’s personal property to the curb if rent is not paid on time.

Whenever a tenant experiences any of these lease clauses, they feel trapped and only see two options:

  1. Abandon the unit with little or no notice
  2. Stop paying rent and refuse to vacate
  3. Lash out at the landlord by maliciously trashing the unit

In either case, the landlord will likely lose thousands of dollars and may not have a feasible way to collect on any judgement they might win.

When a tenant feels unfairly used or taken advantage of, they act like a wounded animal that is backed into a corner. They behave illogically, and stop caring about the unit or the landlord.

Related: How to Grow Amazing Tenants

My Change in Perspective

I’ve spent hours adding to and tweaking my lease, trying to make it the best it can be – for both myself and my tenants.

As such, I’ve found that a fair lease nurtures a healthy respect, and a tenant is less likely to trash a unit during a dispute. Most tenants are reasonable people and hope that you’ll think the best of them until proven otherwise, rather than expecting the worst and having an unfair lease to suffocate their rights.

I believe a landlord should ethically and morally be able to stand behind every clause in the lease agreement. Realistically, you might be forced to justify your lease in court one day – and “I didn’t know” or “they agreed to it”, won’t hold up.

Every landlord has an obligation to ensure the lease is legally compliant with state and local laws, and I think it’s in your best interest to have your lease reviewed by a licensed landlord-tenant attorney.

To summarize, it really all boils down to the golden rule: treat your tenants how you would like to be treated, and you will earn their respect.

Treat your tenants how you would like to be treated, and you will earn their respect.

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14 CommentsLeave a Comment

  • Eli Elysee

    Lucas,

    I don’t know how this translates to the other states, but in NYC, two lawyers advised me that when renting out rooms from a private property, it’s best to have no contract and do only month-to-month. The reason being that if you make the mistake of bringing a predatory tenant squatter into your home who does not want to leave nor pay rent, there’s a better chance to get them out a bit sooner.
    In addition, many judges tend to rule versus room renting owners specially in single family properties overlooking fairness and balance regarding a bad tenant citing technical lodging laws. This happened to me with a NYC judge.
    I just wanted to share this bit of info.
    Can you elaborate a bit more about this kind of situation?

    • rod Kreinbrink

      Very interesting. Think about it this way. You sign a contract with a person who is renting a room out of your home, and then the renter decides to stop paying the rent. Yes, you can give a three day right to cancel the contract under florida statutes, but it does allow you to just kick them out upon the street. If they refuse to leave on their own free will, you still have to go through an eviction process of which can easily take three months with all the sheriffs notices. If you rent month by month with no contract…….well, what do you have? Liability is the same under any circumstances. If they get hurt on the premises, you are responsible. Just thinking out loud….. Any opinions?

      • Eli Elysee

        Rod,
        Yes, I experienced the whole thing first hand with a woman defaulted after only one month living in my property. She apparently had done this before because she ignored the 3 days notice thing which to me is just an intimidation tactic that does not work with unscrupulous morally bankrupt tenants who knows how much ridiculous leeway that the typical housing courts give them.
        It took 6 months and a $5000+ hit before the woman left my premises. But usually through housing courts, by the time the person leaves or is removed, the damage is already done.
        The woman could have still go to court prior to the Sheriff’s arrival and possibly get more free rent in my home.
        So no clear cut end game through housing courts. System does not work.

    • Lucas Hall

      Hi Eli

      Personally, I enjoy having the security of a fixed-term lease, but I see what the lawyers might be saying. If someone stops paying rent, a judge *might* give that person more time if they had a longer lease than if it was only a month-to-month.

      But I think having a verbal agreement is very bad idea. You can still sign a written rental agreement that is only month-to-month. In fact, many of landlords do – for the sole purpose of documenting the rent price, deposit, and rules. Without a written agreement (regardless of the term), the tenant could claim anything he wanted, and you wouldn’t be able refute is (but nor could he prove it).

      I personally think that a written agreement benefits the landlord more than the tenant (regardless of the duration of the agreement).

      • Eli Elysee

        Lucas,
        You are right. We actually have a home protocol agreement.
        The lawyer stated that I have the option of a formal month-to-month agreement,
        or an agreement with the rental check as a confirmation of the month’s payment.
        I believe that the written check acts as an agreed upon amount for the month; and
        it thereby acts a short term contract as long as such detail is noted on the check.
        I definitely can see your point in terms of having terms that benefit
        the home owner. Thank you for the feedback.
        Cheers,
        Eli

  • DAN HUNTER

    I AGREE THAT A RENTAL AGREEMENT SHOULD ALWAYS BE BALANCED AND FAIR, HOWEVER I REMAIN A PROPONENT OF MONTH TO MONTH AGREEMENTS AS OPPOSED TO LONGER TERM LEASES. THIS PUTS PROPERTY OWNER IN A MORE LUCRATIVE POSITION AT ALL TIMES. ALSO, I LIKE TO KEEP MY LATE FEES SMALL. THE TENANTS LOVE IT AND IT ALMOST ENCOURAGES THE TENANT TO LET THE RENT SLIDE FOR A FEW DAYS WHEN THE LATE FEE IS AFFORDABLE. IF YOU OWN A LOT OF UNITS AND COLLECT A LOT OF LATE FEES, IT HELPS YOUR BOTTOM LINE BY AN APPRECIABLE AMOUNT.

    • Lucas Hall

      Hi Dan

      Thanks for sharing. If your late fee is relatively small, do you ever have tenants who wait a full month to pay late? Or are they mostly honorable and limit late payments to only a few days?

  • JR

    I have a lease term question – if a tenant signed a twelve month lease, yet the actual dates specified on the lease agreement are for only eleven months, which one holds up? For example, the lease was supposed to be for twelve months from November 4, 2014 to October 31, 2015, yet the lease agreement states “twelve months from November 4, 2014 to September 29, 2015” in NC

    • Lucas Hall

      Hi JR

      That is a tricky one because your lease is in conflict with itself. In your situation, is there a disagreement about how long the lease is? I have no idea how a judge would rule here, but my gut says the shorter of the two would probably prevail. Just a hunch – not legal advice.

  • Bruce P

    I’m writing you again about a fixed term lease that expired on 10/31/15. Wanting a 1 year lease on 11/1/14, landlord had us sign a month to month rental agrmnt then changed the words “month to month” to “one year lease.” This fixed term lease was written on a document consisting of month to month legal jargon only. He then added additional terms onto the lease after it had already been signed. Terms stating we as tenants are responsible for repairs/replacing needing to be done, like the two 15 yr old A/C units totally incapable of cooling our Desert home down sufficiently enough. The old lease has expired and no new lease has been discussed at all. I view his moronic terms as unenforceable. Apparently he doesn’t. Who’s more right??

    • Lucas Hall

      HI Bruce,

      Once a contract is signed, it usually can’t be changed without both party’s approval. However, what proof do you have? Did you get a copy of it before he changed it, or is it your word against his? I believe you, and think he’s immoral and illegal for pulling this scam, but without proof, he’s the only one with a legal document. You might need to talk to a lawyer, and next time, get a copy of the lease at the time of signing. Good luck. Again, please know that I’m not a lawyer, nor is this legal advice.

      • Bruce P

        Thanks for responding, Lucas, but perhaps I wasn’t explicit enough in asking my question. The lease I’m referring to was a 12 month fixed term lease signed on 11/1/14. Extenuating circumstances (which I cannot go into) occurring that day prevented the lease from being signed in the proper way, thus allowing the landlord to add additional terms onto an already signed lease. I’m not disputing that issue from a year ago because I already know what’s done is done. However, given that our 12 mo lease has now been expired since 10/31 and neither side has done anything at all to renew it, what is the current status of that lease today anyway? If it’s expired, are the terms he added on after the fact still enforceable today? T Y V M!!

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