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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