Get Your Agreements in Writing
Here's
why a handshake shouldn't seal the deal between landlords and tenants
From
the Nolo.com Landlord and Tenant Center
Not many years ago, small landlords frequently rented their
properties on the basis of a handshake -- reaching oral agreement with
their tenants on key terms such as the amount of rent and when it was
due. Landlords who did provide a written rental agreement or lease often
used a jargon-laden form bought at a local office supply store. It might
as well have been written in Sanskrit for all the practical guidance it
provided to tenants.
This
casual approach frequently led to problems, and it is even less likely
to work now. The landlord-tenant relationship has grown more complicated,
for several reasons: Today, laws and regulations govern all aspects of
renting residential property. There is greater turnover in tenants. Landlords
have more responsibilities, tenants have more rights, and small claims
court makes it easy to take disputes to a judge.
Heading
Off Trouble
A landlord who provides no written lease -- or one full of legal gobbledygook
-- often finds that the result is chaos. What happens if the fine print
in the lease (which neither the landlord nor the tenant actually reads)
says no pets, but the landlord turned a blind eye to the cat when the
tenant moved in? With no clear agreement written down, every small disagreement
-- whether it's over repairs, the fee for a late rent check or deductions
made from a departing tenant's security deposit -- has the potential to
escalate into a nasty legal battle.
There's
really no excuse for not putting a clear agreement in plain English. In
addition to heading off disputes, a good lease nudges the landlord to
deal with key issues that might otherwise be overlooked. The result? Happier
tenants and happier landlords.
Solving
Disputes
A solid, complete paper trail is invaluable if disputes do develop --
for example, regarding the landlord's right to enter a tenant's unit to
make repairs, or the time it took for the landlord to fix a problem. Landlords
can even run into trouble with someone they didn't choose as a tenant.
For
example, suppose Betty talks to six tenant applicants before renting one
of her units. Betty picks Applicant #3 because she feels he is most likely
to reliably pay the rent. Two weeks later, Betty gets a call from a lawyer
representing Applicant #5, who claims she was discriminated against because
she is African-American and a single mother. If Betty isn't willing to
pay $10,000 to settle the matter, she'll promptly be sued in federal court
for $50,000.
Because
Betty has no written documentation explaining how she picked Applicant
#3, her insurance carrier proposes to pay the $10,000. After all, they
point out, the fact that Betty picked a white male with no children looks
bad, especially since it turns out that the African-American single mother
has a higher-paying job.
Had
Betty been able to produce all the candidates' comprehensive written applications,
their credit reports and references from previous landlords, the result
would likely have been different. Betty would have had good written documentation
supporting why Applicant #3 was picked -- his credit history and job stability
were far better than that of Applicant #5, who had recently declared bankruptcy
and had poor references from previous landlords.
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