A verbal lease… A mutually agreed arrangement with no documentation to back it up, or no specifics about what happens if….
Do you see a problem with that?
Unfortunately many landlords don’t.
I’ve even seen some talk about it as a point of pride, “I’ve been doing this for x amount for years and I’ve never needed a lease!”
Until you do…
A Verbal Lease Is Not OK
They’re not, they leave you too vulnerable . Vulnerable to individuals who knows how to take advantage of your lackadaisical attitude towards paperwork.
And those people are out there.
You’re even vulnerable to generic situations where it’s something as innocuous as the yard maintenance, or smoking or wear and cleaning up when they move out.
With a verbal lease any potential are of conflict degrades down to a he said she said scenario or defaults to generic law for where ever your property is located and you can be pretty sure the generic rules are not designed to benefit the greedy landlords.
And yes I know we’re not greedy landlords, but the laws rarely seem to reflect that, so we need to be aware.
Big picture you want a lease in place that is entirely legal, but manages to still give you control of the situation.
That can only be accomplished by removing the generics.
So What Does A Lease Need?
Obviously it needs to include information about who’s living there (the tenant(s)), the landlord and the address of the property.
But it should also include specifics about the type and length of the lease. How much the rent is along with any deposits or last month’s rent prepayments. Whether it’s a fixed term and if so, how long is the term or if it’s a month to month.
Note: Depending on where you’re located month to month and fixed term have different implications. In many areas month to month gives the landlord control, yet in other areas month to month gives all the control to tenants, so know what works best in your area!
It should also include specific information about pets, smoking and many other issues that can pop up and cause you more work down the road or loss of potential income.
All of course in line with any local landlord tenant laws that could affect it.
It should include information about what happens if there is a disagreement. As in what rules take place. Typically the local landlord tenant act takes precedent, but what if if fits between the cracks? Your lease should address this.
Basically you want your lease to cover any generic issues that could cause problems.
How Long Should Your Lease Be?
Long enough to protect you, short enough to get through it.
I’ve had landlords tell me there lease is just two pages, I’ve heard of others who have a 25 page document.
Personally I think two pages is too little and 25 is far too many.
Two pages doesn’t cover enough and 25 pages goes too far into the minutia which means no one will ever read it anyway.
My lease is eight pages long and actually has a ton of extra material in it that I can easily remove with a big X that both the new tenant and I initial or I can edit out before presenting to the tenant.
There’s really no perfect size and I’ve added and removed phrases and clauses over the years as laws change or my requirements change and as I realize there are better wordings or paragraphs that need to be added, or that I simply missed.
It’s really a learning experience but the important part is you need a solid base to start from.
Where Do I Get A Good Rental Lease?
There are many great places to find a good local rental lease.
From apartment and landlord associations to Real Estate investment groups and even your lawyer.
An experienced Real Estate lawyer are going to be your best legal lease, although the associations and groups often have additional information or clauses they’ve learned through their experiences locally as well.
You might even want to start with a generic local lease and have your lawyer fix it up to suit you.
Of course there are some reasonably good leases you can pick up online through places like LegalNature or LawDepot. Personal self interest plug here as below are affiliate links for both which means I get a small commission from them if you end up purchasing via those links, so thanks in advance…
Wherever you find your lease, you should make sure you read through it every year, or even before every new tenants to see if maybe, just maybe there is anything new you should add or you should update.
There’s no such thing as a perfect lease that lasts forever, you may end up with a great lease that simply continues to evolve as you learn and gain more experience as a landlord.
Where did you get your lease? And how long is it? Or what did you find out you needed to add through your experience? Leave a comment below so I have an idea of what you’ve learned!