Why it’s Important to Update Your Lease Agreement in 2017

The most important value of a lease agreement is to protect a landlord. That being the case, why would you let your lease agreement become outdated? It’s extremely important to review and update your lease agreement each year. With the new year upon us, take the time to sit down with your lawyer and discuss any necessary modifications that will bring your lease agreement up-to-date.

Tenant Verification Service, Inc. recently posted a helpful article that outlined a list of leasing topics to consider:

  1. Short-Term Sublets:  Airbnb vacation rentals are booming, despite continuing controversy. In major cities, restrictions are in place that holds landlords accountable if tenants sublet short-term. Whether it’s the lack of tenant screening, poor supervision or overcrowding, short-term vacation rentals can greatly increase a landlord’s cost and liabilities. Prohibiting the practice within the lease agreement is the best solution. The rental home is for residential use, not for business. This could be stipulated within the lease with consequences outlined, such as eviction.
  2. Marijuana:  Several more states legalized marijuana use in 2016 which leads to a greater use overall. This can become a problem for landlords since the federal government has yet to remove pot from its list of illegal drugs. Also, marijuana use in multi-family properties triggers more tenant complaints, mostly over the smell. States that have legalized pot have witnessed an increase in apartment fires caused by tenants who distil marijuana into “wax” using butane. Landlords have the right to restrict marijuana use, including growing plants, in rental properties. These restrictions should appear in the lease agreement. But remember, each state is different. You’ll need to check to see what regulations have been set forth in your state.
  3. Crime:  There are a number of ways crime prevention efforts are affecting rental property management. For example, HUD has recently indicated that a landlord’s blank prohibition on criminal history during tenant screenings are discriminatory. And, rejecting or evicting a tenant due to an arrest may violate the Fair Housing Act. In recent years, language within a leasing agreement allowed landlords to sanction or evict a tenant after an arrest—for instance, in a Crime Free Multi-Housing Lease Addendum. However, if the landlord is investigated for housing discrimination, the outdated language could cause legal issues. Finally, several local governments recently passed “nuisance” or crime ordinances requiring landlords to evict tenants when police are called to the property. There may be disclosures that a landlord is required to include in the lease agreement.
  4. Rent Payment Options:  Many landlords continue to rely on the threat of late fees to encourage on-time rent payments, however, due to heavy regulations on the use of penalties, the average late fee is only $40. This minimal amount might even encourage cash-strung tenants to use a landlord like a line of credit. A more effective approach would be to Report Tenant Pay Habits by tracking all tenant rent payments in a database that is shared with a credit reporting agency. This will serve as a powerful incentive for tenants to pay on time.
  5. Regulations:  Local governments have been passing more and more restrictive rental regulations and rental laws have always varied from one state to the next—even from city to city. For example, Seattle lawmakers are working to keep landlords from collecting security deposits in advance while Arkansas lawmakers are trying to make the failure to pay rent a crime. Often, these regulations require disclosure that must be outlined in your lease agreement. This becomes challenging to landlords who own properties in more than one city or state while trying to use the same lease form for all properties.
    Over the past years, landlords have been called upon to stop crime, screen tenants for immigration status, and dole out voter registration applications. Besides the increased burden, many of these new restrictions don’t pass the sniff-test with judges. Ask your attorney whether some of these conflict with federal law and consider active involvement with a local landlord association. Many of these groups offer legislative updates, links to local experts and other resources.
  6. Joint and Several Liability:  Rents are soaring and for this reason, many renters are teaming up. What used to be the domain of college students is extending into the workforce. Millennial renters appear to favor roommate arrangements, but these tenants are more likely to move suddenly due to a new job prospect, marriage, or to buy a home. These tenants need to be informed of their responsibilities under the lease agreement. Remember, with roommates, it’s one rental home, one lease, one deposit, and one rent payment. Does your lease agreement make that clear?
  7. Landlord Tip: Clarity is key when it comes to enforcing a lease agreement. Tenants need to understand the language in the lease agreement in order to follow the rules. Make sure the lease is easy to read. Be particularly clear on provisions having to do with money.

Categories: Association / Owner Information

Hallmark & Johnson property management team has served or is currently serving the following Chicago and Chicago area locations: Austin, Avondale, Bronzeville, Chicago, Chicago Suburbs, Cook County, Crown Pointe, IN, DePaul Campus, Des Plaines, Devonshire, DuPage County, East Lakeview, Edgewater, Edgewater Beach, Evanston, Hyde Park, Lake County, Lakeview, Lincoln Park, Lincoln Square, Lincolnwood, Logan Square, Norridge, North Park, Ravenswood, Rogers Park, Saganush, Schiller Woods, Skokie, Sox Stadium, Uptown, West Loop, West Ridge, West Rogers Park, Wheeling, Wilmette, Winnetka, Woodlawn, and Wrigleyville.