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Home > Lowe's for Pros > Rethinking Rental Agreements

Rethinking Rental Agreements

By Erin Golden

As a property manager, you already know how important it is to find and keep good tenants.

But even the most well intentioned renters and landlords can run into problems if their expectations of each other are unclear. Your best bet for avoiding trouble down the road? Make sure you take care to put together a rental agreement that covers all the essentials — and protects you and your tenants.

Getting Started

Writing a contract doesn’t have to mean reinventing the wheel. Many local property owners’ associations or other groups have standardized forms available.

Kevin Anderson, a paralegal and the director of leasing for Cogir Management Corp. in Whitby, Ont., says the forms are valuable because they’ve been drafted by legal professionals familiar with landlord-tenant laws and have been successfully used again and again. He said the Federation of Rental-Housing Providers of Ontario has a particularly useful form.

“The people who prepared the forms have already been through all of this for years,” Anderson says. “And (the forms) are fairly cheap to buy.”

The Basics

No matter how you personalize your contract, it almost always needs to include a few key points, says Kevin O’Hara, president of the Institute of Housing Management, a Toronto-based professional association geared towards property management. These are the basics generally included on a standardized form. Among them:

When and how the tenant should pay the rent – and how the landlord should be contacted if the tenant is unable to pay. If late fees are allowed in the given jurisdiction, then it should also be clearly stated in the lease as well.

Who will occupy the unit, especially since O’Hara says some landlords are more particular about limiting visitors or additional guest so it’s important to lay out the expectations early on.

The date the tenancy will begin and end, whether it’s a year lease, month-to-month, or some other variation.

Detail which services will be involved in the rent. For example, is parking included, or will the tenant be charged an extra fee? Is laundry an added service?

Specify which utilities are the tenant’s responsibility. These might be additions to a standardize form.

“I think it’s a lot like a collective agreement between employers and employees,” O’Hara says. “The contract sets out exactly what to expect from the other party.”

It’s also critical to spell out the reasons a tenant could be removed from the property, Anderson says, such as allowing additional people or pets into the unit, failing to pay rent or disabling safety devices like smoke detectors.

Get Legal Assistance

Because laws can vary from city to city, and province to province, enlist the help of a lawyer or paralegal to help ensure your contract can stand up in court.

“There are decisions in the law, through the courts, daily that professionals are aware of, and that should be included in the agreements,” Anderson says. “A normal layperson wouldn’t know those types of things.”

It’s important to note that even if a tenant signs a lease, the document might not stand up to a legal challenge if its terms don’t follow the law, he says, such as requiring tenants to give post-dated cheques or paying for a portion of repairs.

Getting the rules on paper is vital if there’s a chance of a legal challenge down the road. That also extends to ongoing expectations for tenants, Anderson says. Make sure the tenants are responsible for submitting maintenance requests in writing, so those kinds of interactions are documented.

“It also puts the onus on the tenant to inform you of any damages that could cause further damage,” Anderson says. For example, if the tenant doesn’t inform the landlord that they have bed bugs, the landlord can’t be held responsible for the time he or she wasn’t advised, Anderson says.

Focus on Safety

Good agreements are written to keep both landlords and tenants safe. Often, that means writing in specific rules for unique situations.

O’Hara says he manages a property where the leases include specific provisions about swimming pools: tenants can install pools, but only a certain size and depth. His agreements are also clear on the expectations about tampering with safety features. Disable a smoke detector, and you can be evicted from the property right away.

He says it’s important to do the hard work of writing a comprehensive lease ahead of time, rather than struggling to make up and defend rules once your tenants have already moved in. Landlords should always be sure to have a contract, a written lease in place before allowing a tenant to move in.

“You don’t want to be embarrassed later,” he says. “Make sure you get it right.”

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