RinconVentures

Tucson's Premier Property Management Company

rental property

How to Successfully Review and Clarify Lease Agreements with New Tenants

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Leasing out a property to tenants is a business agreement.  This means you are allowing others to lease your property for a determined price and length of time. The lease conditions are extremely important and equivalent to a business arrangement and must be taken as such. There are many who rent out properties, but few who understand the importance of personally going over the lease, slowly and carefully, with the would be tenant(s). Let’s assume that your lease may allow for only two tenants. But your tenants overlook it and in about a couple of months, invite additional friends or relatives over to live at your property. This will mean a higher use of your property resources which may not have been agree upon.

A perfect way to avoid a similar situation is to go through every line of the lease document thoroughly and make sure that there is complete transparency between lessor and lessee.

Let us now go through the things to keep in mind while reviewing a lease with a new tenant:

1. Allow ample time for the new tenant to read and understand the lease terms on their own. This will allow them to relax during the meeting and to not feel rushed. Accordingly, they will be more involved and invested in the meeting with you, making it a pleasant experience for both parties.

2. Bring the lease agreement with you to the meeting, as without it, the discussion holds no value whatsoever. Your tenants don’t know you and there is no reason why they should take you at face value. Besides, if you miss an important clause, which you are bound to, you could end up with an angry tenant down the line.

3. A lease agreement may be easy to comprehend for you and you may have gone through a number of them. But for your new tenant, who may have only seen your lease once or twice, this can become a complicated situation. You need to be patient and go through every line with them and allow them to question you on the terms and conditions. However, here the customer/tenant might not even be interested in reviewing terms and conditions. In that case, you should proactively ask them to question you on the lease. This will not only give your tenant(s) a confidence in you but also make sure that every single condition of the agreement is crystal clear to them.

4. Concentrate and emphasize on the most critical points of the agreement. Make it perfectly evident to your client that you mean business and want them to be on the same page as you. Things like the length of the agreement are important and should be communicated thoroughly and clearly. A tenant is also a customer, paying you for the services rendered in your property. Therefore, if he or she looks bewildered or unhappy, probe them further for clarification. Make sure not to leave any stone unturned while discussing the agreement.

5. The creation of the agreement that you create for your lease is solely up to you. Consequently, the responsibility to clarify the same to a potential tenant is on your shoulders as well. There may very well be a number of unusual terms/clauses on your lease agreement which may be confusing or strange to the tenant. Here, you must understand the necessity and thoroughly explain why a particular clause was necessary to be included.

6. It is important for you to maintain an air of friendliness mixed with professionalism when you are dealing with tenants. This will keep the discussion concise and comprehensive without your tenant feeling uncomfortable or rushed. Friendliness ensures that your tenant(s) can feel relaxed and take their time to ask questions and clarify any doubts. Professionalism ensures that you don’t speak out of context, or say anything inappropriate or slang. Your tenant(s) should respect and trust you as it will lead to a working business relationship between you and them.

Any lease agreement is full of regulations and conditions, and for any tenant, these are new. As their future landlord, they need to see you as someone responsible and trustworthy. It needs to be established that the agreement is entirely legal and justified; the terms perfectly clear to them. After all, we all look for honesty and transparency when signing any contract.

Security Deposit Management

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Security deposits are important to ensure a profitable return from renting a property, especially to make sure that both the property owner and the tenant respect the clauses of the tenancy.

We shall delve deeper into the topic and discuss the best ways to manage your deposit money. It is reasonable to expect the best returns and profit when renting out your property to others and we shall point out the important factors in this regard.

Landlords need to keep up with a lot of information when renting out and taking security deposits. As legal matters go, these must be treated with caution and followed religiously. You don’t want to wind up unprepared in front of a judge on a security deposit issue.

Here Are What You Need to Remember:

1. Create a video of your property that reflects its condition before renting out and after the tenants move out of your property. A video is the ultimate tool to have in your hands. It provides an indisputable evidence of the situation and nobody will argue with what they see with their own eyes. You could send copies to your tenants and even present it in the court of law, should a case be raised.

2. Discrimination is a major offense while asking for a security deposit. In Arizona, as per law, the maximum deposit you may ask for is a month and a half’s rent. You may be penalized if you discriminate between tenants having children and those without while asking for a security deposit. The security deposit amount will, under no circumstance, be increased beyond what is stipulated.

3. Determination of damage can be a difficult task while deciding what actually qualifies as damage in your property. If a tenant moves out and you find the general look of the house old and used, it’s not a good idea to expect compensation. Arizona law states that while living at your property, a tenant may cause a little amount of wear and tear to the property.

4. Establishing trust accounts for security deposits is important in the event of any legal issue where your funds may be forfeited otherwise. Always keep a separate security deposit trust fund to ensure you don’t mistakenly spend the deposit amount.

5. There are very stringent rules/guidelines about returning the security deposit to your tenant. Make sure you know about the timeframe and act on it. There are serious legal ramifications in case you do not refund the money on time to your tenant. Should you choose to keep a part or all of the security deposit, make sure that not only is there a valid reason for it but also solid evidence. Presentation of evidence during court proceedings is vital in a case of a dispute.

6. To prevent any future troubles, it’s prudent to be wary of the number of pets a tenant may possess and act accordingly. It important to determine whether a deposit should be refundable or a non-refundable. The latter is more appropriate should you lease the property to a tenant with many pets as it’s almost a certainty that pets will damage your property to an extent. It’s best to retain one or two pets to keep the security monies viable for the tenants and to prevent your property from excessive damage.

Some Things to Remember about Hiring or Firing Property Managers:

1. Keep an eye out for how much your property manager is charging you for his work. There are certain tasks like registration etc. that may be inexpensive but you may be overcharged for. This a good indication that you need to look for a new property manager.

2. Make sure that you understand their accounting statements. Complex software and user interface can be really frustrating as you won’t know where your money is being channeled to. After all, everyone wants to keep perfect track of their money and so do you.

3. In case of your house being vacant for a long time, you need to find out what’s not right. Inquire about the property manager’s marketing methods and how much time they are giving to your cause. Also, you need to make sure if the price is too high or how many leads you are getting on the advertisement. Just make sure that all the bases are covered and your manager is efficient.

4. Observe whether your property manager is a good communicator. They need to follow up with the advertisement results and with any offers they might have received. If the follow ups are few and far between, then that’s a cue to look for a better property manager.

A Few Final Words On the Matter:

Renting comes with stipulations and State Laws that need to be adhered to. Any non-compliance can lead to unnecessary trouble. A number of pointers as mentioned above are crucial to a successful landlord-tenant relationship and a good property manager will complete that deal for you with minimal hassle. So, keep to the laws of your state and be sure to hire a reputable property manager who would handle your property issues.