How You Might Get Screwed Over When Renting An Apartment | The Financial Diet
How to Understand Your Apartment Lease
Real estate leases can be intimidating – they are often quite long and the language can be confusing. As a result, many people will sign the lease without actually reading, or understanding, the entire document. Landlords can include all sorts of different provisions in the lease. Once you sign the contract, these terms are legally binding. It is important to take as much time as you need to understand your apartment lease. By doing so, you will be much better prepared to handle any conflicts or problems that may arise during your tenancy. If you continue to have questions about your lease, you should consult with a licensed real estate broker or a real estate attorney in your area.
Identifying the Parties and Property on the Lease
Make sure that your name is clearly and correctly recorded.In most standard written leases, one of the first paragraphs will be the identification of the parties. You will need to make sure that you are correctly identified as the tenant. If you are renting with a roommate, spouse or family, you should make sure that everyone who is legally responsible for the rent is named as a tenant.
- You can find a Sample Rental Agreement at . This template includes general terms that will be acceptable in most states. In the Sample Rental Agreement, the parties are identified right away in paragraph 1.
- If you are married and have children, the children are not going to be named as tenants, because they will not be legally responsible for the contract. However, you may check to see if the lease contains a paragraph about children or a section to name everyone who will be living in the apartment. On the Sample Rental Agreement, you would list children in paragraph 7.
- If you are renting with a roommate, you and the roommate should decide how you will share the liability for the lease. In most cases, the landlord is likely to want to name both individuals as tenants. In that way, if one tenant defaults or moves away, the landlord can still hold the other tenant responsible. It is usually in your best interest to have all roommates named on the lease, so you don’t get stuck with the entire legal responsibility.
Understand who your landlord is.The person showing you the apartment and discussing the terms with you may not be the owner of the property. For a large apartment building or complex, the owner may be a corporation or someone who does not even reside at the property. The lease should clearly identify the landlord.
- On the Sample Rental Agreement, the landlord is also identified in Paragraph 1.
Look for the identification of a property manager or other responsible person.If the owner does not reside at the property to take care of any concerns that might arise, you will want to make sure that you know who to contact for any problems. Look for the name of a property manager or supervisor, with a way to contact him or her at any time of day with a problem.
- Consider the possibility that your heat could go out or a pipe could burst in the middle of the night. You need a telephone number for a person you can contact at any time.
- The Sample Rental Agreement does not contain a notice provision of this sort. You may just ask the landlord to provide you with the information, or you could attach it as an extra provision (see Paragraph 21).
Find the definition of the property you are renting.Although it may seem obvious, the lease must include a clear statement of the property you are renting. Make sure that the apartment is clearly identified by number or description. The identification should include at least a brief description of the apartment, such as the number of rooms, bathrooms, closets, and so on.
- In the Sample Rental Agreement, Paragraph 2 defines the property. Paragraph 5 then provides a description of fixtures and other property that is included with the apartment.
- A lease in an apartment complex with multiple similar units may will attach a floor plan of the apartment.
- If you are renting a space in a townhouse or single family home, for example, there may not be an apartment number. The lease may just have a description, such as “Second Floor apartment at 276 Grove Street, with use of communal bathroom and first floor kitchen.”
Finding the Details About Rent Payments
Know the amount of your rent payments.When renting an apartment, perhaps the most important detail is the rent. This needs to be stated clearly, usually in one of the first few paragraphs of a lease contract. Make sure that the rent stated in the contract matches what you and the landlord have agreed.
- In the Sample Rental Agreement, you can find the rent clause at Paragraph 4.
- Avoid “side agreements.” Sometimes, a landlord and tenant might agree to print one thing in the lease contract and then agree privately to something else. For example, they might agree privately on monthly rent of ,300, but report a rent of ,600 so the landlord in the future might be able to rent to someone else more easily for a higher amount. You must understand that, in case a problem or dispute arises between you and your landlord, the court is going to uphold what the written lease says. In this example, it could be possible for the landlord to turn on you and demand an additional 0 each month.
Agree on the timing and due date for the rent payments.The lease should define when your rent payments are due. Usually, payments are to be made by the first of the month, although some leases will call for payments on the last day of the month or may set a specific date in the middle of the month.
- Paragraph 4 of the Sample Rental Agreement defines both the amount of the rent payments and the due dates.
Read any provisions about a grace period for late payments.You should always get your rent paid by the due date. However, most leases will include a provision for a grace period. With this, if you make your payment within 5, 10, or sometimes as many as 15 days late, the landlord will accept the payment and take no action against you.
- The Sample Rental Agreement says nothing about late payments. On one hand, this is beneficial to the tenant because it limits the landlord's ability to charge a late fee. On the other hand, you are not protected by a grace period, and the landlord could just declare you in default of the contract on the first day that you are late. It would be a good idea to negotiate for a grace period and add that to the lease.
- Be careful about relying on the grace period. Even though the landlord may not impose a penalty or take any action against you for a payment that is only a couple days late, he or she may still take note of the fact that the payment is late. If you need a referral from the landlord to move to another apartment someday, it will not serve you well if the referral says that you made every payment late.
Understand the penalties for any late payments.In the same provision about rent payments, you should find an explanation of the landlord’s right in case your payments are late beyond the grace period. This may range from a small penalty fee to possible eviction.
- State laws often regulate the amount a landlord may charge as a penalty. If you believe that the lease allows a penalty that seems unreasonable, you should check with a real estate lawyer or local housing board.
Look for any statements about the landlord’s right to increase the rent.The lease should define any changes that are planned in your rent, or describe when and to what extent the landlord may increase the rent. For example, if you sign a multi-year lease, it would be reasonable to include a provision that allows the landlord to increase the rent at the end of each year by a limited percentage.
- Some state laws limit rent increases, while other states do not.
- If the lease does not address the issue of a rent increase, then the landlord must honor the rent amount for the duration of the lease. If the lease expires or reverts to a month-to-month lease, then the landlord would be entitled to issue an increase.
- The Sample Rental Agreement says nothing about rent increases.
Reviewing the Term of the Lease
Be sure that the start and end dates are clearly stated.The lease should clearly identify the first and last dates of your tenancy. Usually, this will be planned to begin on the first of a month and to end on the last of a month, although you and the landlord can agree to any start and end dates that you wish.
- If you need to move in before the first of the month, you may be able to negotiate with the landlord for an earlier state date. If the property is empty anyway and is ready for you, the landlord might be willing to let you move in early and pro rate the rent for a few days.
Look for a statement about the period of the lease.Apartment leases usually last for either a year or are month-to-month. Some may also be multi-year leases. These different lease types have different pros and cons, which you will want to consider in negotiating your agreement.
- An annual lease lasts for one year, and you and the landlord would have the right to negotiate a new lease at the end of that year. This provides you security for a year, that you have a home, but has the flexibility of being able to move out at the end of that time if you wish.
- A multi-year lease lasts for usually two or three years, although some residential leases run even longer. In some high end apartment complexes, where residents tend to be more stable, a multi-year lease may be more common.
- A month-to-month lease provides the most flexibility but the least security. You have the ability to give notice at almost any time that you are moving out, as long as you finish out the month. If your plans are unstable, this may be the lease you want. However, a landlord also has the right to terminate the agreement on short notice and have you move out. The landlord also has more opportunity to increase your rent in a month-to-month lease.
- The Sample Rental Agreement defines the term of the lease in Paragraph 3. However, if you read it closely, the language is not very clearly written. It is unclear whether the lease is intended to be a month-to-month or an annual lease. If the starting and ending dates are a year apart, that would imply an annual lease, which reverts to a month-to-month lease at the end of the year.
Check for the notice requirements to renew the lease.In almost every jurisdiction, you do not need to do anything to remain in a month-to-month lease. However, you should read the contract carefully to understand what you must do if you wish to renew an annual lease or a multi-year lease. Usually, you will need to notify your landlord at least 30 or 60 days before the original expiration date of the lease. That will give you and the landlord time to negotiate any new terms for a revised lease. Some leases will renew automatically for an additional year, unless you notify the landlord that you are leaving.
- In the Sample Rental Agreement, when the initial term of the lease expires, the lease will continue as a month-to-month lease. This is defined in Paragraph 3.
Read the details about what you or your landlord must do to terminate the lease early.Every lease should contain instructions about early termination. This will apply to both the tenant and the landlord. Read the provisions to find out how much notice you must provide if you wish to leave, and how much notice the landlord must provide if he or she wants you to leave early. (Early termination by the landlord may not be allowed in many places.)
- This notice must usually be provided in writing, to a certain person at a particular address. Pay attention to these details.
- In the Sample Rental Agreement, early termination is addressed in Paragraph 20. Don't be confused by Paragraph 16, which is called "Termination." The provisions of Paragraph 16 focus on the tenant's departure from the unit at the regular end of the lease.
Understanding the Services that are Provided
Find out who is responsible for paying the utilities.In addition to rent, paying for the utilities can be one of your greatest expenses. If the utilities are included in the rent, this can represent a great savings. You need to make sure that the lease defines which utilities are included with the rent and which ones are not.
- The Sample Rental Agreement provides a good example of a way to spell out the responsibilities for utility payments, in Paragraph 9.
- If you are responsible for paying for certain utilities, find out if you must use certain vendors or if you may shop around for better prices.
Make sure the lease clearly describes the maintenance responsibilities.You need to understand which maintenance tasks are your responsibility and which are the landlord’s. In general, the tenant will be responsible for minor repairs within the apartment, and the landlord will take care of more extensive work (plumbing, heating).If you have any question about what you might be responsible for doing, you should ask and have it clarified in the lease.
- According to the Sample Rental Agreement, the Landlord will provide most of the maintenance services (Paragraph 18). Additional provisions require the tenant to make regular repairs to minor damage (Paragraph 11) and to maintain the property in a regularly neat and habitable condition (Paragraph 9).
Be sure the lease clearly describes any services that are included with the lease.Anything that the landlord described when you were deciding on the apartment should be included in the lease agreement. This may be anything from available laundry facilities to use of a swimming pool to trash removal. If something was represented that is important to you, make sure that it is included in the lease.
Knowing the Details of your Security Deposit
Agree on the amount of the security deposit.A standard part of any lease agreement is the security deposit. For most leases, the security deposit will be equal to one month’s rent, although different amounts can be negotiated. The security deposit is an amount that you must pay your landlord, which he or she will keep until you leave. The lease should contain the rules about the landlord’s handling of the security deposit in a secure account and should explain when the landlord must return it to you.
- The Sample Rental Agreement defines the security deposit in Paragraph 6.
Understand the conditions that would allow your landlord to keep your security deposit.The lease needs to contain provisions that address when the landlord is allowed to keep your security deposit. Usually this will be for damage to the apartment, or for nonpayment of rent. According to many standard leases, the landlord must provide the tenant with written notice if he or she intends to keep any part of the security deposit, with an detailed explanation of the reason.
- In many cases, the security deposit is to be kept in an interest-bearing account for the duration of your tenancy. Ask your landlord about this if you do not see it in the lease agreement.
Review the details about the return of your security deposit.The contract should explain when you are entitled to receive your security deposit. Usually this will be some time after you leave the apartment, with a reasonable amount of time for the landlord to get in and inspect and clean behind you.
Attaching Additional Documents or Provisions
Be sure that the lease contains your entire agreement.Any details that are important to you must be included in the written lease agreement. If they are not included, you need to have them added. If you and your landlord ever have a dispute about your lease and need to go to court, a judge is going to interpret the written lease as it is. It will not help for you to tell the judge, “But the landlord said...,” unless you can prove it somehow.
- No matter how “nice” your landlord may seem when you are moving in, you must have every part of your agreement in writing. The landlord may smile and tell you that “of course dogs are allowed,” but if you don’t put that in writing, he could change his mind and tell you to get rid of your Great Dane after two months.
Add any documents or additional pages for terms that are not already included in the lease.This may include such issues as smoking, subleasing, or allowing pets in the apartment. Many standard leases are just form agreements. To personalize them, you and your landlord may type additional agreements and attach them. If you do this, make sure that the attachments are identified and referred to as part of the original lease.
- For example, a common paragraph toward the end of the lease may be labeled, “Additional Agreements,” or something similar. This will be the place for you to identify the name of any added documents. Additional provisions are referenced in the Sample Rental Agreement in Paragraph 21. Although that paragraph does not include space to define any attachments, it would be a good idea to name any attachments, even in the margin of the page, and have both parties to the lease initial the addition. Then attach the extra page or pages.
Sign or initial and date any attached pages.Any added agreements must be separately signed or initialed by the parties to the original lease. You should also date any attachments, preferably with the same date as the lease agreement itself. These additions are to be part of the original agreement, so they should contain the same formalities as the original agreement and should match the original as much as possible.
- If you are working with a real estate agent to rent the apartment, the agent will likely have a standard form lease. These forms are usually designed very carefully to comply with applicable local and state real estate laws. Nevertheless, don’t assume that you must agree with everything in the lease form. If you have questions or want to negotiate any different terms, speak up.
- If necessary, you may want to consult with a real estate attorney to help you understand any questionable lease terms.
- Be sure to keep a copy of the lease. When you and the landlord sign the agreement, ask for a copy of your own, and keep it somewhere safe. You may need to refer to it occasionally.
- The written lease is going to control your relationship with your landlord for the duration of the lease. Make sure that you understand it completely. If there are any terms that you do not completely understand, ask the landlord or real estate agent to explain them.
Video: Five Things To Do Before Signing A Lease
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