Property Management Agreement (image: c-rem.com)
Are you a do-it-yourself landlord? Did you use a generic off the shelf lease agreement? Well, we have news for you since your lease agreement might not be valid and will not survive a court challenge if it does not contain these clauses:
1) Fully Executed: Without signed agreement by both parties, a lease agreement might not be recognized as valid. All roommates who are staying in the property also have to sign the agreement.
2) Terms of the Lease: A valid lease should contain the start and end of the term of the agreement. Typical residential lease agreement are for 1 year, but there are standard contracts for month-month as well which we recommend using in California. In fact, it’s often smarter to use month-month rental lease agreements to avoid any possible delays in eviction if your tenants refuse to pay.
3) Payment Details & Terms: The lease agreement should outline the payment requirements including the security deposit. The agreement should also document the penalties for late payments along with the ramification of missed payments which could be eviction. The lease agreement should also identify when and where the payment needs to be made. You can offer your tenants the option to drop off the payment at your office or mail it. This clause also identifies penalties for late payment.
4) Leased Space: Your lease agreement should include the property address and define the space that is subject to the the lease agreement. For example if you are leasing a detached Studio on your property, the contract should have your home address, but should clearly identify that the lease only applies to the studio and not the main house. Without such definition in the lease agreement, your tenants could claim that they should have access to the entire property and not just the studio.
5) Utilities: The terms of the lease must identify if any of the utilities are covered by the landlord. This clause should also identify if the tenant has to establish direct service with the utility companies or if the costs would be shared. Be aware that some utility companies such as trash collection could place a lien against your property if the tenant is not making timely payments.
6) Inspection & Entry Rights: A well developed California lease agreement would include terms and conditions under which the landlord can enter the rental unit. Landlord has the right to enter the property to handle any emergencies such as electrical or water damage. This clause can also include routine inspections that property manager or the landlord can require from the tenant.
7) Terms of Use: This clause in the California lease agreement should define how many people are supposed to occupy the property. This clause will also prohibit any attempts to sub-lease your property.
9) Renewal Terms: A lease should include the renewal terms under which the contract would be extended for another term. You can also include a rent acceleration as part of the renewal terms.
As you can see negotiating a lease for your California property is not a trivial matter and the legal language included in all these sections of the contract can create unnecessary risk for landlords. That’s why we are convinced that hiring a property manager for your California home is worth the extra pay.
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