Contract law is pretty straightforward. It would seem that whatever is spelled out in the lease agreement should be enforceable, so long as there’s a tenant willing to abide by them.
Unfortunately, that’s not how it works. Property management carries a significant level of regulation and local laws often supersede the language of a lease agreement, even if the tenant said they were good with it initially.
Looking at recent monetary awards against landlords across the country, there are three types of lease provisions that stand out as the hardest for landlords to enforce in today’s rental climate:
1. Fees A-Z
Lawmakers and judges have never been happy with landlords charging tenants fees. As a result, there a lot of limitations. That’s particularly true of application fees, but it applies to late fees as well. Other “move-in” fees are viewed with skepticism. It’s a dangerous trap to believe that because a landlord has “always” charged that fee, it must be alright.
Landlords cannot use fees as a profit center. In a best case scenario, illegal fees will have to be returned. But the worst cases start with one tenant who complains, and then go nuclear as a class action, drawing in former tenants. How do they find one other? Social media makes that a no-brainer.
Be aware that a number of states and cities prohibit charging application fees beyond out-of-pocket costs like tenant screening. Likewise, late fees must bear a relationship to actual out-of-pocket losses. Nonrefundable fees can make judges hopping mad. Some states apply a blanket approach that looks at the overall value of the lease compared to both upfront and ongoing fees. Remember, the tenant is viewed as the “little guy” and the landlord as holding all the cards when it comes to leases. If it appears the tenant had to sign an unconscionable contract to put a roof over their head, it can come back on the landlord.
2. Pet Policies
Now that companion animals are mainstream, landlords should expect to encounter a request from a tenant to bring an animal into the property. That means all bets are off if the lease prohibits pets, or has strict pet rules. While pet policies are helpful and may reduce liability for animal-related injuries, it’s imperative to keep in mind that these rules cannot be applied across the board to companion animal cases.
The cost of rejecting a tenant over a companion animal or wrongfully denying a tenant’s request is astronomical. Landlords determined to keep animals out of the property simply cannot escape this exception to the law.
3. Transfer of Liability
Every landlord is responsible for keeping the property habitable, no matter what the lease says about splitting costs. Many states go beyond that and say the landlord is always liable for the condition of the property, even if the tenant is responsible for some of the maintenance. If it seems that math doesn’t add up, it’s because the landlord still has a duty to oversee the property and make sure the tenant is doing what they agreed to do.
Transferring liability for negligent acts of the landlord or for conditions on the property is not only a losing proposition, but in some cases it can violate state consumer protection laws.
Bottom line: choose your battles carefully when it comes to lease agreements. Make sure your lease protects you against deadbeat tenant who won’t pay the rent or who need to be evicted, but don’t overreach by trying to create inappropriate revenue streams or eliminate statutory liability. If you have questions concerning your lease agreement, pass it by an attorney — it’s always better to be proactive when it comes to reducing legal disputes.