Is This Standard Lease Provision Illegal?

by Robert Griswold

Inman News

Red flag photoQuestion: I have wanted to invest in real estate for many years so I recently purchased a single-family home, which has been a rental property for years. The seller of the rental property gave me some advice, including a blank lease form that he buys at the local stationery store. In looking over this form, it states that the tenant shall pay the first $25 of any charge for repairs by a service person.

A friend of mine who is also a landlord told me this is not legal. But as a new landlord I like having this clause in my lease so that the tenant will know he/she will be responsible if he/she damages anything in the house. Please let me know if this charge is appropriate.

Property Manager Griswold replies:

As a new landlord and property manager it is important for you to know that every jurisdiction has laws and statutes concerning rental housing that generally indicate that it is the landlord who is required to maintain the habitability of his/her residential rental properties — not the tenant. Landlords cannot simply ignore their responsibilities by cleverly placing disclaimer language in the lease that waives or modifies the contract between the parties and makes the tenant responsible for legal obligations of the landlord. Thus, your $25 charge to the tenant for making necessary or needed repairs may not be legal. I agree with your friend and would strongly recommend that you delete it from your lease agreement.

As I indicate in my book “Property Management for Dummies,” allowing the tenant to make repairs will often result in deferred maintenance or substandard work if anything is done at all. You are also open to allegations that you failed to maintain the premises if the tenant complains to the local building department or code enforcement. Those governmental agencies will not accept a response that it was the tenant€„¢s responsibility to maintain the rental property in a habitable condition that meets all local and state minimum standards.

To properly document that you were aware of necessary repairs at your rental property, you should establish a written maintenance request program that requires your tenants to promptly notify you in writing of any needed repairs. You should then keep a written record of the work done and the completion date. If the tenant is at fault, through their carelessness or even intentionally damaging the rental, he or she has violated the lease agreement and would be responsible for the costs of the repairs.

Your situation also brings up another important point. It is best to use rental agreements or leases that are written specifically for the local jurisdiction of your rental property. National forms may not cover specific situations peculiar to state law and may result in problems in court. Contact your local apartment association or an attorney in your area that specializes in tenant-landlord legal matters.

Tenants’ attorney Kellman replies:

There are many ways that tenants can be pressured to give up rights. There is the extra per month charge for children, there is the per day late penalty fee and then there is the first $25 per repair fee. All are illegal. Clearly, if a tenant believes that he or she will pay the first $25 of a repair bill, he or she may feel pressured to just forget about getting the repair done. Also, this is actually a bad deal for landlords. As a landlord, you do not want problems hidden from you. A dripping pipe can cause major damage over time. A dangerous condition may result in a serious injury and significant liability claim. If the tenant caused significant damage to the unit by negligence or abuse, the tenant could claim that his or her liability is limited to only $25, forcing you to pay the rest even though they should pay for it.

Tenants are responsible for negligence or abuse caused damages to your unit beyond ordinary wear and tear without such a term in your lease. Therefore, this is a term, which is improper and should not be in your rental agreement.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and co-author of “Real Estate Investing for Dummies,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and Ted Smith, principal in a firm representing landlords.

Click here to learn how to draft a solid lease agreement.

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