Property Management System/ REM 6211

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Property Management System

Module 3 : LEASES
Course Learning Outcomes:
1. Determine the use of Prescriptive analytics.
2. Understand the different types of Multi-agent.
3. Apply the use of Prescriptive analytics.

What is LEASE/s ?

A contract by which one party conveys land, property, services, etc. to another for a
specified time, usually in return for a periodic payment.
A lease is a contract outlining the terms under which one party agrees to rent
property owned by another party. It guarantees the lessee, also known as the tenant, use of
an asset and guarantees the lessor, he property owner or landlord , regular payments for a
specified period in exchange.

Things Every Lease Should Contain

When you go to sign the lease, your tenant will likely have a lot of questions about what
they are signing. As such, it’s important for YOU to understand exactly what is being signed.
So let’s dive into the lease itself now and talk about the 22 parts every lease should contain
and why it’s important to have them. This will help you explain it to your tenant and also
make sure your lease has everything it needs.

1. NAMES

At the top of the lease, be sure to include the names of all tenants who will be living
in the property. We like to make sure the lease specifically states that only those listed
are allowed to live in the home. This ensures that if Lazy Laura moves in her boyfriend
Deadbeat Dan, she is violating the lease and could be evicted over it.

2. DATES

You must include the date that the lease has been signed, as well as the effective
dates of the lease term. In other words, when does the lease actually begin and when
does it end? Sometimes, you will sign a lease long before handing over the keys. (Such
instances are rare for most landlords, but not unheard of. Perhaps the lease will begin
on the 1st of the month, but the tenant will be gone on vacation during that time. So you

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 may sign the lease before they leave, but make the effective date of the lease begin on
the 1st of the month.)

3. MONTH-TO-MONTH OR TERM

Is this lease a month-to-month lease or a pre-defined term? Six months? One year?
Make sure the lease is clear.

4. ADDRESS OF THE PROPERTY

Is this lease a month-to-month lease or a pre-defined term? Six months? One year?
Make sure the lease is clear.

5. GUEST POLICY

For tenants, the distinction between a “guest” staying for a little bit and someone
actually moving in can be a “gray area.” To make this less gray, simply state in your
lease how long a guest is allowed to stay. In our lease, that is 14 days. Anything longer
and the tenant must be approved by management and added to the lease.
We once had an experience where a tenant of ours let her unemployed sister,
unemployed brother-in-law, three kids, and a dog move into a small, 2-bedroom house.
Of course, when we contacted the tenant to discuss the newly arrived “guests,” she
claimed they were only visiting. Fast forward to three months later when we followed
up and discovered, not to our surprise, they were still there: three adults, three kids,
and now two dogs in a little 2-bedroom house, along with ALL of their belongings.
Normally, if a tenant moved someone else in, we would have them submit an
application and go through our approval process, then put them on the lease should
they be approved. In this situation, however, that was obviously not going to work out.
So we gave our tenant legal notice stating that all unauthorized occupants not on the
lease must vacant within 10 days, or she’d be getting the boot. Just like that, they were
gone. Should we have proceeded with the eviction, we would have had the legal
documentation to follow through with removing the tenant and her “guests”
permanently from the residence.

6. SUBLETTING POLICY

In today’s world, subletting units for vacation rental use is growing exponentially,
driven by sites like Airbnb.com and HomeAway.com. As a result, entrepreneurial
tenants are finding that they can rent an apartment and then sublet that apartment to
other guests as a nightly vacation rental. While you might think this doesn’t affect your
bottom line, remember that you have no idea who those nightly guests are, so you may
want to hold a strict anti-subletting policy on your property. Your lease should lay out
exactly what the subletting policy is.
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7. PET POLICY

Will you allow the tenant to have a pet on the property, or are they strictly forbidden? If
you are planning to allow pets, you will likely want to mention it in the lease but use a
separate form known as a Pet Addendum to detail the arrangement.

8. SMOKING POLICY

Will you allow the tenant to smoke in the unit? (We recommend a firm NO.) What about
smoking on the property? Is there a location where smoking would be allowed? We’ve
found that a lot of tenants like to smoke while leaning out their bedroom windows,
believing they are abiding by the “no smoking” policy we have in place. While this is
definitely better than smoking directly in the room, the smell still drifts in, and it stays.
Therefore, be specific in your lease as to your smoking policy. Remember, “smoker” is not a
protected class, so you can discriminate against it - we do! If you smoke, you will not be
approved for one of our rentals.

9. RENTAL PRICE

How much will the tenant pay in rent each month?

10. WHERE TO PAY RENT

How should the tenant pay rent? Mail it? Drop it off? Specify where in your lease, but
also be sure to mention that this could change if so desired by the landlord.

11. SECURITY DEPOSIT AMOUNT

Be sure to specify how much the tenant is being charged for the security deposit, as
well as under what conditions they could lose that deposit. In many states, the name
and location of the bank (and sometimes the account number) for where the deposit is
being held is required to be included on the lease.

12. UTILITIES

What is the tenant responsible for paying? Water? Sewer? Garbage? Electricity? Gas?
Cable? Satellite? Spell it out in the lease.

13. RENT DUE DATE

When is the rent due? Monthly? On what date? Also, is there a “grace period” where
the rent is not considered late? Most leases do contain a grace period, but only a few
states actually require it. We offer a five-day grace period so the tenant can pay rent any
time between the 1st and the 5th of the month without penalty. We don’t need to do
this, but since some of our tenants are on Social Security and they get paid on the 3rd of
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 the month, we keep the grace period in to help them out. You may choose to not offer a
grace period at all, and if that is allowed in your state, more power to you!

14. LATE FEE AMOUNT

If the tenant does not pay by the rental date, what kind of late fee are they charged?
Also, if they pay with a check and the check gets returned, what kind of NSF penalty are
they charged? You may also want to charge a “daily” late fee in addition to the set fee. For
example, charge a $40 late fee the first day rent is late, with an additional $10 late fee each
additional day rent is late. This encourages the tenant to pay their late rent quickly.

15. ACCESS

The lease should specifically state the access rules for the landlord using the property.
This includes emergencies, showing the unit, placing marketing materials in the windows,
etc.

16. ATTORNEY COLLECTION FEE

If the tenant is brought to court, who is responsible for paying those fees? Spell it out
here in your lease to save lots of money if you need to ever evict or sue the tenant.

17. RULES/REGULATION

In addition to everything else just mentioned, the lease should also contain the basic
rules and regulations for using the property. Rules like “no cooking in the bedroom” or
“don’t go on the roof” may seem silly, but you’d be surprised what tenants do. Other
rules you may want to discuss include:
• Fireworks
• Junk on decks, outside, on walkways, or in common areas
• Satellite dishes
• Cleanliness/housekeeping
• Fire/carbon monoxide detector operation
• Marijuana/smoking policy
• Vehicles (How many will you allow and where are they allowed to park?)
• Quiet hours
• Laundry room rules
• Illegal drugs
• Drinking
• Parties
• Window coverings
• Reporting water leaks
• Misuse of plumbing
• Satellite dishes (Are they allowed on decks? Attached to the building? Make it clear.)
• Mold/mildew
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• Pets
• Vandalism
• Changing locks
• And more

18. LAWN CARE/POOL REQUIREMENTS

Who is responsible for mowing the lawn (and how often), weeding the flower beds,
taking care of the pool, etc.? Spell it out clearly here and include what should happen if
the tenant does not fulfill their end of the bargain (for example, the landlord will hire
the lawn to get mowed and the tenant will be sent the bill).

19. MISCELLANEOUS ADDENDUMS

You may also attach other addendums to the lease, including Federal and state-
required forms (such as the EPA-required Lead Based Paint Disclosure) or additional
things you want the tenant to know. For example, we include an addendum that simply
explains in excruciating detail the process the tenant must go through when they want
to move out. In Washington State, the requirement for giving notice is a little confusing
for tenants, so we spell out exactly how it’s done very carefully, and then have the
tenant sign it as part of their lease. This helped us eliminate the “I didn’t know!” excuse
when they try to move out and don’t follow Washington State requirements. Just be
sure to run your addendums past your lawyer to make sure they comply with the law.

20. MOVE-IN/MOVE-OUT CHECKLIST

In many states you are required to use a Move-In and Move-Out Condition Report for
the property. Even in states where it is not required, it’s a no-brainer. A Move-In/Move-
Out Report simply allows the landlord and tenant to list condition and all known defects
on the property at the start of the lease, so when the tenant moves out, both parties
know how the unit should look, what damage was preexisting, and what damage the
tenant should be charged for.

21. INITIAL AND SIGNATURES

All parties should sign the lease, including separate signatures on all the addendums
you might have. In addition, we like to have the tenant initial each and every page of the
lease, just so they can’t come back later and say that we added a page into the lease that
wasn’t there.

22. LEGAL LANGUAGE

Finally, every lease agreement should have legal language at the beginning, end, and
throughout that has been drafted by an attorney to make sure the lease is as binding as
possible. We don’t recommend writing up a lease from scratch because you will not
know the legal way to write it.
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How to Sign the Lease Agreement

Preferably, the lease signing appointment should take place at your office if you have
one or at the property itself. Since we run our business out of our home, we prefer to do
our lease signings at the property itself, which also makes it helpful for completing the
MoveIn Checklist.

When you are preparing for your lease signing appointment, always be sure to plan
ahead. Dress and act professionally. The impression you give your tenant by the way
you treat and handle your business will play a large role in how they treat their tenancy.
If you are too casual or flippant, they may simply imitate the same behavior during their
tenancy. “Rent’s due? Oh well, the landlord won’t care if I’m late.” “The lawn needs to be
mowed? Eh, I’ll do it next week.” Set the precedent from the beginning that you mean
business.
Bring two copies of the rental agreement: one for the tenants to sign that you will keep
and one to give them as a copy until you send them a copy of their signed contract.
Always send your new tenant a copy of their signed contract. Not only is this likely a
requirement in your state, but also the presence of their signature seems to make a
bigger impact during their tenancy when they are questioning or are in disagreement
about a particular rule. It’s harder to argue when they can physically see their own
signature, especially when they know that’s the same thing the landlord sees and the
same thing the judge will see if they don’t straighten up.
Always prepare the lease ahead of time by verifying you have all the correct forms and
filling in all the blanks and rental specifics, like the date, tenant names, lease term,
deposit amount, and rent amount. You can also either highlight or place a signature
sticker (you can get them at any office supply store) on each spot where the tenant
needs to sign or date. This helps ensure that a signature doesn’t get missed at the lease
signing appointment.
Make sure you bring enough pens for all tenants who will be signing. While we’re on the
subject of pens, think about when you go to the bank to sign documents for a new loan,
to the escrow company to close on a new property, or to your attorney’s office to sign
legal documents. What do they all have in common that probably stands out in your
mind? They all have beautiful, fancy, blue ink pens ready and waiting for you to use. You
know, the kind you inwardly “ooo” and “ahh” over and secretly wish you could take
home. So you see, even the choice of pen makes an impression. Avoid using the pen
your dog got ahold of and chewed the cap off or pens with advertisements from your
insurance agent. Plan ahead and pick up a box or two of nice, blue ink pens for your
lease signing appointments and make sure every tenant gets their own.
Always bring your camera and/or video camera to record the condition of the unit at
the time your new tenants obtain occupancy (a smartphone camera works just fine).
You will be recording the condition in writing in your Move-In Condition Report in your
lease as well, but pictures and video speak volumes more than words. The more
documentation you have of the move-in condition of your rental unit, the better.
If you will be conducting your lease signing appointment at the property itself, arrive to
the appointment early enough that you can turn on lights, open blinds, and turn on the
heat or air conditioner (depending on the season). This also gives you the opportunity
to take your pictures and video of the interior and exterior of the property before the
tenant arrives.
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Before giving your new tenants the keys to their new home, ensure that:
1. They have transferred all the utilities they are responsible for into their name.
2. They have brought you their remaining move-in funds in a guaranteed form: cashier’s
check or money order.
3. All occupants over the age of 18 who will be living in the home have signed the lease,
including the Move-In Condition Report.
When going through the lease with your new tenants, spend some time on this. Their
understanding of the particulars of the lease now will determine their compliance with
it later. You don’t need to read the lease word for word (unless you want to), but at
minimum go through the lease point by point. It’s okay to summarize each section, as
long as you cover each section thoroughly. Before going over the lease with our new
tenants, first we like to go through a short presentation called New Tenant Orientation.

References and Supplementary Materials

Books and Journals
1. DICK JONILONIS; PROPERTY MANAGEMENT SYSTEMS From A to Z; 2016;United
States of America;
2. MERRIAM DICTIONARY
3. WWW.GOOGLE.COM
4. WWW.WIKIPEDIA.COM

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