What are Rental Lease Addendums and How to Use Them
The rental agreement is the most critical document for landlords and tenants. That said, a lease involves many different clauses, addendums, and disclosures that each carries its own legal ramifications. In addition, essential components of a lease will vary based on location and the property’s specific needs. So, to thoroughly understand what these additions mean and when you might need rental lease addendums, continue reading below.
What are Rental Lease Addendums?
Rental lease addendums are a separate legal document used in conjunction with a legal lease agreement. In some cases, addendums come along with the initial lease. However, they can also change an existing agreement later on. In either scenario, lease addendums cover some aspect of an agreement not already included in the initial or standard lease. For example, some of the most commonly used addendums address issues such as – Pets, Smoking, Renovations, or Special Maintenance.
Depending on the circumstances, either the landlord or the tenant can initiate an addendum. However, all parties must agree to the terms and sign the document to be legally binding.
Lease Clauses vs. Lease Addendums
Unlike addendums, clauses are built into the lease are typically based on local, state, or federal regulations of some kind. Lease clauses are the legal jargon that landlords do not have a lot of control over in most cases. So, when creating a lease, it is essential to ensure your lease clauses comply with applicable guidelines. The first goal of lease clauses is to address basic lease terms and financial obligations such as –
Basic Lease Clauses
- Identifying the Parties to the Contract– This includes the full names of all tenants or occupants over the age of 18 and the landlord or representing property management company.
- Specifying the Contract Term– Dates must be specific to include the day, month, and year. Therefore, the contract shows a clear beginning and end date to avoid disputes or confusion.
- Security Deposit– Lease agreements must stipulate the amount, date of collection, where the deposit is held, interest rate, and valid reasons for deductions. Furthermore, outline the procedure for returning the deposit, which is usually required within a specific timeframe by law.
- Monthly Rental Rate– Be sure to include the amount, such as the rent, pet fees, utility charges, and prorate amounts, along with the due dates. Also, it is essential to include the types of payments accepted, such as cashier’s check, money order, check, or electronic.
- Clarify Late Payments – Most landlords require rent to be due on the 1st. However, a grace period of 3 to 5 days is generally acceptable. This lease clause must also outline the consequences for missed, late, or returned payments.
- Tenant Responsibilities– This section outlines the responsibilities and obligations to maintain the safety and sanitation of the rental property. In addition, tenants must agree not to damage the unit.
- Necessary Signatures– Without all tenants and the landlord’s signature, the contract is useless. So, make sure everything is signed off on before allowing tenants to receive their keys.
Since lease clauses account for the bulk of any rental agreement, the items they address are far-reaching. As a result, the list above is by no means a complete representation of everything a landlord must address to protect themselves, the property, and the tenant. So, for more information, check out our blog on essential lease clauses.
Lease Disclosures vs. Rental Lease Addendums
Lease disclosures are just as important as rental lease addendums or clauses. In general, lease disclosures are mandated by law and are designed to disclose some type of significant health or safety information to the tenant. While these disclosures may vary based on location, typical examples include – Lead-based paint, Mold, Bed Bugs, Asbestos, and Radon being present on the property.
When to Use a Rental Lease Addendum
Using a lease addendum is a much-debated topic for new landlords, but there are a few essential things to remember. So, before we continue, let’s review a few common misconceptions about lease addendums.
I do not need an addendum because the lease covers everything I need.
- FALSE – While it is true that most rental agreements are pretty extensive, that does not eliminate the need for specific addendums, clauses, or disclosures.
Lease addendums are only used after the lease takes effect and the tenant moves in.
- FALSE – Actually, landlords can use an addendum before or after a tenant moves in. In fact, they are far more common at the beginning of the lease than later on.
Tenants do not need to sign addendums if they are included with the lease documents; signing the lease is enough.
- FALSE – Tenants need to acknowledge each included addendum or disclosure by signing the document. This also helps avoid any potential disputes in the future.
Reasons to Draft a Rental Lease Addendum
In general, to decide whether an addendum is needed, ask yourself, is this issue already addressed clearly in the lease agreement? If not, a lease addendum is a good idea. While not a complete list, here are a few situations where addenda are warranted –
- A pet is permitted; however, the tenant must provide an additional security deposit, pay pet rent, or adhere to specific restrictions or rules regarding the pet.
- The owner and tenant agree that the tenant may complete some changes to the property, such as painting or installing a fixture. An addendum can clearly spell out what is allowed and any special requirements to return the home to found condition upon move out.
- The tenant has an agreement to purchase the property after a specified amount of time.
- The owner and tenant agree that the tenant will have a particular parking spot either included in the rental price or for an additional monthly fee.
- If the lease includes certain utilities in the monthly rental rate, such as electric or gas, an addendum can clarify these terms and any special conditions of service.
- When a property is a part of an HOA, they often have their own rules and regulations for the tenant. Therefore, it is not uncommon to have a lease addendum for an HOA. In it, the tenant acknowledges the receipt of said rules and agrees to full compliance.
Tips for Drafting a Legal Lease Addendum
No matter what the intended purpose of the lease addendum, it must contain certain vital information. In addition, there are some specific but easy-to-follow rules for creating an addendum that is legally enforceable. However, as a landlord, it is your responsibility to ensure that whatever you draft does not violate any local, state, or federal laws. If you are ever unsure, consult a qualified attorney before proceeding. That said, check out these tips below.
- Basic Information – Lease addendums generally begin with some of the same basics found in the lease, including – Names of All Parties, Lease Dates, the Effective Date of the Addendum, and the Property Address.
- What is the Issue? – Each addendum to the lease should address a separate and specific issue. So, make sure the sentences are clear and all-inclusive for what you wish to convey.
- Labels Matter – Just as each addendum needs to have unique language addressing one aspect of the agreement, it needs to be titled as such. For example, if the addendum addresses a pet policy, label it “Pet Addendum. If the issue is parking, then the title is “Parking Addendum,” and so on. Just make sure the document contains the word “addendum” at the end of the title.
- Sign and Date – Any addendum will not be a part of the total agreement until all lease parties sign and date the document. So, even though move-in paperwork can be extensive, be sure to take your time and review each page before marking all as complete.
Rest Assured with Professional Property Management
A legally binding agreement along with its lease addendums, disclosures, and clauses is the backbone of the landlord-tenant relationship. That said, creating and enforcing legally binding documents is a daunting task on your own. Even after review with a qualified attorney, savvy landlords opt to leave the problematic tasks up to an experienced property manager.
Property managers serve as the go-between for tenants and owners while handling all daily operations such as marketing, leasing, legal compliance, accounting, and maintenance. In addition, the experts at Bay Property Management Group are ingrained in the local community and help keep owners, tenants, and their properties protected by following all applicable laws. So, if you are looking for a stress-free way to invest in rental properties without the daily hassles, give us a call today.