Good Residential Lease Contracts Are Worth More Than A Car (But Cost Way Less)
A good residential lease contract earns the landlord thousands or tens of thousands of dollars each year. It saves the landlord even more in expenses and quality of life. The return on investment (ROI) of a good lease could easily exceed 1000% annually. In contrast, most new cars lose at least 10% of their purchase price value immediately after the buyer drives the car off of the parking lot. Despite this, many real estate investors and landlords think of a car as more valuable than their lease agreement.
Car purchasers usually carefully research data before buying new cars. Is the car safe? How much will maintenance cost? Does it fit my height, family size, or driving habits? Yet, landlords select prewritten form leases without even reading them or knowing if the lease could be enforced in court. A good residential lease contract costs substantially less than a car, but it is worth far more.
Buying a residential lease contract
Shopping habits for residential leases deserve scrutiny. Without a landlord-tenant attorney, most landlords cannot discern the enforceability, strength, or value of their residential lease contract. There is a lack of data on litigation, evictions, damages or default rates on any given residential lease contract. In contrast, one can easily find data on the safety, mileage, or maintenance cost on a car.
A good residential lease contract, like a good car, cannot guarantee that there will never be an incident. However, both well-drafted leases and well-made cars reduce the likelihood of mishap and the cost of damage if a mishap does occur. One knows it is dangerous to visit a junkyard and drive away in a car with no brakes. Yet, many landlords and real estate investors take the same type of senseless gamble by downloading residential lease forms from the Internet or by photocopying leases from books.
Residential leases aren’t regulated like cars
Unlike cars, lease agreements are not regulated by any state or federal authority before they are placed on the market. New cars must meet manufacturing guidelines, but prewritten contracts are not tested for compliance with state or federal law. Buyer beware. Most states, including Virginia, Maryland, and Washington DC, do not regulate the sale of prewritten legal instruments. Generic form legal instruments do not constitute the unauthorized practice of law. People often view forms on the Internet or in a book and believe that the words will suit their purposes. But such consumers are likely to find a dangerous or expensive tenancy situation in their personal residence or their rental property.
Prewritten lease contracts contain hazards
Sometimes the leases come from books written by attorneys or by professional real estate associations or they have celebrity endorsements. But these preformed contracts create numerous hazards: financial, legal, emotional, and otherwise. What are the dangers of the ubiquitous prewritten form leases available in books and downloads on the Internet? And more importantly, how does a landlord or property owner avoid them?
Landlords need to know their options
Firstly, landlords who adhere to prewritten leases do not understand that other options could have been available to them. Car dealers would go out of business if they only displayed one inappropriate car model to all customers. But landlords frequently assume that all leases are approximately the same. Rather than selecting an appropriate lease, property owners bind themselves and the tenant to unfavorable or unsuitable terms. Some form leases contain “check boxes”, which convey a sense of choice. But those checkboxes only offer a couple of alternatives and provide very limited protection. Landlords should instead have a customized lease that fully protects them and their property. Prewritten leases usually exclude important terms or legally required terms. Form leases also include irrelevant terms that create confusion and legal problems.
Illegal lease provisions won’t protect the property or its owner
Secondly, most prewritten form leases contain at least a few, and sometimes many, illegal and unenforceable provisions. Unlike cars that must pass federal and state safety regulations, no such protections exist for consumers of prewritten contracts. The terms of a residential lease are only valid to the extent that they comply with housing laws. Purchasers buy leases with extreme clauses under a misguided belief that they offer strong financial protection. In fact, the opposite is true. Certain contract clauses provide no protection to the property or owner at all because the clauses are illegal. If the lease is very poorly written, then the entire lease could potentially be rendered void in a court. Furthermore, if the landlord initiates litigation based on illegal or unenforceable lease terms, then the landlord may be the one to pay attorney fees for the tenant.
Landlords need to know and understand the lease terms
Thirdly, landlords who choose form leases usually don’t read or understand their terms or contents. They don’t know how to legally enforce lease terms and create legal problems for themselves with self-help. This is like leaving the keys in the ignition of an unlocked car in an area with daily car theft. Landlords who assume that all residential leases are the same only realize that their lease is deficient when they violate the lease or their rights are violated. The landlord should be able to point to terms in the lease that protect each and every aspect of the rental property and the landlord as a person.
Customized residential leases offer the best value
A conscientious property owner has an attorney draft or review their lease agreement, just like a conscientious car buyer has a mechanic look over a used car prior to purchase. Unless a landlord keeps up to date with the annual changes in state and federal housing law and observes and understands the treatment of housing matters in the local courts, a property owner can’t know what she/he doesn’t know. Therein lies the danger. Housing laws change at least once per year in most states and leases become outdated or obsolete. A well-written lease agreement is the vehicle through which property owners protect themselves and their property, income, reputation, and livelihood. By reviewing your residential lease agreement with a housing attorney before you rent your property, you place yourself in the driver’s seat on the road to success in residential renting.