Let us say you purchased a condominium building and are about to become a landlord for the first time.
The property management agreement you use sets terms and responsibilities for your legal protection, and your tenants clearly understand what they sign. Here are five points to include.
The agreement must state how much tenants pay in rent and whether rent will be due monthly, quarterly or annually. Explain what services the rent amount includes, such as landscaping costs or utilities, for example. This section should also contain information about a security deposit, if any.
You may not want to allow pets at all, but many landlords find that permitting tenants to have pets is profitable. Set guidelines as to what kind of pets you will accept—usually cats or smaller dogs weighing 20 pounds or fewer. You may also want a separate pet security deposit, in case the animals cause any damage to carpets, drapes and other furnishings.
You can have an agreement that is month-to-month, but a year is the most common length, and you can make this negotiable. If your tenant shows interest in signing a longer contract, you may want to consider a reduction in rent to close the deal.
4. Breaking the agreement
There may be a need for your tenant to break the agreement. For example, he or she could be a military member on active duty who receives orders to relocate to another base. There should be a section that addresses this kind of necessity.
5. Renewal or termination
Explain how the tenant can either renew or terminate the agreement or how you, as the landlord, can end it. Give this some thought. For instance, you may require that all requests be in writing with a 30-day lead time.
Property management agreements must adhere to local ordinances, state statutes and federal laws, all of which can change at any time. To avoid missteps, seek legal guidance in drafting your agreement to ensure terms and responsibilities are clearly stated and that the document holds up in court, should litigation ever become necessary.