Lease Agreement

A rental contract between a tenant and an apartment management company is, technically, a lease agreement. The term, lease agreement, and the term, contract, will be used interchangeably in this document.

If you rent a hotel room for one day, you pay for one day, and the contract expires at the end of one day. If you rent a vacation cabin for a week and pay for a week, the rental contract expires at the end of one week. Apartment rentals are frequently for one month; the tenant pays for one month at a time. Either the tenant or the rental company may allow the contract to expire at the end of the month by not renewing the contract. That is, either party may terminate the contract at the end of the payment period (month). No justification is required to terminate the contract.

The month-to-month lease agreement allows the apartment manager and the management company the opportunity to fairly easily dissolve the contractual relationship with a tenant. That is a significant advantage from a managerial point of view.

The other type of contract, a lease agreement for a specified term, usually a year, is often preferred by investors and management companies because it seems to offer financial security and stability. However, dissolving a long-term lease agreement before the expiration date is sometimes desirable or necessary and doing so can be difficult for the tenant or the company or for both.

If a tenant desires to escape a long-term lease agreement prior to the expiration date, the tenant owes some obligation to the rental company. The obligation may be specified in the agreement or by law. The following is an example of the way that obligation might be expressed. A tenant who vacates prior to the expiration of the lease agreement shall continue to pay rent until the rental company can rent the apartment to another tenant. The rental company has an obligation to diligently attempt to rent the apartment. If the apartment management company is unable to rent the apartment at the same rate paid by the out-going tenant and must accept a lesser rate, the out-going tenant is obligated to pay the difference for the duration of the original agreement. The problem lies in enforcement.

A tenant abruptly loses a job and cannot pay the rent. Do you want to enforce the lease agreement? You will probably allow the tenant to vacate without penalty. Legal pursuit of the matter might prove both costly and futile. Now suppose the tenant in the apartment next door, who holds a good job, is offered an even better job 2000 miles away, provided that the tenant starts work immediately. You are now in the position of saying: "I let your neighbor vacate without penalty but, in your case, I am going to enforce the lease agreement." If you resort to legal process to enforce the contract, the costs may exceed the benefits. Certainly, you risk damaging the reputation of your apartment complex.

If you need to evict a tenant who holds a long term lease agreement, e.g. a one year agreement, you must be prepared to prove that the tenant has violated one or more of the specific provisions of the written lease. Proving failure to pay rent is fairly easy. Proving other violations of the lease can be difficult. And if you discover you need to evict for a reason not mentioned in the lease, you have an even greater problem. The author has knowledge of the following situation. A tenant had uncontrolled children who were causing problems in the apartment complex. The apartment management company attempted to evict but failed; the court held for the tenant. Eventually there were six neighboring apartments that were unoccupied because the tenants had moved out to escape the problem. Generally, long-term lease agreements need to cover every contingency that might arise and cause difficulty for the tenant or for the management company.

All lease agreements require some or all of the following. You will want a clause that prohibits subletting of the apartment. Every contract should contain the names of all adults who live in the apartment and all of those adults should sign the contract. There may be a case when an adult, who will not be living in the apartment, elects to accept contractual responsibility to enable an adult son or daughter to occupy the apartment. The signatures of both the responsible party and the occupying party should be on the contract and all contract signatures must be witnessed by an agent of the apartment management company or by a notary public if someone signs in absentia.

A tenant should never be given a key to the apartment or allowed to place any object in the apartment prior to the date the lease begins because, if that happens, the tenant is in possession of the apartment and you have no contract governing that possession.

Sometimes a tenant who is occupying an apartment may want to move another person into the apartment, i.e. share the apartment. The lease agreement should expressly demand that any adult whom a tenant proposes to move into the apartment be required to submit a credit report, meet all company requirements, and sign the lease agreement. If you allow a person to move in without meeting these requirements, or if the move-in occurs surreptitiously, you may eventually have a person you cannot identify in possession of an apartment, from whom you cannot collect rent, and who may be very difficult to evict.

It is desirable to attempt to contractually preclude the tenant from conducting business operations from an apartment, especially those that may disrupt the peace and tranquility of the neighbors. Attempt may be the operative word. The author is aware of a case in which a court held that the tenant had a right to operate a child day care service from an apartment.

Other clauses or addenda may include a pet policy, parking space controls, and other rules and restrictions that are necessary for satisfactory operation of a community of human beings living in close proximity.

Apartment lease agreements have a substantial number of clauses that identify the parties and establish the terms and conditions to which both parties must adhere. Some of the language or provisions may reflect the local jurisdiction where business is conducted. Just about any relevant lawful term or condition can be written into a lease agreement. As society changes, new contract provisions are required. For example, in recent decades it has become prudent to include a clause to the effect that any unlawful drug activity will be grounds for termination of the contract and eviction of the offending tenant. Making too much noise or doing so at an unreasonable time has always been a problem. But that problem has been intensified by the sale of audio devices powered by wattage sufficient to amplify a football stadium.

Potential tenants may be offended by the length of and terms in the apartment lease agreement. But it should be noted that most sales or service contracts are complex and contain a vast amount of "fine print." Those contracts reflect the requirements of doing business in a complex society.

This writing may appear partial toward insuring a capability to dissolve contracts. It is, of course, our intent to retain tenants to the maximum feasible extent. But that cannot be accomplished by a contract. Tenant retention is the result of our entire range of management activities.

Tenants sometimes prefer a one-year lease agreement because the rent rate cannot be increased during the contractual period. And, as previously noted, investors and apartment management companies tend to prefer annual lease agreements. An apartment manager should be aware of the problems, the opportunities, and the managerial skills required to effectively utilize long-term lease agreements. The apartment manager is advised to rely, extensively, on the management company's legal staff when contract problems arise.

There is a government program that provides rent assistance payments for persons who qualify. Management of apartment complexes that accept rent assisted tenants is somewhat specialized. The rent rate must meet government approval. Two contracts are required, one between the apartment management company and the tenant and an additional contract between the apartment management company and the governmental agency. Two rent payments must be collected, a partial payment from the tenant and the government share of the payment. Eviction, should it become necessary, may be very difficult because of the additional contract with the governmental agency.

Do not enter into a lease agreement with a minor.