As part of our “Eight Things You Are Doing That Are Killing Off Your Rental Property Revenues” series, I want to warn you about a problem I come across often. Landlords are using outdated rental agreements or ones they get free online, as they don’t want to spend money on a rental agreement. After all, rental agreements are all the same, right? That is a very false assumption that can land you in trouble.
If you use a very old rental agreement, the laws may have changed since it was created. With a change in the law comes a change in the terms of a rental agreement. You may have an agreement that will not protect you properly or could be detrimental to your business. You should also remember that form rental agreements are just that—forms—and may not apply to every property you own. If you have not consulted an attorney to determine if a form agreement is suitable for your rental business or how to complete the form in various situations, you could be setting yourself up for trouble down the road.
As for free online rental agreements, buyer beware. I’ve had cases where a landlord has had to provide a 7-day notice to pay rent or quit when only a 3-day notice is required, because the rental agreement stated the landlord had to provide a 7-day notice. The provisions in a rental agreement are enforceable, especially if the agreement grants greater rights to your tenants than California law provides. The bottom line is that if you downloaded a rental agreement online and do not know what it is, you could be hurting your rental business.
If you use form rental agreements, be sure you use ones from reputable sources such as the California Apartment Association or the California Association of Realtors. I also recommend that you sit down with your legal counsel at least once a year to review your rental documents so you can assess your rental business and ensure you are taking the right steps to protect yourself and your business.
