Steps to Take When Leasing Your California Rental Property : Creating a Strong and Compliant Lease Agreement

 
 

Steps to Take When Leasing Your California Rental Property : Creating a Strong and Compliant Lease Agreement

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Before you can effectively lease your California rental property, you need to make sure it’s ready for the rental market and the highly qualified tenants who are looking for a new home.

We’ve created blogs and videos before about the steps you need to take to rent out your property, and today we’re taking a deeper look at the requirements of a lease agreement. You’ll need to put together a lease that protects you and your property. It also needs to contain all the pertinent information that will ensure you and your tenants have a good rental experience.

With the landlord and tenant laws constantly changing in California, there are specific things you need to include in your lease agreement. You should always be updating your lease, and you should be sure it’s legally compliant. Talk to a qualified attorney who specializes in landlord law, or work with a professional property management company that can help you ensure you have all the information you need in your lease agreement.

Access a California-Specific Lease Agreement

Writing your own lease agreement is not the best idea, unless you’re an expert in California property management and tenant rights. If you’re not currently working with a professional property manager, there are a few places that you can go to get a good lease template. We recommend:

  • Your local chapter of NARPM
  • California Apartment Association
  • Institute of Real Estate Management

A major mistake that landlords often make is to download and use a standard lease template that they find online. You want to be careful because not all of those leases are specific to California. Using a lease that was written in Florida or Michigan is not going to help you rent out a property in California. Make sure you find a state-specific template and get it approved by an attorney before you use it.

Tenant Information and Lease Terms

Every adult 18 years of age and older who will live in the property should be included as a tenant on the lease agreement. Get the full names of each resident, and include identifying information, such as a social security number and driver’s license number. Residents under 18 years of age are not legally responsible for rent, but they should still be included in the lease so you know who they are.

The lease should specifically state that occupancy is limited to the parties listed on the lease. You don’t want any long-term visitors in your property who have not been screened.

Your lease agreement must also include information about when the lease begins and when it ends. Stipulate whether the lease will renew automatically or convert to a month-to-month arrangement. You also want to reference how much notice you and the tenant must provide to end the tenancy. It’s also a good idea to include information on what needs to be done in order for a tenant to get their security deposit back. Reference any cleaning requirements. If you want the carpets to be professionally cleaned, for example, make sure your lease agreement has that requirement in writing, including the receipts that will need to be submitted as verification.

Rent Collection Policy and Security Deposit Information

Your lease agreement is the best place to keep your written rent collection policy. Hopefully, you’ve screened your tenants well and you won’t need to worry about late or missing rental payments. But, if something does happen and rent doesn’t come in when it should, you’ll need to refer to the lease agreement before you take any actions to collect the rent or start the eviction process.

Your rent collection policy should include:

  • Which date that rent is due every month, and whether it is still due on a non-business day such as a weekend or a holiday.
  • Whether there is a grace period for the payment of rent before penalties or fees go into effect.
  • How rent should be paid. Reference whether you accept online payments, payments by check, or other payment methods. Be specific about whether tenants should pay by check, online, or through a third-party. State whether you’ll accept cash and personal checks.
  • How late fees are applied and when.
  • Fees for insufficient funds.

In California, there are legal limits to the amount you can collect in a security deposit, and your lease agreement should reflect how much is collected and how it will be used. The security deposit is held by the property owner or the property manager, but it’s still the tenant’s money. Until the tenant is preparing to move out and you’re conducting an inspection to look for damages, you cannot spend that deposit. Keep it separate and not co-mingling with your own funds.

Landlord and Tenant Maintenance Responsibilities

If you want to avoid disputes with tenants over repairs and property condition, be explicit about who is responsible for what in your lease agreement. Maintaining a rental property is a joint responsibility, and most tenants and landlords understand that. But, specifics are important. You want to be detailed about who is responsible for utility payments and any HOA fees. Make sure the lease references whether tenants or landlords take care of landscaping, security, pest control, and any pool or spa services if you provide those amenities.

The lease agreement should also include the process that tenants should follow when they need to request repairs. The process for emergency maintenance will likely be different from routine maintenance. Make sure you document what should be considered an emergency and how the situation will be handled. You can also use your lease to prohibit the tenants from making any repairs or cosmetic changes without your prior permission.

Rules and Regulations for your California Rental Property

Your lease should reflect whether you allow smoking and pets. It should also indicate how and when common areas in a multi-family building can be used. Landlords need to provide a specific amount of notice before entering a property, and you’ll want to include that.

The lease should include standards for guests and parking. It must prohibit illegal and criminal acts. Most leases will set standards against noise and other disruptions. It should also require a tenant to follow any HOA or condo association rules and regulations.

Legal Disclosures and Requirements in California Leases

legalThere are a number of disclosures you must include in your lease. Some are federal laws, such as the lead-based paint disclosure. The state of California also requires disclosures about sexual predator watch list and mold.

The new rent control laws require your lease to indicate whether or not your property is included or excluded in rent control. Make sure you’re using the correct wording and formatting. California courts will take this seriously. You’ll also want to include information about evictions. There are no just-cause evictions and no-fault evictions in California. If you need to evict a tenant through no fault of their own, you might have to pay them a relocation fee that’s equal to one month’s rent. Your lease should include the situations under which that might apply.

Finally, make sure you indicate under what conditions the lease agreement will be terminated or voided. Tenants will occasionally need to break a lease. Make sure you have something in place that dictates how such an event will be handled.

We can help you make sure you’re working with a state-specific and legally compliant lease agreement. We are experts in California property management, and we’d be happy to assist you. Contact us at Progressive Property Management.