The Lease II

Your lease contract, to use a little legal jargon, is an express, parol, commutative agreement. Express simply means that it has been specified, hopefully in writing, and agreed to, as opposed to an implied contract. Parol means that it was a voluntary agreement to do or not do things. Commutative means that the consideration of each party is equal - the money you receive is equal to the rental value of the property. You don't need to be a lawyer, or dig too far into reciprocal, principal, and other descriptions of contracts - they are usually specifications of what common sense understands by whatever name. But do understand that the courts have been dealing with contracts and their requirements since the first time a judge ever sat down before two conflicted parties. A lot of thought has gone into what constitutes a valid contract, types of contracts, what is reasonable vs "unreasonable" or "unconscionable", etc. This body of thought is available to you (and your attorney) in putting together a good lease contract if you need it.

You need to understand that a contract is an agreement between two or more competent parties. A lot goes into the word "competent". A minor is not competent - you cannot rent to 17-year-olds. A person also needs to be considered mentally competent to enter a contract; the threshold for mental competence is low, but if you are concerned you need to assure yourself of the mental competence of the other party. I once had a situation where a couple signed a promissory note (as option money on a lease-option) and didn't pay. The lease ended poorly, so we ended up in court. The judge was treating it as pretty cut-and-dried until the defendants starting raising whether they were competent to sign. That was a huge red light for the judge; she stopped in her tracks and began immediately pursing the competence question - as it would trump anything else. Some questioning revealed they based that defense on the husband claiming to be mildly bi-polar. As soon as that became clear, the judge waived her hand dismissively to stop them, and went back to just looking at what was written within the "four corners" of the contract. A judge would have to find a person unable make or carry out important decisions regarding his or her affairs, starkly incapable of maintaining awareness of and responsibility for their actions - and mild to moderate bi-polar doesn't qualify. However, if you believe you are dealing with a person who may not be competent, seek legal counsel before entering into a contract.

A lease contract must contain the basics, of course: names of the parties, rental amount, dates due, and length of term (other terms will take many other postings).

Names of parties: we have every competent adult who is going to be living in the unit sign on the contract. Use their full names (and it doesn't hurt to include any aliases, with a.k.a. - also known as). If you are acting as corporation, LLC, or other entity, you need to be correctly identified in the contract. If you operate as such a separate entity, then the contract is with the entity, and you are a principal. If you are unincorporated but using a business name, you are "doing business as" (d.b.a.) and that should be included. Make sure of where you really stand as a party to the contract. For example, if you are operating as a separate entity, then many courts will not allow you individually to file suits (like eviction, small claims, etc.) later. As an individual you can file suits (it's called pro se or pro per), but if the property is in a corporation, then the court may rule that only an attorney can file the suit - if you file the suit the court may consider you would be practicing law without a license.

Among the reasons that we have every adult sign the lease is so that they are all responsible for anything owed under the lease. The legal term is "jointly and severally", which means that any or all of them can be held accountable for any or all of the rent. For example, two roommates rent from you; it goes bad and one of them leaves. The other one says they'll pay their half of the rent, but you have to collect the other half from the ex-roommate. Nope; you want your contract to where they are all responsible for all of it. What if the one who left is a bum who just lost their job, and the one who stayed has a good-paying job. Why do you want to waste your time on two when you can just collect from one who is likely able to pay (and then let them collect from the other).

The term of the lease often gets no thought either, but it should. Is there a time of year when you tend to get vacancies (say when school gets out because you've got a college nearby)? Then you don't want your leases ending during that time if you can help it. There is no rule that a lease has to be for a year. Also, different properties have different considerations - houses can often take longer to lease and often (in our experience) have more damage, clean-up and paint to take care of. We decided that we were looking for longer-term tenants on houses. So we eventually settled on two-year leases for houses, eighteen-month leases on duplexes, and one-year leases on apartment units. This has helped a lot. Our bad month is December, so I try to avoid having too many leases with November or December expirations, and will use odd-length leases as needed.

Due Date: All your rents should be due on the same day. Most people pick the 1st, but maybe the 15th or some other date would work for you. I foolishly started out making rents due on the date of the lease signing - and promptly found myself spending all month long collecting rents. Have it all due on one day, then your legal notices can all be posted on one day, and you can take all the deadbeats to court on the same day. You don't want to be doing this hodge-podge all month long.

Your rent amount should be stated clearly, along with any late fees, discounts, etc. Remember, if it's not clear, then the court will likely rule the interpretation most favorable to the tenant.

Next, on to the detail terms of the lease, based on the lease we use.