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    Lease and Other Required Leasing Documents

    in Property Management

    Written or Verbal Leases?

    Although leases less than a year can be verbal, not using a written lease is ill advised. All rental property owners are advised to use some form of written lease.

    Types of Leases

    There are two common types of leases:

    Periodic Leases – Periodic leases are often called rental agreements as they are renewed each time the rent is paid. Month-to-month or week-to-week leases are two very common periodic leases. Periodic leases can be thought of as the “pay as you go” short-term contract. The periodic lease provided by the RPOA is called the Standard Rental Agreement.

    Fixed-Term Leases – Fixed-term leases are the ones typically used to cover a longer range of time and have a specific beginning and ending date which usually spans several months. The lease is not renewed each time the rent is paid but rather continues until the ending date. Six month or year leases are the most common types of fixed term leases. Rent could be paid in advance but is typically paid in monthly installments. Fixed-term leases can be thought of as long term contracts.

    Which Lease Should I use?

    Periodic leases are generally recommended as they offer the property owner the most flexibility. This flexibility can ease the eviction process. A property owner can request possession of their property at the end of each tenancy. In the case of a month-to-month this would be every 30 days. Longer term leases rarely increase the probability that a tenant will stay longer.

    Fixed–term leases can be beneficial in establishing value and can encourage a small segment of tenants to stay longer. Some tenants will insist on a fixed-term lease as it provides them with a greater sense of security, i.e. less chance of being asked to move quickly. Evicting someone on a lease can be more problematic and frustrate the sale of a property to a new owner.

    Where Can I Get a Lease?

    The RPOA strongly recommends that you use the RPOA lease forms provided free online at the RPOA website, www.rpoaonline.org. Other online forms or forms available from office supply stores are notorious for including incorrect language or excluding language required under Michigan law. The RPOA forms are reviewed regularly by attorneys to ascertain their compliance with state and federal laws. The forms are also familiar to many district court judges. The RPOA offers the Standard Rental Agreement and the Standard Lease Agreement online in PDF format or in the office in paper form with NCR copy capability.

    Required Disclosures and Forms:

    The following disclosures and forms are required under Federal or Michigan law:

    Lead-Based Paint Disclosure (if the property was built before 1978) – A disclosure for lead-based paint in compliance with EPA and HUD must be provided to the tenant upon the execution of a lease along with a copy of the EPA booklet entitled “Protect Your Family from Lead in Your Home.” This disclosure may also require you to provided lead testing and clearance information. A copy of the lead-based paint disclosure is available free online at the RPOA website or by clicking here.

    Domestic Violence Language or Addendum – Michigan requires that each lease include specific language regarding the release of domestic violence victims from leases. In lieu of the lease language, an addendum can also be provided or the specific language posted in a conspicuous location at the point of executing the lease. A copy of the domestic violence disclosure is available free online at the RPOA website or by clicking here.

    Beginning & Ending Inventory Checklist – This form is provided to the tenant at the time of the lease for their use in identifying anything that may be in disrepair at the beginning of the lease. A copy of the completed form should be returned to the property owner. A copy of this form is used by the property owner after the tenant has moved out to note any damages caused by the tenant. The checklist is used as the basis for completing a Notice of Damages and can be the only evidence a property owner has to uphold their case for monetary damages. A copy of the Beginning & Ending Inventory Checklist is available free online at the RPOA website or by clicking here.

     

    FORMS

    Required forms under Federal or Michigan law:


    Other Helpful Disclosures and Agreements

    Other disclosures and documents that a rental property owner might use include, but are not limited to, the following. Each of which are available at the RPOA website or office:

     

    Disclosure: This Knowledge Base article is accurate as of the last update.  Laws and policies are subject to change.  If you have any questions, please call the office.  Click here for contact information.

    Clay Powell