LEASE TERMS – CONTROL YOUR BUSINESS

by Mark Zinman

 

In my March article, I wrote about “knowing your business partner”—suggesting that a landlord would be wise to get a complete background check done on all prospective applicants.  Remember, a lease is a business for a year, and your background check is where you learn about your business partner.  The next step is controlling the business relationship: know your lease terms and include any terms that you consider material.  In a rental situation, you get to control the terms of the business by drafting the lease.  Don’t drop the ball by assuming that the lease you use has you covered.  There will be items particular to how you run your business that may not be included in standardized leases.

For example, many people rely upon the Arizona Association of Realtors lease.  While this is a very good lease and covers many items, it does not contain a jury trial waiver.  This provision is important because the most common landlord/tenant lawsuit is an eviction.  This is a streamlined lawsuit in which most attorneys’ fees are relatively inexpensive.  However, if your tenant demands a jury trial, and you do not have a waiver in your lease, your short hearing just turned into a two day trial.  Not only will this ruin your schedule, it will cost you exponentially more in attorneys’ fees.

Another important lease term is to include a provision identifying an emergency contact and the emergency contact’s rights in the event that the tenant becomes incapacitated, imprisoned, or passes away.  While you hope that such a fate never befalls your tenant, you do not want to end up in a situation where your tenant passes away and you can’t use the property for over 30 days because you have to store the tenant’s stuff.  That doesn’t even count the time you need to spend to acquire legal possession back from the deceased.  Under A.R.S. § 33-1314(F), a landlord may include a provision in the lease where the tenant designates a person that the landlord may release the Tenant’s property to in the case of an emergency or if the Tenant dies.  We see this provision apply on a regular basis for our clients.

In addition to these more global lease provisions, there are countless lease terms that a landlord may have thought of, but forgotten to memorialize in the lease.  Remember, even if you don’t want something happening in your property, it is not prohibited unless it violates the law, causes a serious nuisance, or violates the terms of your lease.  Therefore, if something is important to you, specify it in the lease.  Smoking inside a rental unit is a perfect example of this.  Smoking can cause significant damage in a property.  However, if you do not prohibit it in the lease, then the legal presumption is that the tenant can smoke in the property.  Similarly, if you don’t want pets in your property, make sure to specify that.  On the other hand, if you do allow pets, don’t just say “1 pet allowed.”  You should specify the type of animal and breed if applicable.  You don’t want to find yourself in a situation where you thought your tenant was bringing in a cat and it turns out they have a miniature horse living in your rental property.