In a previous article, Keith T. Becker of DeDe’s Rentals and Property Management observed that our standard agreement to rent contracts average eleven pages. Bootstrapping on that prior article, we’d like to propose additional recommendations on creating a solid rental contract.:
Rent delivery: In most cases, the tenant is instructed to deliver rent payments to a location specified by the landlord. This might be to the landlord’s residence or place of business. However, Dede’s Rentals Property Management in Sonoma County recommends having a physical address where a tenant can deliver the rent, rather than just a post office box. The reason for this recommendation is because, if the landlord offers just a P.O. box, rather than a street address, the burden for proof of delivery shifts. In such an instance, focus becomes not when the landlord RECEIVED the rent but when the tenant POSTED the rent payment. If the tenant can prove that he mailed it on time, even if the landlord did not receive it, the tenant has greater protection from incurring late fees or being subject to legal notices for non-payment of rent.
Security Deposit: The best way to address security deposits in a written lease agreement is not to “segregate” it. Whatever the individual components – pet deposit, key deposit, cleaning deposit – add all elements together as one comprehensive total, identified simply as the “security deposit.” If you break the security deposit into individual catagories, you cap the use of those funds within each area. Keith Becker elaborates the reason for this with one of his attorney’s favorite examples: Suppose you have a security deposit divided into different components, $1,500 as a security deposit and $500 as a pet deposit. The tenant is somehow responsible for the house burning to the ground. Unless you can prove that the dog lit the match which set fire to the house, you have to return the pet deposit, since it can be used ONLY FOR DAMAGE CAUSED BY THE PET. Therefore, it is strongly advised to “bundle” all elements of a security deposit together; this provides you the greatest latitude in applying the security deposit to any and all damages at move-out. Remember: in the state of California, security deposits on unfurnished residences cannot exceed two times the monthly rent.
Attorney’s Fee Provision: Many formatted leases and rental agreements have a provision to allow the landlord to collect attorney’s fees from the tenant in the event of an eviction or legal action. Many landlords look at this as a benefit, presuming that they can “go after” the tenant for costs incurred in an unlawful detainer. There is a hidden trap, however, in attorney fees provisions. Under California Civil Code section 1717, where an attorney’s fee provision states that only the landlord can recover attorney’s fees from the tenant, the law treats such a provision as a mutual one, i.e., the prevailing party, EITHER landlord or tenant, is entitled to recover attorney’s fees. Looking at this situation with a critical eye: if your tenant cannot pay rent, why would you believe that they can pay an attorney’s bill? It’s best to simply consider that, in an eviction, the landlord should PRESUME to pay for their own legal counsel. (… and, for ALL legal clarification and counsel, it’s important that you talk with your attorney.)
A potential tripwire to the “attorney’s fee clause” follows: in those instances where a rental contract has the attorney’s fee clause INCLUDED, there are tenant-advocate lawyers who might be more willing to take the case without requiring a retainer from the tenant. In such a scenario, there are many ways that this could unravel for the landlord: the tenant’s attorney could persuade/coerce a negotiated payout from the landlord to AVOID a protracted court case, or conversely, if the tenant does go to trial and wins, the landlord would wind up paying both their own and the tenant’s attorney’s fees. In such a situation, the tenant (or their attorney), could even conceivably lien the rental property for collection of payment!
Therefore DeDe’s Rentals, Sonoma County Property Management, is strongly opposed to the inclusion of attorney’s fees provisions in rental contracts. If included in a formatted rental contract, we encourage you to strike it out entirely, as that single provision in a rental contract can cause unexpected woes.
As it is with any challenge, the more you practice, the better you get. The same philosophy holds for rental contract creation and ALL aspects of residential property management. The more you do it, the better you get! If you have any questions please feel free to contact us at DeDe’s Rentals. We will be happy to help you.