Forms All Rental Property Owners Should Have
December 28, 2022 / by Hignell Property Management Team
Property owners are business owners. And, like most business owners, property owners must rely on forms and contracts to define critical legal concepts and guidelines related to the safe use of their rental property. Most rental property owners rely on the following forms to properly manage a rental property.
The Rental Application
A rental application allows property owners to evaluate prospective renters based on the personal information they provide on the form. The applicant’s information can be evaluated to determine if they meet the vacant unit’s established rental qualifications.
A well-crafted rental application ensures that the property owner avoids violating housing laws, which are established at the state level and through the Federal Fair Housing Act. Federal guidance prohibits any discrimination based on race, nationality, the color of one’s skin, religious preference, nationality, age, gender, family status, or existing disability.
Renter’s Screening Checklist
The rental screening process can be a time-consuming task. The best way to save time is to be prepared, which begins with the right questions to ask prospective renters. While rental screening may vary among property owners, it generally includes:
- Documentation of the applicant’s rental history
- The applicant’s current income & credit profile
- The applicant’s identification and references
- A background check, if permitted by law
Specific policies regarding the rental unit should also be included. This ensures each prospective renter receives the property’s ground rules prior to signing a rental lease.
Credit Check Application
Credit reports offer a snapshot of a potential renter’s current and historical credit, which allows a rental property owner to easily evaluate if the applicant’s history reflects an ability and willingness to pay their debt. Ask for written authorization before running a credit check.
Credit scores are generated by the nation’s credit bureaus. These scores quantify an applicant’s creditworthiness, which can be used to define acceptable and unacceptable credit scores for potential renters.
Move In/Move Out Checklist
Create a checklist that can be used for renters who are moving in as well as those vacating. This information about the property helps to keep track of the condition of the property – and can be used as a baseline or comparison point.
Property owners can use this type of walkthrough checklist to document the property’s condition at the beginning of the lease term. This evidence offers a viable way to hold renters accountable for the extraordinary damage that happened during their residency.
In addition, properly documenting existing conditions in the unit helps to reduce the chances that a property owner/renter dispute arises about the renter’s security deposit.
The exact type of lease agreement a property owner uses will depend on whether the rental unit is considered a residential or commercial property.
A lease agreement is among the most important documents used by property owners. A lease, which is an enforceable legal contract, details the legal terms an applicant must meet as a renter in the rental unit. Standard leases exist in each state, each with the ability to stipulate additional guidelines for any specific rental contract. A well-crafted lease agreement clarifies the requirements, rules, and obligations for each party to the contract – the rental property owner and the renter.
The laws that apply to commercial leases differ from residential properties. It's important to seek professional or legal guidance when leasing a commercial unit.
Past Due Rental Notices
A Past-Due or Late Rent Notice is a type of standard form a property owner hopes to never need. It is essentially a demand letter provided to the renter notifying them that the rent in arrears is due immediately. It acts as the first step a property owner uses to collect rent that is past due.
The Late Rent Notice is a less formal notice than a notice to evict. It precedes the beginning of the eviction process. Although the form and content of the notice may vary, most Past Due Rent Notices include these basic elements:
- The legal renters’ names – those on the lease agreement
- The exact address of the rental property
- The exact amount of overdue rent currently due to the property owner by the renter
- The amount of late fee that may be due in addition to the rent arrears, if any
- The effective date of the notice and the new rental amount
- The property owner’s contact information
Renewal & Non-Renewal Lease Notices
As a lease agreement nears its expiration, a property owner has a right to choose to renew or not renew the current lease agreement based on the terms detailed.
Renewal Lease Notices
A lease renewal letter should be sent if you intend to offer the current renters a lease extension/renewal. The lease renewal letter should include this pertinent information:
- The date of the notice being sent
- The upcoming expiration date of the current property lease
- The term of the lease renewal – which may be six months or a year, etc.
- The new rent amount, if applicable
- The date by which a renter must respond to the notice
- The property manager or owner’s contact information
Non-Renewal Lease Notices
A property owner has the right to end the rental contract when it expires. This notice essentially acts as a legal notification to the current renter that they are expected to vacate the premises when the lease expires. Note that state laws regarding the non-renewal of residential lease agreements differ, so it's important to comply with the relevant state law. Seek legal guidance if you have questions regarding this matter.
Although always thought of as a last resort, there are occasions when an eviction is a necessary legal tool. The notice of eviction laws varies by state, so it's best to seek professional or legal guidance. The notice of eviction is the first step in this process.
Standard industry forms set forth specifics and policies in a way that allows the renter and owner to agree to defined terms and provisions in writing saving both parties involved from potential headaches and wasted time.
Topics: Residential Property Management, Investment Property