Attorney Transaction Killers Series - Standard Lease Terms - Commons Issues for Attorney Review

By
Real Estate Agent with PREA Signature Realty - www.preasignaturerealty.com

Model Lease Forms and ProvisionsUnlike the jointly drafted real estate sales contract approved by the Bar Association of Metropolitan St. Louis and  St. Louis Association of Realtors, the model lease provided by the St. Louis Association of Realtors has not received similar treatment and is not uniformly used.  The reasons for the lack of wide spread use and acceptance of model lease form include:

  • Owners often have their own leasing staff and have relied on attorneys and commercially available forms instead of Realtors for the source of their leases and lease terms.
  • Owners often draft their leases to address issues that have occurred in the past.  In many cases, there are overreactions to the prior issue that result in one-sided or onerous terms.
  • In the leasing context, Owners have greater bargaining strength than tenants and there is less pressure to approve unfavorable or even balanced terms.
  • Model forms often are ill-equipped to reflect the specific leasing practices and requirements of the owner or the specific issues that arise due to the nature or condition of the property.
  • Model forms often do not take into consideration municipal ordinances and local practices that modify or govern leasing practices and customs in a particular jurisdiction.

Although there is no uniform acceptance of the model lease form provided by the St. Louis Association of Realtors, the provisions contained in the model lease form represent in my opinion balanced terms that can be used as the basis for developing a good, well-written lease that is fair while still adequately protecting the interests of the landlord.  

In the table below, I set forth the individual terms of the model lease form in the first column.  The second column sets forth a brief description of the lease term as well as a short comment on areas that may be appropriate for review by the attorney reviewing the model lease form.

 

LEASE TERMS COMMONLY USED IN ST. LOUIS

COMMON ISSUES FOR ATTORNEY REIVEW

PARTIES AND PROPERTY.  Tenant, agrees to lease from the undersigned Landlord the following real property located in the City/County of  [Insert City/County Name], Missouri, known as and described as follows: [Insert Street Address & Unit No.]

Describes Leased Premises. Specify parking and storage area assignments.

TERMS Tenant agrees to pay a total of $[Insert Annual Rent] to Landlord for the rental period of [Insert Period] beginning [Insert Start Date] and ending on [Insert End Date].  Tenant covenants and agrees to pay a monthly rental fee of $[Insert Rent Rate] in advance on the [Insert Payment Date] day of each month during the term of this lease. The first month's rent shall be paid on [Insert First Payment Date]. If Tenant takes possession of the property in advance of the term, all conditions of this lease shall prevail and rent shall be paid pro rata to the beginning of the month. In the event the Landlord receives the rental payment on or before the due date each month, a $[Insert Discount] discount shall be applied to the monthly payment.

Sets forth Rental Rate.

  

Use of discount encourages timely payment of rent by creating incentive for early payment.

  

  

ADDITIONAL RENT All monthly rent payments shall be paid on or before the due date without a grace period and if not received by Landlord when due, then in addition to other remedies which are contained herein or as may be provided by law, Tenant agrees to pay additional rent of $[Insert Late Fee] per day for each day such rent or partial rent is overdue as liquidated damages, actual damages being impossible to ascertain. An insufficient check shall incur the same additional rent until such time as the check is made good. All rental payments shall be paid to [Insert Property Manager] and delivered to: [Insert Payment Address] or to such other place as the Landlord may, from time to time, direct.

Sets forth late fee described as liquidated damages and not penalty and identifies where rent payment should be delivered.

  

Make sure late fee is reasonable.

SECURITY DEPOSIT The security deposit of $[Insert Earnest Money] payable upon execution of this lease, shall be held by [Insert Party Holding Security Deposit], without interest to Tenant for the term of this lease, in part, as a guarantee of the performance by the Tenant of the agreements contained herein.  Landlord is hereby authorized to expend from this deposit, such sums necessary to clean the premises and correct or repair damage done by the Tenant or Tenant's guests or invitees. Within thirty (30) days after the termination of the tenancy or recovery of possession by Landlord (whichever is later), Landlord shall either return to the Tenant the full security deposit or furnish a written itemized list and cost or estimated cost of any such damages or reasons for which the security deposit or any portion thereof is being withheld along with the balance of the security deposit, if any. In the event the security deposit is not sufficient to correct or repair the damage or restore the loss due to Tenant's non performance, then Tenant agrees to pay such additional amount upon notification of the dollar amount.  The security deposit is not to be construed by the Tenant as a payment of any installment of rent due under the terms of this lease. The security deposit refund may be in one check, jointly payable to all Tenants and such refund check and itemization of deduction may be mailed to one Tenant only.  NOTE: IN NO EVENT SHALL SECURITY DEPOSIT BE USED BY TENANT AS ANY PART OF RENT.  Missouri Landlord and Tenant Act Chapter 441 and 535 RsMo states that a tenant may not apply or deduct any portion of the security deposit in payment of rent.

Review amount of security deposit for statutory compliance.  Security deposit cannot exceed 2x the monthly rent.

  

Review return of security deposit provision for statutory compliance.  Requirements for notice, inspection, and deadline for return set forth in statute.

RETURNED CHECK There shall immediately accrue a charge of $[Insert Return Check Fee] as additional rent, for each event of any check delivered to the Landlord, which upon presentation to the designated depository thereon, is dishonored for reason of insufficient funds, account closed, payment stopped or otherwise. At any time after such an occurrence, Landlord may require all subsequent amounts payable under this lease to be paid by Tenant in the form of cash, cashiers check or money order.

Sets forth return check fee policy.  Statutory provision may allow collection of 2x face value up to $500 plus attorney's fees.

USE OF PROPERTY Tenant agrees that the property shall be occupied by no more than [Insert Number of Occupants] person(s), as a residence for Tenant and Tenant's immediate family or other such persons identified on Tenant's application or otherwise identified herein, and shall not be used for any other purpose whatsoever, however, Tenant shall be permitted to entertain guests for limited periods of time, not to exceed two weeks. Tenant shall comply with all applicable laws regulating the use of the property. Failure to comply will cause a default of this agreement.

Identifies occupants and is intended to prohibit change in true occupants while permitting guests as well as to prohibit transient uses. 

GOVERNMENTAL INSPECTIONS AND OCCUPANCY PERMIT Before possession and if required by any applicable governmental authority, Landlord shall comply with occupancy code requirements. Tenant shall obtain an occupancy permit.

Occupancy inspection required for most (not all) City properties. 

Review statutory penalty for failing to obtain occupancy permit.  Local ordinance may make it illegal to collect rent without an occupancy permit.

Review provision for statutory compliance regarding who is responsible for obtaining and paying for occupancy inspection and permit.  Local ordinance may make this non-delegable duty of landlord.

POSSESSION Landlord will permit Tenant to quietly and peaceably hold, occupy and enjoy said property during the term hereof without interference by the Landlord provided that Tenant observes and performs all of the agreements contained herein. Landlord's liability for failure to deliver possession on the specified date shall be limited to the abatement of rent due from Tenant until possession is delivered.

Sets forth standard quiet enjoyment provision. 

  

Review abatement provision as it may not be suitable for tenant's requiring to move on set date.

ILLEGAL DRUGWARNING Illegal drug trafficking, manufacturing or use is a violation of law and this lease, subjecting Tenant to all applicable penalties. In the event Tenant or any member of Tenant's family or any of Tenant's guests, invitees, agents or employees uses or is involved in the use, distribution or manufacture of illegal drugs while on Landlord's property, it shall be just cause for the termination of this lease and the eviction of the

Tenant.

Provision is intended to avoid forfeiture provisions for illegal drug trafficking and manufacture from leased premises.  Review for statutory compliance with seizure and forfeiture provisions of statute and disclosure requirements regarding meth production, storage and sale from leased premises.  For landlords, emphasize use of criminal records checks of tenants.

ACCESS BY LANDLORD Tenant shall assume all responsibility for the terms and conditions of this lease at the time of occupancy but no later than the first day of the term hereof. Landlord shall be entitled and shall have the right, at all reasonable times, to inspect said property for any damage or destruction or to determine whether or not Tenant is performing and observing all of the agreements contained herein, and for the purpose of making any necessary repairs. For a period of 60 days prior to the expiration or termination of this lease, Landlord shall have the right of access to the property at all reasonable times for the purpose of showing to prospective tenants, buyers, appraisers, lenders and inspectors. Landlord shall not be liable to Tenant or any member of Tenant's family or any of Tenant's guests, invitees, agents or employees for any loss, injury or damage to them or their personal property from any cause whatsoever, except Landlord's gross and willful negligence.

Sets forth landlord's right to enter and inspect property. 

  

Creates a 60 day window for showings at end of lease term.

  

Disclaims liability for personal injury or property damage.  Review case law to verify whether language use is effective disclaimer of liability.

RESPONSIBILITIES OF LANDLORD In addition to other responsibilities set forth elsewhere in this lease, Landlord shall be responsible for the cost to maintain the residence in good and habitable condition including costs associated with reasonable wear and tear of the tenant, except as provided for damages caused by Tenant's neglect and except as provided herein. Landlord has disclosed to Tenant, in writing, any facts known to Landlord as regards to any prior use of the property as a site for production, distribution or the use of methamphetamine in the property.

Sets forth warranty of habitability which cannot be disclaimed and allocates responsibility for maintenance.

  

Review to determine whether re-allocation of maintenance requirements between landlord and tenant is appropriate.

  

Provides for meth disclosures required by statute.  Review for statutory compliance.

LIABILITY AND INDEMNITY Landlord shall not be liable to Tenant, Tenant's guests or other occupants or persons on the premises for personal injury, property damage or other losses to such persons or their property caused by theft, burglary, assault, other crimes, fire, water, ice, wind, rain, smoke, or any other cause. Furthermore, Tenant agrees to indemnify and hold Landlord free and harmless from any and all liability for injury to or death of any person, or for damage of property arising from the use and occupancy of the premises by Tenant or from the act or omission of any person or persons, including Tenant in or about the leased premises with the express or implied consent of Tenant. Landlord requires Tenant to obtain personal household contents and personal liability insurance. Landlord shall have no duty to furnish smoke detectors, except as required by law, however, if furnished, Tenant is responsible for keeping them operational by furnishing batteries.

Disclaimer of liability by landlord.  Review case law regarding effectiveness of disclaimer.

  

Requires indemnification of landlord by tenant and requires liability insurance.  Confirm amount and coverage requirements for tenant required insurance.

  

Review effectiveness of attempts to disclaim duty to provide working smoke detectors.  Local ordinance may impose duty to provide working smoke detectors.

MULTIPLE TENANTS: Each Tenant is jointly and individually liable for all obligations and sums due under this lease agreement. A lease violation by one Tenant is a violation by all Tenants. Notice by Landlord to any adult Tenant is notice to all Tenants.

Provides for joint and several liability for obligations under lease including payment of rent and property damage.

RESPONSIBILITIES OF TENANT: In addition to other responsibilities set forth in the lease, Tenant shall:

• Pay all utilities when due including, if applicable, electric, gas, water, and trash removal. Tenant shall make arrangements for such services prior to occupancy and shall maintain such services (and, when necessary, provide heat for the building) throughout the term of the lease.

• Obtain personal liability insurance and, if desired, personal household contents insurance.

• Inspect smoke alarms monthly, if applicable, and replace batteries when needed.

• Change furnace filter regularly (at least every three months) if residence has a forced air system.

• Keep air conditioner compressor clean and free of debris, leaves, grass clippings, etc.

• Keep garbage, trash, waste and debris in proper containers and dispose of same at least weekly.

• Comply with subdivision/condominium rules and regulations, a copy of which, if applicable, is attached. 

 

Except where the following exterior maintenance items are provided for by the subdivision/condominium, Tenant

shall also:

 

•1.    Keep sidewalks and driveways free from snow, ice and anything that may present a danger to Tenant or others.

•2.    Keep grass cut, watered and trimmed and reasonably free of leaves and debris.

•3.    Provide the necessary and proper care for shrubs and trees.

•4.    Maintain gutters and downspouts so as to be clean and operable.

 

It is further understood, acknowledged and agreed that Tenant shall:

 

• Be responsible for the cost of repair of glass, screens and doors if damaged by accident or neglect of Tenant or anyone else.

• Be responsible for the cost of pest/insect control, except for wood destroying insects/pests, first reported to landlord 30 days or later after possession.

• Be responsible for the cost of repairs to bath, tub/shower enclosures, tile, walls and floors if grout or caulk is not intact and properly sealed so as to prevent water penetration behind such seals when such condition was not reported, in writing, to Landlord before damage occurred.

• Be responsible for the cost of repairs to garbage disposal (if any), bathtub, toilets or drains, if caused by rags, excessive grease, glass, metal, plastic, etc. or any accident or neglect of Tenant or anyone else.

• Be responsible for any other cost incurred by Landlord (repairs or otherwise) resulting from accident or negligence of Tenant or Tenant's invitees or guests.

• Be responsible to immediately notify Landlord, in writing, of any repairs needed that, if left unattended, would result in damage to the residence.

 

In addition, it is understood, acknowledged and agreed that Tenant:

 

• Shall keep no pets on the property without the express written consent of Landlord.

• Shall not paint, or install or remove wallpaper, or otherwise alter the residence in any manner without the written consent of Landlord.

• Shall not alter, replace or add door or window locks and shall return all keys to Landlord upon termination of this lease. Landlord agrees to change locks upon request of Tenant and receipt of payment for the applicable locksmith or other contractor service fee.

• Shall not park or allow guests to park anywhere on the property except in regular spaces provided for such vehicle parking.

• Shall not park or store any recreational vehicle, trailer or commercial vehicle on the property without the written consent of Landlord

• Shall not store flammable or hazardous materials, except nominal amounts of gasoline, which is to be stored in proper containers.

• Shall refrain from activities of any kind that would interfere with any neighbors' peaceful enjoyment of the property they occupy.

• Shall not assign this lease or sublease or rent any portion of the property to anyone else.

• Shall keep Landlord informed at all times of Tenant's current phone numbers (residence, work and cell).

• Shall, upon vacating, remove all personal property belonging to Tenant and shall thoroughly clean the property and shall pay Landlord's cost of professional carpet cleaning to be done after vacating.

• Shall pay all attorneys fees and court costs in the event legal proceedings are instituted by Landlord for non-payment of rent or late charges or any other breach of this lease by Tenant, including eviction cost.

Review to insure it meets specific requirements of landlord or tenant and/or is consistent with type or condition of property.

  

Review for inconsistent maintenance obligations.

  

Review reasonableness of restrictions on use.

  

Review attorney's fees provisions.

HOLDOVER. If Tenant holds over and fails to vacate on or before the agreed upon move-out date (end of lease term, or any renewal or extension period, or the move-out date agreed to by the parties), Tenant shall be liable to pay double rent for the holdover period and shall indemnify Landlord and/or prospective tenants or buyers for damages (i.e., lost rent or profits of sale, lodging expenses and attorney's fees).

Describes statutory provision for double rent penalty for holdover tenants after expiration or termination of lease.

DESTRUCTION OF PROPERTY. In the event the property is rendered partially uninhabitable by fire or other casualty, rent shall be reduced proportionally until such time as property is habitable. Landlord shall proceed immediately to render the property habitable and if repairs are not completed within 30 days after the date of the damage or loss, then Tenant shall have the option of terminating this lease immediately thereafter by giving Landlord written notice of termination. If the property is totally destroyed or rendered uninhabitable by reason of fire or other casualty, the lease shall immediately terminate.

Provides for abatement of rent, cancellation or termination of lease due to property damage rendering leased premises uninhabitable.

CONDEMNATION. In the event of condemnation under governmental right of eminent domain or otherwise or in the event of a sale of the property under threat of such condemnation, Landlord may terminate this lease but not without written notice to Tenant not less than sixty (60) days in advance of the rent due date.

Provides for termination due to transfer or sale of property due to eminent domain.

DEFAULT BY TENANT. In the event of a default by Tenant of any rent payment or in the performance of or compliance with any agreements contained herein, Landlord shall, without demand, be entitled to possession of the property. Tenant shall, upon written demand by Landlord, quit and surrender said property to Landlord. Tenant's obligation to pay rent for the full term shall not be terminated, provided however, that Tenant shall be entitled to credit for any rent thereafter collected by the Landlord for re-renting said property during any part of the balance of the term hereof, less any expenses in connection therewith. The remedies provided for in this paragraph shall be in addition to the other remedies provided for herein or as provided by law. Failure by Landlord to enforce or demand performance of any obligation of Tenant, or to seek remedy for breach

thereof shall not waive or excuse defaults of other obligations nor further defaults of the same obligation.

Sets forth landlord remedies upon breach of lease by tenant.

  

Allows for renting of leased premises to mitigate damages.

ABANDONMENT. If Tenant is absent from the premises for five (5) consecutive days following notice of default of this lease, or if Tenant leaves personal property at the premises after the termination of the lease, all personal property found in or on the premises may be deemed by Landlord to be abandoned. Landlord may peaceably enter, remove and dispose of such personal property as Landlord sees fit without any liability or duty to account for such personal property to Tenant. Cost of removal of personal property shall be paid by Tenant.

Defines abandonment and authorize re-entry and disposal of tenant personal property.

  

Review for statutory compliance regarding abandonment.

INSPECTION OF PROPERTY Tenant acknowledges having inspected said property prior to the execution of this lease and finds the same to be in good, safe, and clean condition and repair except as may be otherwise noted. Tenant further agrees to keep said property in as good and clean condition and repair as when so inspected and when first occupied, and will keep said property free from any debris, trash and filth, and will not do anything to create a danger of fire or cause an increase in insurance rates or to cause a cancellation of insurance. Upon the expiration of this lease or its termination, Tenant will surrender possession of the leased property (including any Landlord owned personal property) in as good, clean and safe condition and repair as on the date of this lease except for reasonable wear and tear.  Tenant agrees that no representation as to condition has been made and that no promise to decorate, alter, repair or improve the property has been made except what has been set forth herein. Before executing this agreement, Tenant should contact law enforcement officials for information pertaining to whether registered sex offenders or other convicted criminals reside in the area. If Tenant is not satisfied with such information, Tenant should not lease this property.

Requires inspection and acceptance of condition of leased premises.

  

Sets forth maintenance and repair duties of tenant.

  

Requires all pre-leasing promises of repairs to be made in writing.

  

Requires tenant to make sex offender related inquiries.

  

21. CHECK ONE

___ This lease agreement is part of a Lease/Purchase agreement, Sale Contract is attached.

___ This lease agreement is for lease only, attach Form #2161 for Relationship Disclosure and Form #2119 for Lead Based Paint Disclosure.

Provides for addendum of lease purchase, lead paint disclosure, and relationship disclosure for agency relationship.

If you are interested in professional representation regarding the drafting and negotiation of leases or if you are interested in learning more about our leasing services, please contact Ryan Shaughnessy at PREA Signature Realty at 314-971-4381 or send an e-mail to Ryan@PREASignatureRealty.com.  Or, visit our website at www.PREASignatureRealty.com.

Attorney Review Series

Attorney Review Series - Residential Leases

 

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________________________________________________________________________________________________

PREA SIGNATURE REALTY

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PREA Signature Realty is a full service brokerage located at 1709 Park Avenue in the Lafayette Square neighborhood of the City of St. Louis.  PREA Signature proudly serves the following city neighborhoods:  Lafayette Square, Soulard, Benton Park, Benton Park West, Downtown Loft District, Forest Park Southwest, Central West End, Tower Grove East, Tower Grove South, Compton Heights, Shaw, The Hill, Dogtown, Carondelet, Holly Hills, St. Louis Hills, Dutchtown, and the Other Historic Neighborhoods of the City of Saint Louis, Missouri. 

The opinions expressed herein represent the opinions of the author only and do not reflect the opinions of PREA Signature Realty.  All photos and written content were produced by PREA Signature Realty.  All Rights Reserved - PREA Signature Realty (2009).  This content may not be reproduced or reprinted, except for Active Rain re-blogging, without express written permission of PREA Signature Realty.

For more information, visit our website at www.PREASignatureRealty.com or contact Ryan Shaughnessy at 314-971-4381 or send an email to Ryan@PREASignatureRealty.com

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Show All Comments
Rainmaker
1,317,601
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

A great post.  I always advise my clients to consult with an attorney regarding these issues.  I am surprised so many agents tell me they NEVER do.

Aug 20, 2009 01:40 PM #1
Rainer
229,238
Ryan Shaughnessy
PREA Signature Realty - www.preasignaturerealty.com - Saint Louis, MO
Broker/Attorney - Your Lafayette Square Real Estate Partner

Joan - This series really focuses on common sense attorney review and provides some general guidelines.  Although it is oriented towards leasing, I will add other transaction in the future.  Thanks for reading.

Aug 20, 2009 01:52 PM #2
Rainmaker
1,080,029
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Ryan, here in Florida our Associations do not have leases. If a boiler plate lease is used, then we can only be involved if it is for a year. Anything over a year must be handled by an attorney. We refer rentals to property managers.

Aug 22, 2009 10:05 AM #3
Rainer
229,238
Ryan Shaughnessy
PREA Signature Realty - www.preasignaturerealty.com - Saint Louis, MO
Broker/Attorney - Your Lafayette Square Real Estate Partner

Sharon - We don't have such a restriction.  Real estate agents and unlicensed employees of owners handle lease transactions.  Real estate agent who in past years wouldn't handle leasing are now handling leasing transactions.  I guess the theory is it is better to have $500 on a transaction then no income at all.

Aug 23, 2009 02:15 PM #4
Rainer
2,725
Paul Davidson

 

Great article. Thanks for the info, this is really a helpful post. BTW, if anyone needs to fill out IRS form 2119, I found a blank form in this link http://goo.gl/jm192X. This site PDFfiller also has several related tax forms that you might find useful.

Feb 25, 2015 12:31 AM #5
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Rainer
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Ryan Shaughnessy

Broker/Attorney - Your Lafayette Square Real Estate Partner
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