One of the questions I get asked a lot from owners and potential owners is about our lease. We have a lease we've been using for over 15 years and have been constantly improving and fine tuning it to protect our owners. We have used our lease for over 4,000 lease signings over this time period. I get asked about the difference between our lease and why it is so “pro owner” versus pro tenant. Here are a couple of reasons why our lease is “pro owner” and why it will benefit you to use our lease as opposed to another lease.
All Persons Over 18 Must Sign the Lease
We require all persons over the age of 18 to sign the lease. Seems simple right? But you would be surprised how many property management companies do not require it. The reason we require all persons over 18 to sign the lease is if we must evict the tenants and all parties over 18 have not signed that lease, we have a problem. We can evict the parties that have signed the lease, but it is hard to evict people that have not signed the lease if they are 18 or older.
Tenants will come to us and say my spouse or partner does not work so I don't want them on the lease. This is not a good policy and do not allow this to happen. Or they may come to you and say my partner or spouse has a very poor credit score so I don't want them on the lease. Again, we want all parties over 18 years old to sign the lease so we know exactly who's living in the property and if we must do an eviction, we can get that done.
Automatic Rent Increase after the Initial Term Ends
Within our lease is a clause that when the initial term is over in one year or two years, the rent goes up automatically 10% if they want to go month-to-month. This incentivizes the tenants to either accept the 10% premium if they want the flexibility of month-to-month or negotiate a new one or two-year lease. This new lease will probably increase the rent by 3 to 5%, which is a much more reasonable increase than a 10% increase. And that way we've locked them in for another year, or maybe two years, and this benefits the owner. But again, the tenant does have the flexibility but the 10% is already pre-authorized.
Waive Their “Notice to Quit” Rights
In the State of Pennsylvania, and maybe other states, the tenant has what is called a 10-day “Notice to Quit” right. If we need to do an eviction, we must give the tenant 10 days’ notice to tell them we are about to evict them. In our lease, we make the tenants waive that right, so they have signed that right away, and we can begin eviction proceedings right away. We could evict a tenant on the first day of the month. I am not saying we do that, but we have the right to do that because we require our tenants to waive that 10-day Notice to Quit right.
Tenants Must Initial Several Sections of the Lease
Tenants must initial certain sections of our lease. There are areas of the lease that are very important including the Notice -of Quit we spoke about in the last paragraph. Another important section is Renter's Insurance, so we make the tenants initial these sections. This way the tenant cannot claim later that they were not aware because we make them initial each of these important sections in the lease.
Tenants Must Sign Several Addendums Designed to Protect the Owner
Tenants are required to sign several addendums including Lead Paint, Security Deposit Escrow, Rules and Regulations and several other addendums. These addendums are designed to protect the owner so it's very clear what's going to happen at the end of the lease or under other various scenarios. So we make sure that these addendums are signed to protect the owner.
Our Lease has been Reviewed by 100’s of Judges and Attorneys over the Last 10 Years
Del Val has probably signed 4000 to 5000 leases over the last 15 years. As part of this process our lease has been reviewed by hundreds of attorneys. We have also been in front of hundreds of Judges during eviction hearings. As result we have refined and improved our lease based upon this feedback. Our lease is well tested and any weaknesses have long since been removed.
We Include the “Extra” Paperwork that is Required in Philadelphia
The City of Philadelphia requires a lot of extra paperwork that is not required outside of Philadelphia. So, it is important that we get those documents signed at the time that the tenant moves in. If we do not get these documents signed and go to evict down the road we could potentially have a hard time doing an eviction. That's not the position we want our owners to be in so we want to make sure all the paperwork is done properly.
If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program please go to our website at http://www.delvalproperty.com/.
Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Philadelphia Property Management company with over 15 years' experience and manage over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA. We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program. This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation. All this while it GUARANTEES you will never have to deal with maintenance or tenant issues.