Q. I visited an apartment and liked what I saw. The landlord asked me to sign up on the spot; he created a lease on his phone, walked me back to the office and printed it. I’m all for creative online apps, but I’m wondering, can this be legal?
A. There’s nothing illegal about creating a lease using an online app. The question is, will the document stand up to scrutiny? Without seeing the precise document that your landlord made, I couldn’t say. But I was curious, so I went online and found such an app. Then I gave it a try. I’ll say this: It sure is easy. But because the app is not designed for any particular state, gives no information that would enable a user to make the lease state-law compliant and doesn’t even warn the user to check his state laws before use, it’s downright dangerous.
For example, the user is asked to specify the security deposit. Many states limit the amount of deposit a landlord may collect, but the app doesn’t mention this, let alone give you a 50-state chart with the exact limits. Ditto for late fees, whether interest is required on deposits (and if so, how much), and the amount of notice required to enter a tenant’s dwelling. This is make-it-yourself law at its finest.
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The app also ignores required disclosures, information that, by federal or state law, must be in leases and rental agreements. All landlords must comply with the federal law that requires landlords to disclose the known presence of lead-based paint hazards on the property.
Similarly, almost every state has one or more disclosures that must be in a lease, including California (regarding the existence of a state database of registered sex offenders; a lease without this information subjects the landlord to liability) and Illinois (any rent concessions must be described in the lease; failure to do so is a misdemeanor). These states have additional requirements, as do almost every other state. But this app is blissfully unaware.
The termination-notice option, in which users are asked to choose the amount of notice the landlord and tenant must give to terminate the agreement, is perhaps the most stunning. Leases by definition may not be terminated before the end of the term unless it’s for cause (the failure of the landlord or tenant to follow the lease or the law). By allowing the user to name a termination notice period for noncause reasons, the app has arguably just converted a fixed-term lease into a monthly rental agreement.
Online apps have great potential, and theoretically, there’s no reason why a thoroughly researched and engineered app couldn’t do the job. But the one I looked at seemed to be released before it was ready (and legally compliant).
Q. We require our tenants to carry renters insurance. But when a tenant recently ruined the hardwood floor in his living room (his aquarium leaked), we found out that he had not paid the premiums; he had to pay out of pocket. He asked to pay for it over time, and we reluctantly agreed. How can we make sure our tenants get and keep policies?
A. It’s a shame your tenants were so shortsighted that they didn’t keep this modestly priced coverage. For a few hundred dollars a year at most, renters insurance will cover the tenant’s own belongings that are ruined, destroyed or stolen; and it will cover the tenant in case his negligence damages or destroys others’ property or causes personal injuries. Policies also cover living expenses in the event that a disaster destroys the property and the tenant has nowhere to live.
In some states, it’s not legal for landlords to require their tenants to carry such insurance, but the majority do allow it. While it’s a good start to require, in your lease or rental agreement, that the tenant carry property and liability insurance (assuming it’s legal in your state), it won’t do you much good unless you see proof that the tenant has followed through. You’ll also want to specify what will happen if the tenant buys the policy but lets it lapse.
Your lease clause should require the tenant to purchase a renters insurance policy within 10 or so days of the move-in date. That gives the tenant plenty of time to shop around.
You should also require the tenant to obtain certificates of insurance from the issuing carrier, for both the personal and the liability policies.