If you are a landlord in Sacramento or planning to become one in the near future, you’ll need to prepare a customized rental agreement. The most common mistake we see landlords make is that they download a generic rental agreement from the Internet and use it to manage their property in Sacramento CA.
The agreement should not only outline all the terms and conditions that your tenants need to follow while residing in your property, but also comply with various laws outlined in the California Code of Civil Procedures.
Rental agreements are an important aspect of property management in Sacramento CA.
In the beginning of your career dealing with rental properties in Sacramento, you should seek the help of a qualified real estate lawyer in drafting rental agreements. As you gain experience, you can do this yourself, but make sure to stay updated with the latest legislations related to property management laws. If there is any question – always speak to a lawyer. Let’s now examine in more detail some of the most important items you should include in a tenancy agreement when practicing property management in Sacramento CA.
1) Tenancy period
Let’s first understand the basic difference between a rental agreement and a lease. A lease typically expires in a year and has to be renewed annually. On the other hand, rental agreements auto renew each month – until the time the tenant or landlord terminates it. This is the basic difference. You should refer to your local property management laws for a more detailed definition.
The rental agreement should clearly state the exact date and time it comes into effect, and it expires. It should also specify whether it’s a month-to-month rental agreement, or a lease.
If it’s a lease it should specify the lease period. There are various types of leases. What type you should choose will depend on the how long you want the tenant to stay, and how much flexibility you want in your arrangement.
2) Rent policy
The rent policy is another important item to specify in the rental agreement or the lease. The rent policy should specify:
- The exact amount of rent due and the exact time period
- Acceptable and unacceptable payment methods
- Conditions related to non-payment or delayed payment of the rent
- The amount of late fees and when they will apply
All occupants of a unit should be named as tenants separately. Every adult who will live in the unit should be named as a tenant in the rental application. In this way, they are all individually responsible for paying the rent and following all the terms and conditions of the agreement. This gives you several advantages:
1)You can legally ask for the payment of rent from any of the adults named in the agreement — or lease as a tenant.
2) It also empowers you to terminate the tenancy if any of the tenants living in the unit violate an important condition.
3) Security deposit
Many jurisdictions have put a limit on the maximum amount of security deposit that landlords can ask for. Check with your local property management legislation. Make sure the terms and conditions are clear, to avoid future disputes. You should outline where the security bond will be held, and how interest will be disbursed if it is held in a bank. The circumstances under which the security deposit can be withheld, and how the landlord will determine expenses from damages has to be clear.
4) Number of occupants
Your rental lease, as signed by all the adult tenants, should specify how many total adults and minor children can reside in the unit — and list their names. You should keep a record of the identification, and other necessary documents of each of the occupants. This clause becomes a powerful legal tool if a tenant sublets the unit, or moves in friends or relatives without seeking your permission. It gives you justification to evict the tenant in case things get out of control.
5) Dealing with Pets
Pet bond deposits are a good idea if pets are allowed on the property. In this manner, you will be able to recover the cost if the pet causes any damage to the property. However you need to check with your legislation to know if it allows you to have the tenant make a separate pet deposit over and above the mandatory security deposit.
6) Responsibility for maintenance
Clearly outlining the tenant’s responsibilities with regard to property maintenance and repairs is critical. These responsibilities depend on the type of property. Let’s say your agreement states that the tenant is responsible for lawn or pool maintenance in a single family home. The agreement should state that if the tenant is negligent in upkeep, they are responsible for any resulting repair costs as well as any future maintenance costs should you, as the landlord, decide to contract for this upkeep to an outside party.
The agreement should also state that the tenant is required to inform you immediately about any repair and maintenance issues so that they can be addressed immediately. A condition should be in place that prohibits the tenants from making any alterations and repairs in the unit without written approval. In short, the manner in which the landlord handles complaints regarding maintenance and repairs should be outlined carefully in the agreement.
7) Right of access
Right of access for the property manager can be a cause of dispute if not clearly outlined in your agreement. Refer to the local property management law first regarding the amount of advance notice you are required to provide the tenant before you can access the property. You should also mention that you may have to access the property in case of requirement for urgent repairs or emergency situations.
Another important item to clearly mention is all the restrictions imposed on the rental premises. Following are some of the restrictions you would like to consider:
- Involvement in any illegal activity must obviously be on top of the list. If you fail to restrict the tenants in this regard, you may be subjected to a lawsuit by neighbors or other tenants or even face legal action from authorities. You should also mention that disruptive behavior may also lead to the lease’s immediate termination.
- If the landlord wants restriction on smoking on the premises, it should be clearly specified as well as action that can be taken in case a tenant violates this.
- If you require restrictions on pets, it should mention this in the agreement. Also set out terms and conditions if tenants are allowed to have pets, including the number of pets and their size.
9) Parking regulations
There are important rules and regulations about parking and use of common areas that should be in your agreement. Keep in mind the tenant’s rights when setting up the agreement. Your rental agreement must comply with all relevant laws including rent control ordinances, health and safety codes, occupancy rules, and anti-discrimination laws.
If the unit is in an apartment building managed by a committee of occupants, attach a copy of homeowner’s association rules and bylaws. Your rental agreement cannot override the restrictions set out by the association. For example, if the association disallows pets, you cannot allow them in your agreement. If a monthly amount for common area maintenance is required, this should also be specified.
While this article serves as a guide for setting up your rental agreement, before attempting property management in Sacramento CA make sure that you consult a professional. It’s imperative that you talk to a real estate lawyer when drafting your agreement.
If you have any questions or comments, please post them below!