Lease agreement for each year's renewal

Member since 2021 · 18 posts · 4 votes

Hi all,

I'm curious to know what would be the recommendation to renew lease each year. Questions:

1. Should I use the comprehensive lease agreement or should I use an addendum simply describing the tenant names, rent increase and for which period, etc.?

2. Also, my tenants have been with me for close to 10 years and I only took the deposit that was equivalent to the rent back then. How can I increase the deposit amount and what should I state in the agreement?

Thanks in advance for your guidance,

Andy

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Rick Albert

Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes

I would do the amendment, less to read and higher probability of accepting.

In terms of the deposit, to be honest why raise it? After 10 years, most of the damages may be consider wear and tear anyways and hard to charge them for it. For example if you put in brand new carpeting ten years ago, you probably won't be able to charge them for stains when it would need to be replaced anyways. I'm not saying don't do it, I'm just saying maybe focus on what matters, which is the rent increase.

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Dan Baldini
Property Manager · Indianapolis, IN · Member since 2016 · 16 posts · 16 votes
1y
Unless you have a massive amount of lease terms that are changing from the original lease agreement, you can use a simple Lease Amendment, not an addendum, to renew your lease. On this Amendment, you can add a handful of updated lease terms and conditions, as well as even increasing the SD amount, especially if it's not a current amount needed to be relevant to the current risk level. Simply negotiate that with the tenant and include the language in the amendment that tenant is paying in $xxx additional SD at time of signing the lease amendment and put the total amount of the new SD balance held by you so it is clear to all parties how much the tenant has paid in.
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- Anudeep Pradhan
  OP
  Member since 2021 · 18 posts · 4 votes
  1y
  Quote from @Dan Baldini:
  
  Unless you have a massive amount of lease terms that are changing from the original lease agreement, you can use a simple Lease Amendment, not an addendum, to renew your lease. On this Amendment, you can add a handful of updated lease terms and conditions, as well as even increasing the SD amount, especially if it's not a current amount needed to be relevant to the current risk level. Simply negotiate that with the tenant and include the language in the amendment that tenant is paying in $xxx additional SD at time of signing the lease amendment and put the total amount of the new SD balance held by you so it is clear to all parties how much the tenant has paid in.
  
  Hi Dan- I truly appreciate your response and insight. Sounds like a plan and glad I don't have to do something elaborate to update the lease renewals. I'll make sure to use the Amendment.
  Thank you!
  1 Reply
Patrick O'SullivanBusiness Member
Property Manager · Phoenix, AZ · Member since 2024 · 559 posts · 213 votes
1y
@Anudeep Pradhan

For the lease renewal, many landlords go with a simple lease renewal agreement or amendment if the core terms of the lease are not changing, just the rent amount, lease dates, and maybe a few small updates. It keeps things streamlined, especially with long-term tenants.

As for the security deposit, you are right to revisit that after 10 years. If the original deposit no longer reflects current rent or risk, you can negotiate an increase as part of the renewal. Just be sure to document the additional amount in the renewal agreement and note the new total being held. Some states have limits on how much you can collect, so it is worth double-checking California law or consulting a local attorney to stay compliant.

It sounds like you have done a great job keeping tenants long-term. It's always a plus when lease renewals are easy.
[email protected]480-795-7938
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- Anudeep Pradhan
  OP
  Member since 2021 · 18 posts · 4 votes
  1y
  Quote from @Patrick O'Sullivan:
  
  @Anudeep Pradhan
  
  For the lease renewal, many landlords go with a simple lease renewal agreement or amendment if the core terms of the lease are not changing, just the rent amount, lease dates, and maybe a few small updates. It keeps things streamlined, especially with long-term tenants.
  
  As for the security deposit, you are right to revisit that after 10 years. If the original deposit no longer reflects current rent or risk, you can negotiate an increase as part of the renewal. Just be sure to document the additional amount in the renewal agreement and note the new total being held. Some states have limits on how much you can collect, so it is worth double-checking California law or consulting a local attorney to stay compliant.
  
  It sounds like you have done a great job keeping tenants long-term. It's always a plus when lease renewals are easy.
  
  Hi Patrick - Sincere thanks to you too for your response and guidance. Yes, it is a blessing to have long term tenants. I'll be sure to check CA law prior to initiating conversation about the SD increase to match current rent/risk. Thanks again!
  1 Reply
- Patrick O'SullivanBusiness Member
  Property Manager · Phoenix, AZ · Member since 2024 · 559 posts · 213 votes
  1y
  Quote from @Anudeep Pradhan:
  
  Quote from @Patrick O'Sullivan:
  
  @Anudeep Pradhan
  
  For the lease renewal, many landlords go with a simple lease renewal agreement or amendment if the core terms of the lease are not changing, just the rent amount, lease dates, and maybe a few small updates. It keeps things streamlined, especially with long-term tenants.
  
  As for the security deposit, you are right to revisit that after 10 years. If the original deposit no longer reflects current rent or risk, you can negotiate an increase as part of the renewal. Just be sure to document the additional amount in the renewal agreement and note the new total being held. Some states have limits on how much you can collect, so it is worth double-checking California law or consulting a local attorney to stay compliant.
  
  It sounds like you have done a great job keeping tenants long-term. It's always a plus when lease renewals are easy.
  
  Hi Patrick - Sincere thanks to you too for your response and guidance. Yes, it is a blessing to have long term tenants. I'll be sure to check CA law prior to initiating conversation about the SD increase to match current rent/risk. Thanks again!
  
  Happy to help @Anudeep Pradhan!
  [email protected]480-795-7938
  get MULTIfamily Property Management4.7215 Reviews
  Website View Page
  0 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
1y
I would do the amendment, less to read and higher probability of accepting.
In terms of the deposit, to be honest why raise it? After 10 years, most of the damages may be consider wear and tear anyways and hard to charge them for it. For example if you put in brand new carpeting ten years ago, you probably won't be able to charge them for stains when it would need to be replaced anyways. I'm not saying don't do it, I'm just saying maybe focus on what matters, which is the rent increase.
1 Reply
- Anudeep Pradhan
  OP
  Member since 2021 · 18 posts · 4 votes
  1y
  Quote from @Rick Albert:
  
  I would do the amendment, less to read and higher probability of accepting.
  In terms of the deposit, to be honest why raise it? After 10 years, most of the damages may be consider wear and tear anyways and hard to charge them for it. For example if you put in brand new carpeting ten years ago, you probably won't be able to charge them for stains when it would need to be replaced anyways. I'm not saying don't do it, I'm just saying maybe focus on what matters, which is the rent increase.
  
  Thank you for your insight Rick. It does make sense to me and something to really think through.
  1 Reply

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