Rental Property Investor · Richmond, VA · Member since 2017 · 71 posts · 10 votes
I would like to use a realtor to help lease out my rental property in Richmond, VA. At this time, I am not wanting on-going property management services.
If a realtor helps a property owner rent out a property (i.e., marketing, showings, overseeing signing of the lease, delivery of keys, and move-in inspection), is there a Virginia law or regulation that requires the realtor to use his lease agreement instead of the lease agreement the property owner provides?
If there isn't a Virginia law or regulation, why would a realtor insist on using the realtor's lease agreement and "not budge" on using the lease agreement used by the property owner for 7+ years counting?
As a property owner, what risks do I open myself up to by having to adhere to and govern a realtor's lease agreement that was not written specifically for my property?
Two other realtors have agreed to use my own lease since I am not utilizing on-going property management services. However the realtor I wish to use, insists his lease agreement must be used so he doesn't open himself up to risk. He isn't doing a good job in explaining his point of view, which why I am here. I hope someone else can explain it to me so I understand.
I haven't seen the leases and I'm not a lawyer, but I imagine that the lease your realtor wants to use is written in a way that protects you a little better leagally. The leases realtors have access to through programs like Zip Forms are usually updated regularly to comply with the current laws and regulations of the state in which they are being used. You should ask your realtor if this is the case, and if so, I would trust them and just use their lease. Good luck!
In Texas, I always use the default state lease to lease out property but if the client has their own lease. I am perfectly fine with it. I can certainly explain the pros and cons between two leases It's their investment after all, not yours.
For your case, I would simply find a different Realtors - preferably the one that actually owns investment properties so they know what they are talking about.
I haven't seen the leases and I'm not a lawyer, but I imagine that the lease your realtor wants to use is written in a way that protects you a little better leagally. The leases realtors have access to through programs like Zip Forms are usually updated regularly to comply with the current laws and regulations of the state in which they are being used. You should ask your realtor if this is the case, and if so, I would trust them and just use their lease. Good luck!
@Brett Alphin Given the number of properties/units I own, it is not required for me to follow the state's laws and regulations to a T. Even so, my lease agreement does closely follow the Landlord & Tenant act for the state. I have had an attorney review my lease years ago and have made little changes to it sense. I do try and keep abreast of changes to the Landlord & Tenant act.
Huy/Brett I need to reach back out to the realtor to be sure I understood his rationale, but it sounded more like he was concerned about whatever risk he may bring onto himself and not what risks the leaseholder / property owner will have to accept.
@Nerissa Marbury, I've never heard of that happening, but I'd be interested to hear his rationale... I think. However, I'm certain that if I was using a realtor to market the property I would insist on using "my" lease and not theirs. Generally speaking it seems like I would want to use a realtor who is open to new ideas and is good at communicating their opinions about those ideas. And I'm far less concerned about risk (perceived or real) to the realtor than I am about risk to me as the owner.
As a side note, there were some changes in 2016 (I think) and now anyone who owns more than one rental unit in the Commonwealth is subject to the VRLTA. I think it's a good thing...
@Nerissa Marbury Looks like the above comments have definitely offered some great thoughts to consider in your final decision. Whatever you decide I would probably consult a real estate lawyer to review both contracts, to see if they could find or think of any reasons why one lease would be better than another in protecting you. Wish you well!
@Matt Clark I spoke with him earlier today and his rationale is based on him having a property managers hat on versus an ala carte realtor hat on. He thought his company would sign the lease agreement. In addition he felt that if I took too long to sign the lease agreement or if I changed my mind and didn't want to lease to an approved applcant that the tenant would end up penalizing his company even if I was the hold up. I made it clear that wasn't how I operated.
He asked to see my lease agreement and I sent it to him. He responded rather quickly after skimming the document (his words). He brought up several items that was personal preference versus anything serious IMO.
@Nicole Graves I was thinking of reaching out to an attorney. In fact I contacted one last week, but still have yet to hear from him several days later. If you are willing to refer someone to me, I would be appreciative.
In case anyone is interested in knowing the Realtor's issues or want to offer input (with the full understanding I need to consult a licensed VA attorney before moving foward with any advice) please feel free to comment.
In my lease agreement, I state the first $XX of any repair is the tenant’s responsibility unless the damge or repair is required due to negligence....then the tenant is 100% responsible.
The Realtor said if he was a tenant he would agree to it. From my experience, tenants have agreed to it for years now. However I also offer verbal examples of when the amount will be expected to be paid by the tenant and when it isn't expected to paid.
My lease gives an address where rent checks can be mailed. He uses direct deposit only.
It’s been quite a number of years since anyone mailed me a check. I think 2011 was the last year. Most go directly to the bank (under 1/2 mile from the property) and deposit the funds or they do an electronic payment using my email address.
The Realtor felt my cleaning deposit is redundant and that I should, just raise the security deposit.
The Realtor wanted me to know that the application fee written in my lease agreement "goes to Agent, not landlord".
Sure, not a problem. However he still voiced it as a concern when it shouldn't be....the Realtor is doing the screening so the Realtor gets the app fee.
The Realtor "REQUIRE and force-place insurance policies on tenants if they don’t provide – your lease “suggests” insurance."
Yes, I "strongly suggest" the tenant gets insurance. Only recently have I better understood the protection that it offers the owner. Even so, as a Realtor who will not do on-going property management, this should not be a concern that would deter the Realtor from performing ala carte leasing services.
Anytime I have to write up a "rental charges statement" that requires the tenant to pay me money in addition to the monthly rent I add a 25% administrative fee.
The Realtor said a judge won’t honor a 25% surcharge on deposit withholdings. Only actual damages / receipts.
A rental charge could be from late rent, damage to the property, an unauthorized animal, etc. The charges are collected from the client during the year instead of waiting until the end of the lease.
I will need to speak to an attorney on this one since the Realtor's opinion could be because of where the statement is written and perhaps there is a better location for it from a legal interpretation perspective.
For the record, I have yet to go to court in the 10 years I've been a landlord.
My lease states security deposit will be refunded (less any deductions) within 60 days of lease end date.
The Realtor believes "60 days is illegal – deposits need to be returned within 45 days in Virginia."
Per fhe Code of Virginia: "...where the landlord is a natural person, an estate, or a legal entity that owns no more than two single-family residential dwelling units in its own name subject to a rental agreement, such landlord may opt out of the Virginia Residential Landlord and Tenant Act (§ 55-248.2 et seq.) by so stating in a rental agreement with a tenant."
I own one single-family residential dwelling units in all of VA.
I will consult an attorney (again - it has been a few years for this specific topic); however, I thought it was within my right to use a different number of days as long as it was clearly communicated to the tenant and within reason.
The Realtor believe "there are a lot of illegal and onerous terms" in my current lease agreement. Out of the 7 reasons the Relator gave for why "I can’t willingly recruit a tenant to sign into that agreement", #6 and #7 may be legitimate reasons. The other 5 reasons are personal opinion and nothing that goes against state law.
The short end of it:
I do plan to have the lease reviewed by a lawyer as it has been a while since the last review. I do not intend to move forward with this Realtor. I seek a Realtor who is open to new ideas, less focused on what a tenant might say about his company online and more focused on the owner who is footing the bill, AND willing to have an open dialogue to figure out how best to make all parties involved feel most comfortable.
Having an attorney review the lease would be the best option since it has not been done in a while and laws do change. I personally use the VA Association of Realtors lease provided by my Realtor and just add addendums to it for items that I care about. Also, if you are not happy with your current Realtor you can find someone else unless you have a signed contract.
@Daniel P. That is what I was told I could do as well. I have to go back and look for this particular realtor's lease agreement. His was NOT a VAR lease agreement. It appeared as if he took his own spin to it since he also mentioned he spent $3,000 to have an attorney put his together.
Another realtor did provide me with the VAR lease so I am reviewing it to see if it works once addendums are added.
@Nerissa Marbury, Why waste money, time and effort writing your own lease agreements when VAR, NVAR have a team of attorneys constantly reviewing and modifying VA lease templates to make sure you are protected under VA law based on case law precedent. I would recommend using the VAR template contract from your realtor and just cross out anything that you don't want and add an addendum for other terms. Since there are so many laws regulating residential real estate lease agreements, both federal and state, I would be concerned with opening yourself up to legal liability.
Thank you @Dan Bernstein. Since I have always self-managed the property, I have not been eligible to use VAR forms given I am not a realtor. However if I use a realtor I feel you are absolutely correct (as others have also stated) to use the VAR and adjust or amend the correct as needed.
@Nerissa Marbury Lawyer I've used in the past is @Sean Tluchak in Richmond, VA. He was recommended by the Richmond REIA and normally has a short response time and is very helpful! Hope this helps.
I would second the recommendation for @Sean Tluchak and/or his associate Katie Taylor.
He's closed the majority of my transactions and has been a great resource for my clients. Very knowledgeable, responsive, and they're just generally great people. You can find his website by googling Tluchak Law.
I was just wondering why you would want a "lease up" agent if you are in the same as your rental? Most times an agent is used in this type of situation for absentee landlords. When I lived in NOVA we had an absentee landlord and she used a local agent for lease signing, but the actual owner signed the lease and we paid our rent directly to the owner.
@Yvette M. For 10 years, I have managed the showings and lease signings myself regardless on where I lived. However, the time it takes to screen inquiries, schedule and show a property , process applications, etc. was time I didn't have a lot of this year and that is why I wanted to use an agent. The situation you described when you lived in NOVA sounds like the one I was trying to get this year.......but didn't. I ended up finding tenants before signing a contract with the realtor :-D