I’ve Broken Every Lease I Ever Had: Here’s What That’s Taught Me as a Landlord

by | BiggerPockets.com

How much of your lease have your tenants read?

If you handed it to them, got their signature, shook hands and left, let me peer into my crystal ball and see. Oh, look—zero percent.

I have rented exactly two places in my entire life. I went to college near my parents’ house, so I lived with them those four years. My first job out of college was for a tour, so I didn’t get my own place during that time, either.

I know a LOT more now than I did then. Not an earth shattering statement. I’m sure we all know more now than we did then. Want to hear a secret?

I’ve broken every lease I ever had.

I’m not bragging. That’s a crappy thing to do. But here’s the thing: I didn’t know I was breaking the lease; I didn’t read it. (NOBODY reads the legalese. Ever.)

I just did what I wanted to do, which was probably a little different from what the landlord wanted me to do.

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Property #1: The Sublet

A friend of mine was going through a contentious divorce. She could not stand to live in the same house as her husband, but they had two kids in the mix, and she didn’t want to uproot them. So she was at the house during the day, then would put the kids to sleep and go sleep at her newly rented apartment.

This didn’t last long for several reasons, but she had a lease she felt she needed to cover. I volunteered to take it over, so she moved out and I moved in (lease violation #1).

We didn’t tell the landlord; I just took over the rent payments. I thought that as long as I paid the rent on time, it wouldn’t matter.

I was reminded of this recently when I read this thread in the Forums. The original poster said that his tenant moved out quietly and sublet the apartment to someone who would never have qualified, but the rent was on time. (Wow, flashbacks!)

I would not have passed any credit check because I had no credit history. I had no previous landlords to call, either.

I also knew nothing about security deposits. I didn’t know that I wasn’t supposed to hang shelves on the walls (lease violation #2). I didn’t know that I couldn’t smoke inside the unit (lease violation #3).

I also did not give any notice when I moved out (lease violation #4). The lease ended in March, so I left at the end of March. I didn’t worry about any security deposit because I hadn’t put any down. I cleaned the whole place as best as I could, removed the shelves, and patched the holes.

BRRRR-strategy-deal

Property #2: The Actual Rental

I was reminded of my other rental experience when I read this thread. In this case, I found and rented the property myself. I was pregnant with my first child and knew I wouldn’t be working after she was born. We had already purchased a home in Madison, Wisconsin where we would be living once the baby arrived, but were both working in the Chicago area—about 3 hours away—until the baby was born.

We found the house, signed the lease, and gave a deposit.

Then it rained—one of those 100-year storms that floods everything in an instant.

Oh yeah, it was also fall. Guess what happens in fall? Leaves drop off the trees.

Leaves + monsoon rains = flash flood with sewers backing because they are clogged with leaves. The crawlspace of this rental house flooded. No worries; we didn’t put anything down there but empty boxes. Water + cardboard = disgusting mess. But it’s the crawlspace. Nobody cares about that, right? Wrong. Guess who cared? The landlord (lease violation #1—not leaving a clean property).

A couple of months later, during the middle of the night, the power went out in the whole house. All the neighbors had power, so we figured it must be related to our house.

My father-in-law was living with us at the time (lease violation #2—no extended guests), and he is a union electrician. He’s been an electrician for about 40 years. He took a look at it and somehow figured out that a screw attaching a light fixture to the closet ceiling went through a wire—probably when the house was built—and finally shorted it out. He performed some electrical magic on the screw/wire/fixture and got the power back on in the house. Parts cost him around $2, no big deal. To call a union electrician out to assess the issue and make the repairs would have easily cost multiple hundreds of dollars (lease violation #3—tenants may not perform any work on the property without landlord approval).

I thought the landlord was going to be thankful that we saved him this money, but instead he was livid that we would have any work done to the house without his permission. He ordered us to immediately cease any and all work being performed on the property and notified us that he would not pay for any of it. (I wasn’t even asking…)

When we moved out, the landlord sent us a note telling us he was keeping our entire deposit because there was a broken window in the garage. (It was broken when we moved in, which was immediately after the previous tenants, including four kids, moved out.) I didn’t know the landlord tenant laws in my state, but was pretty sure he couldn’t just do that.

He reminded me that I did unauthorized work on the property, and he was an attorney, so he kind of bullied me into backing off. (Boy, if only I had found BiggerPockets back then…)

Landlord-Tenant Laws Only Cover So Much

Every state (plus Washington, DC) has its own version of landlord-tenant laws. These laws cover legalities such as how much security deposit you can charge and how soon after the tenancy ends you must return any unused portion.

But they don’t cover personal preference things like smoking in the unit, pets, or waterbeds. This is where your lease comes in. YOU dictate what they can or cannot do, and you communicate this through your lease.

Your lease should be a living document that you add to and amend as you encounter more situations. This post in the Forums gave me several ideas for what to add to my next lease, including “cars are not to be parked on the front lawn” and “no trap ranges/trap shooting/gun ranges.” I currently do not have these two items in my lease because it would not occur to me to park on the lawn or shoot a gun in the backyard.

private-money-meeting

Go Through Your Lease With Your Tenants BEFORE They Move In

In both of these cases above, it was not my intention to break the lease. I truly didn’t think I was doing anything wrong. When a landlord gives you a lease to sign, you sign it. You don’t read it. This is true in about 100 percent of all rentals.

Avoid this issue and the lease violations I made above by walking your tenant through the lease.

Marcia Maynard is a lease master. She’s been investing for a long time, and her lease is 17 pages long. When she turns over a property, the new tenants come over and she walks them through the entire lease, getting an initial at the beginning of each clause or paragraph after she has explained that it to them and answered any questions.

She makes sure that her tenants read the lease because she does it for them.

Your tenants do not read minds—and they certainly won’t read that lease! Avoid the well-meaning or oblivious tenant by making sure your tenant is aware of everything in the lease, and get their signature to prove they knew about it.

What other lease tips do you have?

Please share below.

About Author

Mindy Jensen

Mindy has flipped numerous homes in the past 10 years, one at a time and doing much of the work with her husband. She lives in Longmont, CO, and is always looking for an ugly duckling to turn into a swan.

9 Comments

  1. Erik Whiting

    One strategy I borrowed from another successful land lord was to create a video/audio “reading” of the key provisions in the lease, along with friendly reminders about what not to flush down the toilet, how late fees work, etc. It makes it so much easier to have it on my laptop or YouTube channel and just push “play” and let the computer do the work vs. me having to go thru every single page. Once we finish, the tenant gets an electronic copy or link to our channel. K.I.S.S. Takes a bit of work to set up, but then you just click it and sit back. Never forget that one important thing we always seem to forget…

  2. Maggie Tasseron

    Hey Mindy: You make great points, as always. As i’ve realized that, like you say, tenants don’t read the lease, I always include an Addendum with mine which outline the major points such as No Roommates, No Pets, No Smoking, etc. This is just on one page and I go through it with them and have them sign it along with their signatures on the least itself. They still may not get every point but I figure any Judge will agree with me that one sheet with 7-8 items is something every tenant should be able to grasp. All the best!

  3. Nathan G.

    Great article, Mindy! It’s important for us to remember what we were like as Tenants. My first apartment was a fully-furnished slum in Germany. It was 1988 and I was 17 years old. A month after moving in, I got some used furniture from an Army buddy that I liked better than the Landlord’s furniture. I set his furniture out by the dumpster, thinking he would be fine with me improving his unit. It didn’t go as planned.

    That said, I’ll give you my opinion about leases.

    First and foremost, your lease could be 17 pages, 8 pages, or 1 page and you will get about the same results. Whether you review it line-by-line or not at all, you will get about the same results.

    I manage 230 units. 80% of my tenants (about 180) will pay on time, take care of the property, and cause few problems. 20% of my tenants (about 46) create 80% of my work. They pay late, are needy, violate the lease, etc. I break it down even farther. 20% of the 20% (about 10 tenants) cause 80% of that work, which means 64% of my problems are created by 10 of my 230 renters.

    If I spend 15 minutes covering my lease with 100 tenants a year it takes 25 hours of my time and I’ll still have the same number of problems. Science (and my personal experience) demonstrates this. So why waste my time reviewing the lease with 80% of the tenants that will never cause problems?!? Why create a 17-page document to deal with every possible problem when 4% of my renters are still going to cause 64% of my problems?

    I started out with a three-page lease that was weaker than watered-down Genesee Light. I worked hard to develop an eight-page lease that’s as strong as 18-year Macallan but I still had the same number of problem tenants.

    What’s the solution? Analyze your tenants and find the 4% (20% of 20%) that are creating 64% of your problems. Then get rid of them. Replace them with better tenants. Rinse and repeat. This continual refinement reduces your workload, increases productivity, and frees up time to focus on things that make money. This is far more productive than adding more details to your lease.

    Everyone has their own method but I think it’s a waste of time to try covering every possible scenario or constantly adding things to the lease. Firing weapons, barking dogs, and parking on the law are already covered by city ordinances in most areas, so why bother covering it? Do you forbid murder and meth labs while you’re at it?

    Cover the basics. Stay within the law. Create policies and procedures to enforce the agreement. This is all important, but your focus would be better spent ridding yourself of the riffraff that eat up 64% of your time, regardless of the lease.

    Wow. That went waaay too long!

  4. Tim Porsche

    Great article Mindy. Something I started to do as well is create a short 1 page document with all of the key points of the lease on it, where the most important things are spelled out clearly. That way if they don’t take the time to read the entire 15 page lease, at least they can hopefully take a few minutes to read over the main points.

  5. When I was a tenant, I always read every lease thoroughly. In a foreign country, I asked the leasing agent to read it to me because I could not read the language, but I could understand it when spoken. Most landlords were peeved that I insisted on reading the entire lease before I signed it.

    • Mindy Jensen

      This reminds me of the story of the first time my dad bought a house. (This was a really long time ago, too when the paperwork wasn’t nearly so intense.)

      The closing agent handing him a document, and explained it like they do, then showed him where to sign. He took the paper, leaned back, and started reading. The closer asked if he had any questions, and he said, “No, I’ve just never read this before. I don’t sign anything before I read it.”

      Closer: “But I explained it all to you.”
      Dad: “I want to read it for myself.”
      Closer: “Are you reading every page?”
      Dad: “Yes”

      Pretty sure that closer wanted to shoot my dad by the end…

      • Linda Hastings

        Ha! I think your dad and I would get along well. Not only have I read every lease I ever signed, but also every closing document. First closing I ever did was when hubby and I did a construction loan to build our personal residence. Talk about a LOT of paperwork. We had no idea it would be so much and I guess the closing agent didn’t expect that we would read it all b/c she scheduled the closing for late afternoon on a Friday. We were there reading until after dark.
        Now I always ask for an electronic copy of all closing docs to be sent to me a few days in advance so I can read at my leisure and not ruin anyone’s Friday night. 🙂

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