10 Legal Disclosures I Include in My Rental Applications

by | BiggerPockets.com

[Editor’s Note: The contents of this article do not constitute legal advice. Please be sure to check with a legal expert in your market before implementing these items into your documents.]

To be successful in the business of landlording, you have to know that the person who you are entrusting with your investment is going to care for your property and help you prosper in this business, rather than assist you going down in flames.

The legal part of the application is where the landlord covers their hiney and makes sure the applicant is fully aware of what happens with the information they supplied. To avoid any misunderstandings, I make sure my application includes the following information.

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10 Legal Disclosures I Include in My Rental Applications

1. The Applicant’s Assurance

The applicant agrees that the information in their application is true and that an incomplete application or information discovered to be false is grounds for denial.

What landlord wants a tenant who lies from the very beginning?

limit-liability-landlords

2. The Application Fee

This is where the applicant is told in writing that their application fee is non-refundable and will be used to cover the landlord’s costs to verify the information they have listed on their application.

Related: How to Successfully (& Legally) Raise the Rent as a Landlord

3. Permission to Contact

Here the applicant is made aware of who the landlord (or the landlord’s representative/agent) will be contacting to obtain information as to whether the applicant is a suitable candidate for tenancy. Really, the applicant simply gives the landlord permission to contact whomever they deem necessary.

4. Liability

Make sure to include a clause that releases the landlord from any consequences that arise from screening the applicant.

5. Extended Authorization

We like to include a line or two that the information supplied by the applicant on the application may be used at any time during their tenancy or after their tenancy has ended. The information on the application is especially helpful for collecting debts after a tenant has vacated.

6. Consumer Report Information

If the landlord will be collecting a consumer report (for the background and credit check), the applicant must be given the name and address of the agency and told of their right to obtain a copy and dispute the accuracy of the report in the event of their denial.

landlord-traits

7. Holding Fee

If the tenant is approved, provide the terms of when the security deposit, also known at this point as the “Holding Fee,” or “Deposit to Hold” must be paid to guarantee their position.

We allow our tenants 24 hours from the time of approval to supply the holding fee and also sign the Deposit to Hold Agreement, which states the specifics of how long the unit will be held for the applicant, as well as the consequences should they fail to meet all of their obligations and perform by the given date. No tenancy is guaranteed to the applicant until they have been approved and have paid the holding fee.

Related: 6 Common Application & Screening Mistakes Property Managers Make

8. Failure to Perform

Should the tenant fail to supply the holding fee for the rental within the specified time period (24 hours), the applicant is made aware that the rental will be made available to other applicants.

9. Move-in Requirements

This is where the tenant is made aware of what will be required of them after they are approved and before they are given keys, such as paying all move-in funds, deposits, fees, transferring utilities, signing a lease, and so forth.

10. Grounds for Denial

Finally, the applicant needs to be made aware that if they fail to meet the minimum standards for qualification due to information received from any sources or if they fail to perform during the application process, they will be denied.

Do you have anything you’d add to this list? Do you include all of these items in your application?

Comment below!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like… seriously… a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of “The Book on Investing in Real Estate with No (and Low) Money Down“, and “The Book on Rental Property Investing” which you should probably read if you want to do more deals.

11 Comments

  1. Erik Whiting

    Good list!

    To avoid confusion, we call Item # 7 only a Holding Fee and the word “deposit” doesn’t appear anywhere. In other words, we have a Holding Fee Agreement, not a “Deposit to Hold” agreement. I have been told (and who knows how correct this is) that deposits are fully refundable unless the Land lord can prove damages. Well, how can you prove someone else would have rented the place? Answer is you can’t. So we keep is super, duper simple. It’s a FEE. If they do everything else as they are supposed to, we credit the fee towards their Security Deposit at the time the lease is signed. It may be a small detail, but the verbiage is essentially the same, so my vote is to call it what it is: a FEE.

  2. Lana Lee

    I recently decided not to use an agent to find tenants for our rentals. Was kind of nervous at first. But everything went great. Thank you all BP members who gave me great tips. And I have used the rental aplication provided by this website.

  3. Roberta Sweeper

    If I rent to someone in Chicago, I’d have to make sure none of these boosters run afoul of the Chicago rental ordinance. It details many legal musts of rental for owners and renter’s rights. Break a rule and courts will send you back to the drawing board.

    • Libby Mic

      Roberta- (OBVIOUSLY NOT LEGAL ADVICE): I don’t know a fig about Chi law, but you could consider a Severability Clause. Legal term for if some part of a contract is not enforceable, the rest still stands. This is far from iron clad, but it doesn’t hurt.

      As you prob are aware, as the party that draws up a contract (in this case, the landlord), the benefit of any doubt or dubious language in a contract goes to the the other party (tenant). In some cases, if a clause or section is not enforceable (not practical, or even illegal) it might void the ENTIRE contract, and leave you hanging in the wind.

      EG:
      SEVERABILITY CLAUSE: IF any provision of this CONTRACT is held unenforceable then such provision will be modified to reflect the parties’ intention. All remaining provisions of this CONTRACT shall remain in full force and effect.

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