Understanding the Importance of a Lease Addendum
March 27, 2019
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Murphy’s Law has several subtle variations, but the general message is as follows: if something can go wrong, it will. Many landlords can vouch for this with their rental properties. The truth is that the longer you manage properties, the more problems you are likely to encounter. Your lease agreement is your strongest protection against any issues, but lease agreements aren’t a one-size-fits-all solution. Over time, you’ll need to adjust, refine or add to your lease to mitigate any problems that arise – that’s where a lease addendum comes in. Lease addenda are among the best ways to keep your leases as efficient and air-tight as possible. This article outlines what lease addenda are, the most commonly used addenda and how to add them to your lease.
Lease addenda are among the best ways to keep your leases as efficient and air-tight as possible.
What is a Lease Addendum?
Lease addenda are separate documents that landlords add to an original lease agreement. Landlords use them to provide additional information that the original lease doesn’t cover. Be sure not to confuse addenda with lease amendments, which are changes made directly to the existing lease itself. While they serve a similar purpose, amendments are often used mistakenly to mean the same thing as addenda.
Some addenda may be required by law, such as the Lead Paint Disclosure rule, but most are created from experience. In other words, if landlords aren’t protected from a specific infraction on their current lease, they can create addenda to address that problem in the future. Let’s go over some specific examples to see which addenda can best “battle-proof” your lease.
Common Residential Lease Addenda
- Pet Addendum: There’s a lot to consider when deciding whether to allow pets in your rental units. If you haven’t taken a stance on pets in your current lease, adding an addendum would be the best way to go about it. At the very least, the addendum should specify the types or breeds of pets you allow (if any) and any fees or deposits associated with them. Regardless of where you stand on the matter, an addendum would help protect you should something happen.
- Smoking Addendum: Smoking can be surprisingly damaging (and costly) to your property. As long as you state that smoking is prohibited in the lease, you are allowed to enforce a smoke-free environment in your unit. If the fees or consequences that you associate with smoking aren’t clearly mentioned in your current lease, you should outline them in an addendum.
- Renovation/Landscaping Addenda: While renovating and landscaping are two distinct aspects of the lease, they both come with similar gray areas for landlords and tenants. The delegation of responsibility may not be clear, and tenants may think they have more freedom to make changes than the landlord actually allows. Addenda can help to dissolve these gray areas before it’s too late.
- Occupancy/Guests Addenda: Remember that there will be guests and other individuals in your unit who aren’t your tenants. Limiting the amount of people that you allow in the unit at any time can protect the home from extra damage and help enforce any fire-hazard requirements. Addressing long-term guests in your rental are just as important. You can add language that specifies how long is too Afterall, lingering guests can lead to messy situations. You can sign these guests onto the original lease via an addendum, but realistically, this won’t always be possible. It’s best to plan for a variety of situations ahead of time.
- Legally Required Disclosures: Again, the HUD and the EPA require that landlords nationwide include the lead-based paint disclosure in their lease. Most likely, you have already included it in your original lease. If not, an addendum would suffice. Other necessary information may vary by city or state. In Chicago, for instance, the law requires landlords to provide bed-bug brochures to tenants. Mold and asbestos-related disclosures are among other disclosures of which you should be aware.
You can create addenda for just about anything your lease doesn’t already address. For instance, you may find it beneficial to include addenda for any of the following: appliance usage, changing locks, extended tenant absences, landlord entry, utilities (payment or usage), subletting, termination on sale of premises, etc. If your original lease already covers many of these issues, here some more specific examples of items you may want to address via an addendum (via EZ Landlord Forms):
- Tenant has the option to purchase the leased property.
- Tenants who move out before a lease expires must pay a specified early termination fee.
- Satellite or antenna installation must be completed according to the landlord’s guidelines.
Adding an Addendum
An addendum must include the basic elements of any landlord/tenant agreement. You should include the date, the address of the rental property and the names of each party just as you would in the original lease. Each addendum you create should address a separate topic, so title each accordingly, and include the word “addendum” in each to stay organized and avoid confusion. Addenda are typically no more than one to two pages in length and have just as much validity as the original contract.
Addenda usually address issues unique to your specific property, so it might make the most sense to create your own. If you choose to research templates online, make sure that they’re professional and that they cover everything you want to include. Of course, running any changes or additions past a lawyer is never a bad idea.
If an addendum is created after a lease term has begun, it can only go into effect if both parties are in acceptance. Tenants have no obligation to sign addenda presented to them after signing the original lease. Let’s say the lease was signed in March, but the landlord creates an addendum in June. There are two scenarios that can occur:
- The tenant chooses to sign the addendum. It is then enforced, along with the original lease, for the remainder of the term.
- The tenant chooses not to sign the addendum. The landlord has no means of enforcing it, so the landlord can only enforce the existing lease as he or she originally wrote it. After the term expires, the landlord can require tenants to sign any addenda before a rental agreement is valid.
If an addendum is created after a lease term has begun, it can only go into effect if both parties are in acceptance.
The Benefits of Adding Addenda
Addenda are extremely useful in protecting landlords. They mitigate specific risks that a general lease may not cover. Misunderstandings are inevitable, so minimizing them where you can goes a long way in helping you prevent inconvenience.
Addenda also give your lease agreements flexibility. Since addenda are separate documents from the lease itself, you can choose to use or disregard them for certain units. For instance, specific landscaping details for one rental property may not apply to another. Instead of changing the body of each lease to address these details, you can just tack on the appropriate addenda instead. In this case, the lease itself remains the same, so you aren’t bombarding other tenants with unnecessary details.
Everything about your lease agreement comes down to protection. Leases with more pages do not necessarily equate to “better” leases, but the more elements you can account for in advance, the more prepared you’ll be should something go awry.
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