PROPERTY II

SPRING 2001
Professor Chin

LEASE DRAFTING EXERCISE:
Drafting a lease for renting your own home to a stranger

Assume that after two outstanding years of practicing law you have accepted the opportunity to work for a year as a trouble-shooter on a major case your firm is handling in another part of the country. You have decided that while you are away from home, you will rent out to someone else the beautiful house that you recently purchased in your hometown.

Draft an appropriate lease for renting your house to a stranger for one year. As you begin drafting, you may want to consider the Pointers for Drafting that follow.
 

POINTERS FOR DRAFTING A LEASE FOR A SINGLE FAMILY HOME

Your lease should include the following:

  1. The Names and addresses of the landlord and the tenant, and the date the lease is signed.

  2. The date when the tenant is entitled to possession of the house, the time at which the tenant may move in on the first day, the time by which the tenant must leave on the last day, the consequences if the tenant holds over for a few hours - or days.

  3. The amount of the monthly rental and the date it is to be paid, where the rental checks are to be sent, the consequences if the rent check is mailed five or ten days late. Is there any provision for automatic penalties, in a set amount, for late rental payments? What if the June rental payment is simply not sent for the entire month of June? Or the check bounces?

  4. Who pays for each utility.

  5. The amount of the security deposit, when it will be returned, and for what reasons part or all of the security deposit may be retained. Are you, as the landlord, obligated to pay interest on the security deposit? At what rate? What if you decide to sell the house during the rental term? What happens to the security deposit?

    NOTE:  Remember that many states have very specific laws on security deposits, so be sure that your lease complies               with the applicable state law.

  6. Provisions for early termination of the lease. For what reasons could you terminate the lease early? How much notice would you have to give for termination? Do you have a right of inspection during the term of the lease? For what reasons could the tenant terminate the lease early? What notice would the tenant have to give you? What if you lose the house through foreclosure, partial or total condemnation, fire, tornado, or earthquake?

  7. The tenant's obligations for maintaining the house. Must the tenant water and mow the lawn? Shovel the snow? Repair damage caused by storms? Keep the jacuzzi in good shape? Are there any other special items the tenant should maintain in a certain way? Are there situations in which the tenant will be allowed to deduct the cost of repairs from the rent due?

  8. Your obligations to maintain the house during the lease. Will you replace or repair appliances that break or wear out during the term of the lease? Repair the plumbing? For what reasons, and how often? Repair storm damage? How soon must repairs be made? What happens if repairs are not made on time? What notice must the tenant give you that repairs are necessary? When do you have an obligation to repair, and when should the lease simply be terminated - because of extensive fire damage, or the like? Will there be an apportionment of rent if the lease is terminated early because of damage not caused by the tenant?

    NOTE:  If you are renting the house as a furnished house, you will probably want to use a checklist indicating what is in               the house at the beginning of the lease - and what the condition of each item is.

  9. A statement on pets. Do you want to specify how many dogs or cats, if pets are allowed? Who has the obligation to clean up the yard, and the carpets, after the pets?

  10. The tenant's obligation to return the house in good shape at the end of the lease.

  11. Provisions for continuing the lease after the first year. Are there automatic renewal provisions? Or would it be wiser to allow negotiation of a completely new lease at the end of the first year?

  12. Provisions for mediation or arbitration. Have you provided some way to settle disputes without going to court? Who pays attorneys' fees and court costs if litigation is necessary?