Disclosures and Tenant Agreements
Disclosures and tenant agreements are important to all real estate investors. Whether you are a landlord or flipping houses, in every state that I am aware of, you have an obligation to disclose any problems that you are aware of regarding the property. Obviously, tenant agreements are intended primarily for landlords.
Of course, disclosure and tenant agreements differ from state to state. This article is not a comprehensive list of everything that landlords must disclose or include in tenant agreements. Rather, it is only an indication of what your disclosure and tenant agreements need to contain. Or as a tenant, what you landlord must provide to you.
In most, if not all, states there are landlord / tenant laws requiring a signed lease. This is especially true for residential properties. Typically, these require a description and address of the property, the length of the lease, and the amount of rent being charged. The point is to inform the tenant what they are getting into and for the landlord and tenant to have a formal agreement. Disclosures and tenant agreements are intended to protect tenants from unscrupulous landlords and also to establish conditions for when landlords can have unwanted tenants evicted.
Disclosures and Tenant Agreements Protect Tenants From Harm
Some disclosure requirements are less obvious than rental details. At the federal level are requirements to disclose some toxic substances and certain types of criminals.
If the leased premises were constructed before 1978, federal law requires the landlord to disclose the possibility that there is lead based paint or lead based paint hazards in the apartment or house. If known, the landlord must disclose the location of the lead based paint or the lead hazard. The landlord also must disclose the condition of the painted surfaces. Additionally, the landlord must provide the tenant with a pamphlet with instructions about identifying and controlling lead based paint hazards.
The tenant is allowed 10 days to conduct a risk assessment and inspect the premises. Landlords not complying with the federal law are subject to civil and even criminal charges. He or she can also be held liable to the tenants for up to three times the amount of damages a tenant suffers as the result of a lead based paint hazard.
In some states, landlords are required to notify tenants in writing when the premise is known to be contaminated with mold. This must be done whether the mold is visible or invisible when the landlord knows or has reasonable cause to know mold is present.
State Level Disclosures and Tenant Agreements
Although based on federal laws, the specifics are written at the state level that require individuals convicted of sex crimes against children to register and that information is made available to the public. Typically, this is done on websites managed at the local, state, and federal levels.
At a minimum, most states require landlords to provide a notice in the lease about how the tenant can access registered sex offender information. Some states require the landlord to inform tenants about any sex offenders known to be living in the area. This can be a gray area because the landlord has to have actual knowledge.
In some states, the disclosures and tenant agreements must also notify the tenant before pest control is performed. The notice is often prepared by the pest control company to include the type of pest to be controlled, the pesticide that will be used, and the active ingredients of the pesticide.
Some state disclosures and tenant agreements require landlords to disclose when a previous occupant died on the premise. Especially, if it was a violent death. This requirement often comes with a time limit such as within the past five years or less.
Most states require tenants be notified of the names and addresses of all owners, agents, and property managers that are authorized to act on the behalf of the owner. This can be for collecting rents, making requests for repairs, giving notice of the lease termination, etc.
Disclosures and tenant agreements are only one of the challenges of being a landlord. Especially, if it is your second job. That’s a big reason I prefer and teach my students about the benefits of real estate investing using low cost / low risk lease options. Lease option agreements still require disclosures and tenant agreements but they make the tenant much more active in maintaining the property and making repairs before they become big headaches to the landlord. Lease option agreements also work in favor of the tenant because these provide the tenant experience living in the home to uncover any previously unknown problems before committing to the purchase.
Real estate investing does not need to be about owning as much property as possible. It should be about controlling as much property as possible for the least amount of money and risk. That makes the Sandwich Lease Option the most attractive investing method I know of. You can take control of the property for a couple of hundred dollars. You then put an option buyer in place that takes on most of the homeownership responsibilities until they make the purchase and take on full ownership responsibility. The Sandwich Lease Option let’s you make a big profit for a small investment. This is the method that I highly encourage my students to use.
By Wendy Patton
For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.
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