Section Three: The Rental Agreement or Lease
TYPES OF AGREEMENTS
ORAL LEASE (or PERIODIC
TENANCY)
An "oral rental agreement" or "oral lease" is made without writing anything
down and without signatures. Such agreements usually are for short periods
of time and provide that the tenant pay rent and live in the apartment
on a weekly basis (week-to-week tenancy) or monthly basis (month-to-month
tenancy). Such oral tenancies are "periodic tenancies" which renew themselves
for the specified period automatically.
There are special rules for terminating this type of agreement (see Section 7), which the tenant should consider before renting on an oral basis. The rent may be increased and the lease may be terminated by giving written notice.
Oral rental agreements can be made for any period of time up to one year. If the agreement is for a term of more than one year, then it must be in writing and signed to be effective.
Advantages and Disadvantages of an Oral Lease:
- Short-term oral agreements have the advantage of being easy to begin and terminate. This may be a critical factor for college students who wish to rent for a period less than the one year usually required by the landlord in a written lease.
- Oral leases are relatively uncomplicated and do not burden the tenant with the many restrictions typically found in a written lease (no pets, limitations on guests, restrictions on subletting and use of property, etc.).
- The standard form lease usually imposes many conditions on the tenant, but rarely creates any new tenant remedies if the landlord fails to properly maintain the apartment. All of the principle laws enacted for tenant protection - Housing Codes (Section 6), Security Deposit Law (Section 4), Rent Escrow Law (Section 6) - apply equally to both oral and written leases.
- There may be little realistic opportunity for negotiation with the major landlords in order to strike objectionable clauses or add desirable clauses to written leases.
WRITTEN LEASE
A written lease
is a binding agreement that describes the promises made by the tenant
to the landlord and vice versa. Usually a written rental agreement specifies
the location of the apartment, the amount of rent, and numerous other
conditions and restrictions.
Most written leases run for a specific amount of time with the dates of the beginning and end of the term stated on the document. This is called a lease for a fixed term. Usually the lease will terminate automatically at the end of the term, although a "notice to quit" is still required, (See Section 7 on Ending the Lease). The landlord cannot legally raise the rent, change the terms of the lease, or force the tenant to leave (or evict the tenant without good reason - such as breaking the lease), until the lease ends. However, the tenant is obligated to remain for the full lease term and abide by all the provisions.
The great majority of written leases run for one full year. If the tenant does not plan to live in an apartment for the full year, then he/she should try and negotiate a shorter term, or as an alternative, get permission from the landlord to sublease the apartment for the period of time he/she will not be there. If the tenant moves out during the term of the lease, he/she will usually be obligated to pay rent until the landlord finds a suitable tenant or until the lease expires. This is especially important for college students who attend school only 9 months of the year.
Advantages of a Written Lease:
Rent Stabilization: Without a firm written agreement for a specified period of time, the landlord may easily raise the rent after thirty days' notice.
Continued Occupancy: A written lease prevents the landlord from changing the terms of the lease or evicting the tenant (without good reason) for a longer period than oral leases.
Minimize Disputes: With an oral agreement, there is no record of the terms and conditions actually agreed upon by the parties. For example, disagreements often arise under an oral lease regarding who is responsible for paying utilities. A well-drafted written agreement that is fair to both parties is the best protection against arbitrary actions and unreasonable demands in the future.
LEASE PROVISIONS
PROVISIONS THAT
MAY BE INCLUDED
In addition to the period of occupancy, the written lease will always
specify the amount of rent to be paid and the time of payment (for example,
the first of every month). It will also usually contain a description
of the services and facilities that are included in the rental payment. BY
LAW, THE LEASE MUST STATE THE LANDLORD’S AND THE TENANT’S SPECIFIC OBLIGATIONS
AS TO HEAT, GAS, ELECTRICITY, WATER, AND REPAIR OF THE APARTMENT. If
your lease is unclear on who must pay such utility bills, you have the
right to insist upon a written clarification in the lease form.
The standard form lease will almost invariably list a host of conditions and duties. The landlord usually supplies the lease, which was drawn up by his/her lawyers, so the tenant receives few benefits in comparison to his/her obligations under the lease. Such conditions relate to matters such as pets, children, noise, subleasing, damage, default of rental payments, and eviction, to name a few. (Some of these are further discussed elsewhere in this guide and in some instances a lawyer’s interpretation of the local law will be necessary).
ILLEGAL PROVISIONS
A Maryland PIRG study uncovered the fact that numerous Maryland apartment
leases contained unenforceable, unethical, or unfair clauses. As a result
of Maryland PIRG’s efforts the Maryland legislature enacted a law prohibiting
the inclusion of such clauses in the leases.
No lease may contain the following provisions:
Exculpatory Clause – a clause stating that the landlord is not liable for any injury, loss or damage sustained on the rental premises or common areas due to the fault or negligence of the landlord. If this exculpatory clause is found in a lease then the tenant may disregard it because it is made void and of no effect by Maryland law. This type of clause may be legitimate only if it pertains to areas under the exclusive control of the tenant.
Confession of Judgment – a clause stating that if any dispute arises out of the lease, the tenant admits to wrongdoing in advance, regardless of what the actual facts are.
Excessive Late Rent Payment Penalty – a clause providing for a penalty for the late payment of rent in excess of 5% of the amount due for the rental period for which the payment was delinquent. Where rent is paid weekly, only a $3 penalty can be demanded, and no more than $12 a month can be charged for late payments of these weekly rents. (See Section 5 on Moving In and Paying Rent.)
Tenant’s Waiver of Jury Trial – a clause that states in advance that in the case of a dispute, the tenant will not take advantage of his/her right to demand a jury trial.
Time Period for Notice of Termination Shortened – a clause by which the tenant agrees to allow the landlord to give notice of termination of the lease within a shorter period of time from the ending date of the lease than is required by law (see Section 7 on Ending the Lease). Both parties can agree, however, to require a longer notice period than is required by law.
Landlord’s Illegal Taking Possession of Premises or of Personal Property – any clause allowing the landlord to come into and take possession of the leased premises or of the tenant’s personal goods without a court order or other legal process. The landlord can come in and take over only if the lease has been ended by the parties or a court and if the tenant has left or abandoned his/her goods and property.
Further Illegal Provisions – No lease provision stating that the tenant will lose all the deposit, whether or not the unit is re-rented, can be used by the landlord to keep the deposit. Some phrases signaling this kind of clause may be "liquidated damages" or "forfeiture to the landlord for breach of the lease." Another type of illegal provision, discussed in Section 7, is the retaliatory eviction clause. By law a landlord cannot evict a tenant solely in retaliation for engaging in certain legal activities such as participating in a tenant organization. Even if the lease contains a clause stating that such conduct is grounds for eviction, the landlord cannot use it to evict a tenant for such reasons.
UNDESIRABLE LEASE
PROVISIONS
There
are other provisions in the typical lease that are not illegal or unenforceable,
but the tenant should look for them and know what they mean. To delete
any one of the following undesirable lease provisions, it should be
crossed out and initialed by both the landlord and tenant. The following
are possible undesirable provisions that may appear in a lease.
Automatic Renewal: Some fixed term leases may contain an automatic renewal clause. This provides that if the lease is not cancelled in advance of its termination date then it will renew itself for another term. BEWARE of this type of clause. This may commit a tenant to stay for an extra year (or whatever term was specified) that s/he did not want. This provision must provide a separate place for the tenant to sign and specifically agree to this automatic renewal clause. Also, this provision must be set apart from other provisions in the lease.
"The tenant is liable for all costs and attorney’s fees incurred by the landlord." This means that if the landlord brings suit against the tenant for the payment of rent, seizure of property, or eviction, the tenant promises to pay the landlord’s legal costs.
"The tenant agrees to obey all present and future rules promulgated by the landlord." Such rules or prohibitions may be unnecessarily restrictive, for example prohibiting driving nails into walls or playing radios after certain hours. It is dangerous for the tenant to agree in advance to obey such rules with the risk of eviction or loss of security deposit for disobeying to the rules.
"The tenant gives the landlord unlimited access to his/her apartment." It is reasonable for the landlord to gain access to an apartment in cases of emergency (fire, gas leaks, etc.) or for the legitimate purpose of making repairs. But often lease provisions provide for unannounced access by landlords for any reason, therefore pay special attention to provisions of this type.
"The tenant agrees that only s/he and the immediate family will live in the apartment." This type of clause prohibits subletting, extended visits by guests and/or relatives, and pets. In Prince George’s County "occasional guests" are permitted for fifteen consecutive days without violation of this type of clause, and subletting is permitted if the landlord gives his/her written approval. Other counties have similar provisions.
"Tenant agrees to pay extra rent." These provisions specify that if the landlord’s taxes, utilities, or operating costs increase, then rent will be raised accordingly.
"Tenant agrees that the landlord is not liable for repairs." This clause may impose an excessive burden upon the tenant to make more repairs than would normally be required. Although the landlord ordinarily would have the duty to make certain repairs required by the housing codes (See Section 6), some small, isolated houses may be exempted from the coverage of these codes. In these cases, the parties are entirely free to reach an agreement as to who will be responsible for repairs. Under this type of clause, the landlord will not be responsible for many major repairs that the tenant would normally expect from him/her. However, the tenant may still be able to withhold rent through the Rent Escrow Procedure if the landlord fails to provide certain essential services (see Section 6) despite the existence of such a clause.
IF ANY OF THE ABOVE PROVISIONS APPEAR IN A LEASE, THE TENANT SHOULD TRY AND NEGOCIATE WITH THE LANDLORD TO ELIMINATE THEM OR TO MAKE THEM REASONABLE. EXCEPT FOR ILLEGAL PROVISIONS TENANTS ARE OBLIGATED TO FULFILL ALL THE TERMS OF THEIR LEASE.
FURTHER PRECAUTIONS BEFORE SIGNING ON THE DOTTED LINE
Since most leases are drafted by the landlord’s attorneys and therefore weighted in the landlord’s favor, the tenant must take certain precautions to protect his/her interests.
THE TENANT SHOULD ALWAYS DEMAND A COPY OF THE WRITTEN LEASE TO READ AND STUDY BEFORE SIGNING IT. Landlords who rent more than four units must furnish a copy if the tenant requests it. The tenant is entitled to a copy before signing and before putting down a deposit. The tenant should take home the lease and look over it or at least read it in the office before signing.
READ ALL THE PROVISIONS OF THE LEASE AND MAKE SURE YOU UNDERSTAND ALL SECTIONS OF THE LEASE. The landlord has had much time to draw up the lease (or look it over if it is a standard form) so the tenant has the right to ask for an explanation of any and all provisions. If a provision, once explained, does not mean exactly what was desired or agreed upon, it may be changed or crossed out. Once the tenant signs a lease it will be difficult to later claim that s/he did not understand what it meant. Therefore be sure to discuss and clarify any provisions that are unclear. The clearer the understanding of the agreement itself, the more likely the intentions of the agreeing parties will be enforced.
MAKE SURE THAT ANY BLANK SPACES IN THE LEASE ARE FILLED IN AS AGREED UPON OR CROSSED OUT ENTIRELY. Likewise, if any provisions are to be disregarded, be sure that they are crossed out. If any new provisions are written in, then in most cases the handwritten change will be effective and will be enforced by a court. All such changes should be made and initialed by both the landlord and the tenant on all copies of the lease. If both parties make such alterations, the altered lease will become the legal basis of the agreement unless the alteration is in violation of the law.
IT IS IMPORTANT THAT THE WRITTEN AGREEMENT INCLUDE ALL THE TERMS THAT WERE AGREED UPON. These terms should include any changes or repairs that the landlord promises to make after the tenant inspects the premises. After an agreement had been signed, binding oral agreements can be made, but it is safer to have everything in writing. Courts usually assume that when you sign an agreement everything has been written into it.
ALWAYS OBTAIN A SIGNED COPY OF THE AGREEMENT. Be sure that all copies are signed in duplicate by all parties to the lease, including all roommates and adult cosigners. Having a copy of the signed lease will be an important part of insuring your rights and remedies under the lease and the law.
KEEP YOUR COPY OF THE LEASE IN A SAFE PLACE. In many instances where housing is in a short supply, prospective tenants may be presented with a form lease on a take-it or leave-it basis. If the prospective tenant will not sign, then others on a waiting list will. Even in this situation, the tenant should attempt to bargain with the landlord. But, make sure that you never sign an agreement that you cannot or will not fulfill - YOU WILL BE HELD TO IT BY LAW.
MODEL LEASE
Maryland PIRG has prepared a Model Lease in the Appendices that attempts to be fair to both the landlord and the tenant. Present this Model Lease to your landlord; s/he may be wiling to accept it. Certain sections of this Model Lease deserve closer attention.
Section IV involves protection of the security deposit and sets up a more reliable procedure (using mandatory checklists) and shorter time periods for returning the deposit than the minimum required by law. Under the Model Lease, the landlord would be required to pay interest on the deposit at the prevailing rate of 4%. Section IV clearly states the landlord’s responsibility to pay for utilities where so agreed.
Section VII can alleviate misunderstandings about the provision and condition of promised furnishings. The inventory of leased furnishings at the end of the Model Lease should list all appliances and furniture provided so that the tenant is not unfairly blamed for "missing" items that were not initially present.
Section IX and X require the landlord to provide and maintain the rental property in livable condition and in compliance with the housing codes. Promised repairs should be written down in Section X to insure they are completed by the expected date. If the property is not maintained or repaired as required, the tenant can have the repairs done and deduct the costs from the rent under Section XI of the Model Lease.
Section XVI creates a fair procedure for subletting the apartment if the tenant decides to move out early.
If the landlord refuses to accept the full Model Lease (as will many large commercial realtors), the tenant may be able to incorporate some of its provisions into the standard agreement. Although the needs of individual tenants may vary, the most important provisions of the Model Lease that may not already be included in a standard lease are probably Section VII (Furnishings), IX and X (Landlord’s Duty to Repair), Section XI (Tenant’s Right of Repair and Deduct for Defects), XIII (Entry and Inspection of Premises), and Section XVI (Termination and Subletting).
