Whether or not you are presently a landlord or a tenant, you likely have encountered a residential lease. Many people may assume that form leases from the internet or other places are sufficient. While there are many consideration when renting property, the lease is significant. The lease elucidates the legal relationship between the landlord and the tenant. As with many other areas of law, it is often easier to avoid problems before they occur than after, so a well drafted lease can eliminate a lot of worries for the landlord or the tenant. However, many times form leases used improperly.
All leases should include some basic information: name and address of landlord and tenant or tenants; when, where, and how rent is to be paid; the amount of rent; length of the lease (its term); and what happens when the term ends. Even in form leases, the basics are generally covered. But even somethings such as the term of the lease can easily be misunderstood. The type of term dictates the new term created at the end of the lease, unless specifically provided otherwise.
Beyond the basics, Michigan law requires a disclaimer statement in the law that must be printed in the lease. Any form lease that is not drafted specific for Michigan may not include this disclaimer, and can place the landlord at risk of statutory penalties.
Michigan law also prohibits certain provisions from leases. If a lease contains a prohibited provision the provision is void and subjects the landlord to possible penalties starting at $250. Examples of prohibited terms include that a landlord cannot ask a tenant to waive their rights to the eviction proceedings, nor alter or waive a tenants right to possession. Additionally a landlord cannot ask, nor can a tenant agree to waive their right to a trial.
The most common mistakes involve the security deposit. First, The law limits the amount of money that can be requested. The security deposit is limited to one and one-half times the monthly rent. A landlord must return the security deposit unless the landlord can substantiate that either: 1) the tenant owes money, 2) the tenant has unpaid utility bills, or 3) the tenant has caused damage beyond reasonable wear and tear.
In a residential lease there can be many pitfalls. Good legal advice in drafting a lease can save hundreds and thousands in legal fees enforcing or litigating the lease later. Good, clear drafting can help minimize risk, because nothing can totally prevent litigation. Any form you find free on the internet should come with the tag - you get what you pay for.