Despite a recent reduction in interest rates for residential mortgages, rates are still considerably higher than what most homebuyers received over the past decade. If you were one of the lucky homebuyers in the early 2020’s, you likely scored a mortgage under 3% interest. Unfortunately, along with rising interest rates, rent has also increased. Because of such low rates, homebuyers who are ready to move up to a newer or larger home are opting to keep their current homes as rental properties which covers the existing home expenses and also generates additional income while building equity.

With this financial perk comes the pain of navigating the world as a landlord, likely for the first time. This generally starts with needing a lease agreement for your new rental property. While you might be quick to consider the obvious terms like how much rent to charge, there can be issues that you might not even recognize, such as when and how does the tenant give notice that he or she wants to renew the lease. In addition, there are local and state laws that require landlords to undertake certain actions and provide specific information to their tenants which are unique to where the rental property is located. In Maryland, how a residential landlord handles a security deposit is quite particular in identifying what type of bank it can be deposited in and how interest on the deposit is calculated when returned to the tenant.

Then there are protections to the landlord that also must be considered. Most likely, you would not want a tenant living in your home who is not going to maintain it properly through daily upkeep. You likely would not want a tenant who paints your home hot pink either. A detailed lease allows the landlord to outline specifics including what type of decorations the tenant may do while living in the house, what maintenance the tenant must undertake, and whether the tenant has to repair or replace any particular type of item.

Unfortunately, disputes happen all the time between renters and their landlords. If you have ever experienced rent court, you know all too well the volume of disputes that are handled daily in the courthouse. A carefully crafted lease will limit the likelihood for a dispute to arise at all and will also substantially reduce the scope of a dispute if one does develop.

The importance of a well-written lease agreement cannot be stressed enough. These are contracts after all. A quick Google search for a rental agreement available on the web and AI-assisted drafting is never a substitute for legal counsel. If you become a landlord, it is critical that you confer with competent counsel to have a thoughtful and well-written lease. If you currently own a rental property, we recommend you periodically have your lease agreement reviewed and updated by counsel. This will ensure you are protected with specific terms you need incorporated into the lease, but also that you are in compliance with state and county laws and regulations.

If you need help in crafting a lease, please reach out to RKW for help.