Bad Lease Agreements and How to Avoid Them
My recent influx of clients have been mostly first time buyers or folks who have relocated to this area from out of state and decided to lease an apartment for a year while they investigated the area. When I moved to Charlotte, we lived in a rental for a year so that we wouldn’t end up buying a home in an area we didn’t like and to ensure we didn’t overspend our budget. It didn’t take a mathemetician to figure out that I was moving from an area where the lower end of our market was $400,000 to a place were the bottom end could be less than $100,000.
My property management company (Executive Home Management) was great to deal with. Turned out that the home I picked out was a dog and they arranged to get the seller to repair most of the fleas. It worked for our year but when the lease was up, the owner had us removed and fired the management company. So we never had to deal with exiting a lease and up until now, I had never dealt with a lot of apartment dwellers. However, as of late, I am noticing a disturbing trend.
First, these lease agreements require the tenant give 60 day notice of their intent to leave. This is a bad policy because it forces the tenant to start looking for a home in the 7th or 8th month of their lease to ensure they are not thrown out. But moreover, I would bet a cup of starbucks coffee that there isn’t an apartment complex with at least 10% vacancies here in town. So the idea that they would displace a tenant is absurd. A sixty day notice is equally absurd and should be reduced to a reasonable 30.
Second, the magical auto-renewing lease agreement. Every contract, including lease agreements, feature a beginning and an ending date. Many complex property managers are using the 60 days notice of move out to force the tenant into another year lease or an outrageous month-to-month situation. In effect, they are creating an auto renewing lease.
Finally, the penalty for breaking a lease in these places are too steep. The North Carolina Real Estate Commission states that if a tenant breaks a lease, the landlord must dillegently find a new tenant to re-rent the unit. If they are successful, they can only collect the fees that are associated with the income lost and the cost of finding a new tenant. That’s straight from the Real Estate Commission, however landlords and apartment property managers are not abiding by this rule. Any tenant who moves out because of job transfer, home purchase, etc should be able to do so with minimum penalty if they find someone to rent that apartment from the property manager. This should be a win-win for the property manager since they are going to get a new tenant under a new lease, usually at a higher lease.
So lets recap. Some, not all, property managers are using auto-renewing leases, requiring excessive notice to terminate an auto-renewing lease, and excerizing excessing penalties for tenants who break leases - against the rule of the state’s governing body, the North Carolina Real Estate Commission. The Real Estate Commission needs to change these practices and require apartments to fully disclose the tenants rights like we must do with an agency disclosure.
If you are looking to lease here in the Charlotte area, here are some tips that may help you in search for a rent.
- Rent only the period of time that are going to need the unit. Do not sign a year lease if you are planning to leave in six months.
- Rent from a reputable property manager. There are great ones here in town, usually renting private residences.
- Realize that the property manager doesn’t represent you. Therefore, take the lease to your attorney if you do not understand what you are reading.
- These are negotiable so negotiate!
- Most rental contracts are written to benefit the property manager. Insist that you will only sign a lease on NC Standard Form 410-T: The Residential Rental Contract put out by the Real Estate Commission.
Sincerely;
Jonathan Osman
The Charlotte House Hunter
Charlotte NC Homes, Charlotte Real Estate