Thinking back on the number of times I have moved house over the years, I counted at least 8 moves. I rented granny flats, shared a house, rented apartments and townhouses. As I matured, the properties grew in size and so did the rent and the deposit I was paying. I started with renting properties directly from landlords, on a handshake, with no formal lease agreement or deposit, and gradually progressed to long complicated lease agreements that, in those years, pretty much were written to protect just the landlord. As a result, deposits were seldom returned.
Today, there is considerably more protection for tenants. Lease agreements cannot be one-sided, however, the practice of trying to find loopholes and not return your deposit still remains. What usually starts as a positive relationship between the tenant and landlord, both excited to have concluded the deal, often ends in huge frustration at the end of the lease with parties fighting over the meaning of “wear and tear”, the need to have the entire house repainted, or the extent of the damage to plants.
As a tenant, you have to ensure the unpleasantness and costs are avoided and you receive your deposit back at the end of the lease. The best approach is to plan well at the beginning and follow some steps that will protect you at the end.
Here are eight important points to keep in mind before putting pen to paper:
Ensure the lease agreement clearly defines who holds the deposit. This can be the landlord, estate agent or a lawyer. Third parties have to show proof of a trust account to ensure the money is safe. The deposit clause must spell out the exact steps to be taken at the end of the lease, when will final inspection take place, who will be present, within how many days will the deposit be returned. The deposit should be returned back with interest accrued for the benefit of the tenant. No deductions should be allowed without consent from both parties. In the event of disagreements on the damages, call on three contractor quotes and take the average price of the three.
Remember, if it is not clearly defined in the lease, it can be a cause of disagreement and fights.
In other words, who pays for what. Properties have monthly running costs such as levies, rates and taxes, refuse removal, water and sanitation. Make sure the lease agreement outlines the different costs payable by the landlord and by the tenant monthly. While it is customary for the landlord to pay the rates and taxes, it is not always a given that the levies and refuse removal will also be paid by the landlord. This is normally subject to negotiation and should reflect in the lease.
Entry inspection and photos
The quality and detail of your entry inspection and extent of your photographs of the property will probably be the single most important factor on whether you receive your deposit back or not. Leave no corner, cracked tile or loose hinge undescribed in the inspection and un-photographed. Ensure the inspection is signed by the landlord and yourself within the first 2-3 weeks of moving in and send all the photos to the landlord via email. Keep the email, photos and signed inspection for that exit inspection day.
The first 30 days
Ensure there is a clause allowing you to notify the landlord of any snag items within 30 days of taking occupation. This will give you some time to live in the property, use it and identify snag items that may have gone unnoticed during the move in inspection, such as damaged pool pump, cracked tiles or wobbly cupboard doors. Identify which of the items are “for the record only” and which are to be fixed by the landlord urgently or within a specified timeframe.
Include a detailed maintenance clause spelling out all conceivable maintenance items and whose responsibility they are for the duration of the lease. Think of wooden window frames, gutters, pool pump, plumbing, door knobs, sprinkler system. Properties always have maintenance issues and the more detailed this clause is, the less frustration when things start breaking.
Breach of contract clause
The landlord will want to include a clause in the event you do not pay your rent on time. Therefore, it is only fair that you include a clause in the event the landlord does not meet his/her lease obligations. This should cover the event of the landlord not attending to maintenance issues timeously. I advise that you focus on the critical maintenance issues and give the landlord 7 days to remedy, failing which, you should have the right to attend to the repair and deduct the costs from the rent. This will give you the peace of mind that you are not stuck with leaking toilets or a faulty pool pump for weeks.
Termination and extension clause
What happens if you sign a 3 years lease but unforeseen circumstances force you to move out sooner? Ensure you include an early termination clause and define the possible claim the landlord can have against such early termination.
You should also have a clause dealing with the extension, how many months in advance you should notify the landlord of your intention to extend and whether the landlord should automatically extend or have the right to decline such extension. This will be the best place to include a rent escalation sub-clause and ideally specify the exact amount, if any.
There are always these conversations you had with the landlord where you agreed you will do certain things or the landlord will provide others. All of these verbal agreements should go into the lease agreement under a clause called “special conditions”. This will protect you later on when the landlord may become too busy to make time for all the promises.
Lease agreements can be long and daunting and easy to rush through in the excitement of moving into a new place. No matter how eager you are to conclude the deal, it pays to stop and take time to scrutinize the lease agreement and ensure it gives you as much protection as possible.
Do not let fear of losing the property, cloud your judgement and rush the lease. If the deal falls through, it was probably not meant to be and for the best.
We at EOG have successfully concluded hundreds of lease agreements and also seen many fall apart. It pays off to get guidance and assistance from an experienced professional to avoid later frustration and deposit loss. Give us a call if you need advice on your lease agreement.