What Should be Included in a Residential Lease: The Basics
When leasing a residential property it is important to ensure that both you and the tenant know exactly what is expected from you and what to expect from the other party.
While some oral leases can be legally binding, a diligent landlord will stick to the more traditional written format. This not only helps to protect both parties, but also makes it much easier to recall what exactly was agreed upon later down the road when questions may arise.
But what items should be addressed in the lease? Some of the most basic items to include are:
The Commencement and Expiration Dates:
One of the most important items to include in a written lease is the commencement and expiration date. This allows both parties to prepare themselves and the property for the move in date while also preventing either party from ending the occupancy earlier than expected. If either party attempts to end the occupancy prior to the expiration date stated in the lease that party could be held responsible for the damage caused to the other party (depending on the other lease terms).
The Rental Rate & Due Date:
Another major point to ensure is included is the expected rental rate and due date. This sets financial expectations for both landlord and tenant and allows each party to budget accordingly.
When determining the desired due date keep in mind that, to say compliant with the Texas Property Code, you can not start charging late fees until the rent has remained unpaid for two full days after the original due date.
Even though the expectation on timely payment will be set by providing a due date it is best to include details on what will happen if that due date is not met.
Providing late fees amounts ahead of time can be an excellent deterrent for late payments. If the tenant knows that they will incur extra cost by paying late they will be more likely to ensure that the payment is received on time.
Keep in mind that, if you fail to put late charges in the lease, you will not be able to charge them to the tenant if they fail to pay timely.
Sec. 92.019. LATE PAYMENT OF RENT; FEES
In addition to the rental rate and late fees, another fee that should be included in the residential lease is the security deposit. A security deposit helps protect the landlord from incurring the cost of tenant caused damage and helps deter the tenant, who hopes to receive all of the deposit back at the end of their occupancy, from causing any damage above and beyond normal wear and tear.
Sec. 92.104. RETENTION OF SECURITY DEPOSIT; ACCOUNTING.
While these basic terms should be included in every lease there is much more to be considered when signing a lease with a tenant.
One (out of many) reason to hire a professional property management company is that each company will have a lease that has been typed by a legal professional. Frontline Property Management, Inc., for example, uses the Texas Association of Realtors (TAR) Residential Lease, which is only available to Realtors and is written by TAR lawyers.
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Property Management Record-Keeping: How to Properly Destroy Sensitive Documents
In the age of an increasing need for cyber-security due to rampant identity theft, the common person has a good grasp on what sensitive information needs to be protected. That protection doesn’t end when it’s time to toss out the old and bring in the new – especially not when it comes to the kinds of documents you handle in property management. Applicants hand over their social security numbers, credit and criminal backgrounds, and your own information is all over your business documents, taxes, and filings. During the transition from paper to digital files, you will inevitably end up facing the issue:
How do I get rid of these excess or expired documents?
Legally speaking, whether you are managing only one property or multiple, by retaining consumer information for business purposes, you are subject to legal obligations in your method of erasure and disposal. You or your Retention Officer should be well-read on how to properly keep, protect and ultimately dispose of your records.
Digitization will result in the need to eliminate your property management file folders, stacks of papers and old copies of licenses and ledgers. The end result of whichever method you choose is that the documents cannot practically be read or reconstructed. These methods include:
Anyone who’s ever watched a crime drama knows that your deleted files are never really gone. The “trash” or “recycle” bin of your computer is a holding area for files you don’t want to see anymore. Even when you “empty” those areas, the files are still in your machine and are recoverable – by you, if you’re desperately trying to find that document you didn’t mean to delete or by an unauthorized person looking to make a profit from stolen data.
The simplest way to go about ensuring that your sensitive data is effectively erased is to seek out software that’s up to the task! A software that performs a “Secure Erase” and other erasure / overwriting tactics can completely wipe a hard drive and prevent anyone from mining data from your systems.
One of the most direct things you can do to protect your documents prior to discarding them is to redact as you go. Redactions are the obscured bits of text in a document that are obscured, censored or deleted for a variety of reasons, all of which are ultimately for privacy.
If you are not digitally reacting documents that you are legally obligated to keep on file, then you are putting your business on the market to be targeted by hackers and identity thieves. However, it is not enough that the documents are redacted – they must be redacted correctly.
Redaction failures can be defeated by the embarrassingly easy process of copy + paste, leaving your and your tenants’ information at risk in case of a breach. A properly sanitized document erases all metadata and source information, and irrevocably deletes information behind the black redaction boxes. In other words, it creates an entirely new document that replaces the original and severs ties to any information that the original contained. It is a picture of the redacted document, and not the document itself.
Your goal at every step of the process is to be legally compliant but also orderly and secure!
Frontline Property Management invites you to explore our entire series on Record Keeping! Our business is your business, and our integrated systems ensure that our information is streamlined, secure and adaptive. Our multiple departments and property managers work together seamlessly to provide great service to you and your tenants.
If you would like to learn how we can help you manage properties in the DFW area (and beyond!) – start a conversation with us today! We protect your frontline so that you can worry about your bottom line.
Property Management Record-Keeping: Business Documents
As we’ve said before, being a landlord is a business. To stay on top of your business, you need to maintain all files that support the structure of your operations. You are building your financial future – consider your paperwork the bedrock!
In Texas, you are not required to have a rental license in order to rent your property to others, but that doesn’t mean you aren’t engaging in a highly regulated and litigious business. Like trouble, property management mistakes can be easy to get into and hard to get out of. No one has ever been hurt by crossing too many Ts and dotting too many Is – especially when you are your own oversight!
Files that you want to have on hand (or accessible and easy to find) include:
- Licenses as required by your state, eg, Real Estate Broker’s license
- Employee & Vendor Records (Including verification of liability insurance for Vendors)
- Audit Records
- Property Insurance Documents
- Templates of Contracts that you use for your tenants
Accessibility is important in the event that someone needs to find documentation on your behalf. Your lawyer, business partner, or employee should not have to disassemble your property in order to find these documents!
Most of these can (and should!) be cached digitally – but keep in mind that these documents may have sensitive information embedded in them. Properly redacted documents will keep your (and your tenants and vendors’) information confidential and safe in the event of unauthorized access to the files, or if the physical files are lost.
You may find that you would rather trust a company that employs licensed professionals to do all of this work for you! Our Property Managers are experienced not only in working with tenants, but also in teaming up with the Tenant Coordination and Accounting Departments to keep your business organized, legally compliant, and secure!
Contact us today to learn how we can help you manage your property!
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Property Management Record-Keeping: Owner Files
We are all well practiced in sorting out junk mail, whether it’s in our physical mailbox or the various email inboxes that easily become overpopulated with information, offers, and copies of copies (of copies) that you simply do not need.
When managing your property, how do you know what documents you need?
What are Owner Files?
As we go through this series of Record-Keeping Basics, we’ll help you to distinguish between the different types of files that you’re handling to better help you organize. We’ve already reviewed Tenant files, and Owner files cover much of the same type of information; however, this is information that pertains directly to you and your business practices involving your property.
For instance, to provide the basic specs of the property in order to compose a profile for advertising purposes you need:
- Property Deed
- Property Tax Records
- Your Marketing Profile (Compiling photos and information will make it quick and easy to market your property!)
To ensure that your property is a habitable environment, you will need:
- Property Insurance Policy Records
- Property Maintenance Records (Requests & Repairs)
- Move-In Inventory & Condition Forms
- Move-Out Inventory & Condition Forms
- Photos of any damages sustained by the property
- Photos of any repairs or upgrades to the property
In order to operate as a business, you need to know what your expenditures are to figure out where your bottom line needs to be. Consider documents like:
Lastly, property management is about relationships. The contracts you keep with other businesses are your keys to success. Make sure that you retain copies of:
- Vendor contracts
- Employee Records (if you hire an assistant to help you)
- Owner-Management Agreements
- All Correspondence with the above entities
How Should Owner Files be Organized?
Firstly, your Document Retention Officer (you, if you are managing your own property) should be involved in all aspects of document organization. By no means should you purge without consulting your DRO or your own Document Retention Policy. Consistency is key.
Your attorney and accountant also need to be kept apprised of your record retention policy. If necessary, they will need to be able to locate documents on your behalf, and as such must know where they are and how to access them.
All this being said, you do not necessarily have to have the most high-tech integrated system – those aren’t free. Using readily available resources such as computer files backed up into a cloud storage may be perfectly fine for you, if you are organized and have only one or just a few properties to manage.
However, if in your cost/benefit analysis you find that your time can be better utilized elsewhere, property management software provides a system that is already in place – you just have to be consistent in inputting the information!
But if at the end of the day you decide that your time would be best utilized spending time with your family, investing in your hobby, or any one of a million things more thrilling than dotting the i’s and crossing the t’s of your paperwork – then perhaps what you’re most interested in is finding a property management company with the experience, staffing, and attention to detail you need for your rental properties.
Frontline Property Management is in the business of building relationships with owners like you!
Contact us today to start the conversation of how we can cover your front line in order to protect your bottom line.
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Property Management Record-Keeping: Tenant Files
As a landlord, the bulk of your records will consist of Tenant Files.
This is because every tenant (and every applicant) creates an exponential amount of paperwork that must be transferred, completed and filed away. These are records you will retain for a period of at least five years, or in direct relation to however long the statute of limitations for making a claim is in your state.
Property Management software is useful in integrating all of the necessary steps and documents into a streamlined process that flows seamlessly into a record filing system. However, keep in mind that even the best software is only as good as its operator. Records require maintenance and consistent input. This means that emails and documentation created outside of the system should be added in a timely manner and destroyed / deleted / disposed of when the time comes.
We’ve reviewed that as a landlord or property manager, it’s important that you retain tenant files in the case that there is ever any legal claim made against you. Expect that you will have to be able to create a detailed timeline of your every interaction with your tenant from beginning to end. This should assist you in conducting your business in a professional manner (imagine that every document you send and phone call you make can be presented to someone else for review) and will keep you covered. These documents can also carry your case in a court procedure like an eviction.
It’s understood that leases are legally binding documents and should be read in their entirety; however, you will find that many tenants do not familiarize themselves with the details of their lease. Having the signed documentation on hand affirms that the tenant agreed to the terms laid out to them. Whether or not they understood the document is subjective to the tenant, and is solely the tenant’s responsibility. Objectively, however, the paperwork will support your case.
Remember that there are some things that are confidential and as such, even if the information is revealed in the course of conversation, should not be filed as pertinent information to you. You are obligated always to adhere to the Federal Fair Housing laws, and as such your tenant files should not contain any information regarding a tenant’s disability (other than in a quantifiable capacity, as proof of income or related to a reasonable accommodation request) or of any services the tenant receives in relation to said disability. That information is strictly confidential and should not be anywhere in your records.
The following, however, most certainly should be:
- Credit/Background Screening
- Application Fees
- Income Verification
The Rental Agreement / Lease
- Signed Copies of Lease & All Addendums/Riders
- Move-In Inspections
- Move-Out Inspections w/ Itemized Deductions List
- Pet Policy Agreement
- Information on How to Submit Service Request
- Record of Receipt of Keys Upon Move-Out
- Notice of Changes to Property, Lease, Payment Arrangments or Management
- Eviction Notices
- Request for the Remittance of Payment
- Service/Maintenance Request, Evidence of Follow-Up Actions
- Property Maintenance Notices
- Intent to Access Premises for Repair/Inspection
- Notice of Lease Violations
- All Emails and Correspondence
- Security/Other Deposits
- Rental Payments
- Late Fees
- Returned Payments
Property Management Record-Keeping: First Steps
We’ve talked about why you need to have a focus on record-keeping when you’re managing a property, and briefly reviewed what documents you need to keep. (We will explore that further in this series.)
But how exactly should you go about keeping our records? What do you need to do?
We are at the intersection of increasingly streamlined emerging technologies and old-school filing cabinets. Old habits die hard, and you may find your work or personal office strewn with years’ worth of documents. Or collecting dust in metal drawers and hanging folders with labels long faded. In the 2020s, our society is heading in the direction of remote operation, system integration and an emphasis on a greener, more paper-free world – and that’s the world you need to be part of as a property manager!
Rather than compare the benefits of physical vs. digital record management, let’s agree that physical records are going the way of the floppy disk and that you must take steps towards digitizing your records.
Where to start:
Determine Who Your Document Retention Officer / Team Is
As we previously discussed, if you are a business of one person, then this will be your task. However, if there is an ability to delegate then you’ll want to assign a person to head your Document Retention Team. This person or team will be in charge of:
- Developing, implementing, and maintaining the records management program
- Establishing protocol for records management in accordance with the document retention policy
- Determining what will be taken care of by the company / employee / team and what will be outsourced to a third-party company or software
Inventory Office Records
Before you can go about how to manage your records, you need to know exactly what it is you have on hand. By reviewing the materials that you have been keeping, either physically or digitally, you can then determine whether something is a record or non-record.
A Record has information created or received by your organization in pursuance of legal obligations or in the transaction of business, and has value requiring its retention.
A Non-Record is exactly what it sounds like – something that doesn’t need to be kept! This includes reference materials, junk mail, and duplicate records. (Get rid of those ASAP!)
Create a Document Retention Policy
There are general guidelines to follow when creating a document retention policy, but the best way to make sure that your retention policy is tailored to you and understood by your document retention officer and / or team is to make one of your own and detail what will be stored as well as how.
This policy is a teachable document that can be referenced by anyone in the company. It will give you and any employees or assistance clear directives on how your documents are managed.
Establish Your Records Retention Program
Your Records Retention Program is the system that takes all of the above information
and puts them into action! You will combine your document retention policy with a schedule, so that you are retaining the correct records for the appropriate amount of time – no less, and no more. You are not archiving your records; you are storing them for exactly as long as they legally need to be retained.
Taking the time to lay the groundwork and establish best practices may seem either like overkill or a major pain (or both) but it is absolutely necessary in order to move forward with properly sorting every record that you have on your tenants, properties, tax information and more!
When in doubt, let a professional Property Management Company like Frontline sort it out! Any landlords in the DFW and surrounding areas who suddenly feel out of their depth should contact us today to learn more about how we can increase your bottom line by protecting your Frontline!
Tired of all the paper work? Have a property you need help managing? Just submit your information and we will reach out to you!
Property Management Record Keeping: Risk Management
All business is subject to litigation. Knowing and understanding local, state, and federal laws is your first step towards avoiding legal issues or violations. Property Management is certainly no different.
Federal Fair Housing Laws strive to regulate industry practices in order to eliminate discrimination; local housing and building codes require residential properties to meet minimum health and safety standards; the lease you draw up between yourself and your tenant is a legally binding contract in which what is not stated is as impactful as what is. Maintaining a thorough and complete record of your contracts, your adherence to laws and regulations, and receipts of your fulfillment of obligations will be your saving grace should a claim be filed against you.
Record filing and organization isn’t simply a matter of housekeeping – it’s risk management. Whether in court or financial analysis, the truth comes down to what can be proven on paper. Anything undocumented is simply not accounted for, and its absence can be costly. Mitigate your risk by understanding which records will support what kinds of issues! A few examples are listed below:
Fair Housing Claims
Statute of Limitations:
Renters have up to two years to file a fair housing claim in federal court, and up to a year after the alleged discrimination to pursue it through the Department of Housing and Urban Development (HUD). States and municipalities that have their own fair housing laws often have similar limitations.
What You Will Need:
- All records on all prospective, current, and past residents.
- Written screening policy and documentation showing that policy is uniformly and consistently applied to each applicant.
Tax / IRS Audits
Statute of Limitations:
Generally, the IRS can include returns filed within the last three years in an audit. If they identify a substantial error, the IRS may add additional years. They usually don’t go back more than the last six years.
What you Will Need:
- Documentation for the income, losses, expenses, and deductions that you claim on your tax return. In most cases, electronic records are acceptable for the purposes of an IRS audit. You are required by law to retain and safeguard all records—in physical or electronic form—that you use to file your returns for at least three years. Most tax professionals recommend you keep records for seven years, just to be safe.
Personal Injury Lawsuit
Statute of Limitations:
Two years after the day the cause of action (accident that caused injury) accrues.
What You Will Need:
- The move-in condition checklist of the rental unit and common areas filled out by the tenant upon move-in. This documents the condition of the unit as accepted by the tenant.
- Written documentation of all security, safety, and maintenance reports and how and when they were handled.
- Statement in the lease that describes the clear division of duties and responsibilities between the landlord and tenant in regards to maintenance and repair. (Who is responsible for what.)
- Instructions provided to tenant that describe how to make a maintenance request.
Already up to your ears in paperwork?
Let a property management company like Frontline Property Management handle the details for you! Eliminate the need for filing cabinets and overstuffed desk drawers – we manage our records digitally and keep everything on file from tenant application to move-out! Your repair receipts and monthly statements will never be lost again! Find out more today about how we can help you manage your property and all the paperwork that goes with it!
Tired of all the paper work? Have a property you need help managing? Just submit your information and we will reach out to you to help!
Property Management Record Keeping: The Basics
As you undertake the endeavor of managing your property, you’ll quickly realize that it’s not just the property itself and the accounting that you need to keep in order.
What is Document Retention?
You will need to “bring the receipts” to any situation that may arise as a result of discrepancies or legal issues between you and your tenant, vendors, or anyone else you conduct business with.
Property management is rife with paperwork! Document retention guidelines will help you know what paperwork to keep, and for how long. Planning ahead and determining up front how you will organize and file your documents will save you a lot of time and trouble down the line. Rather than reorganizing and filing years of paperwork, have a plan for document retention going in.
Establish a Document Retention Policy
If you are managing your own property, then you are your own document retention officer. Your first step to success will be to institute a document retention policy. This will be your personal guide to how you will organize your files, whether they are physical or digital, and for how long you will keep them on record. Your DRP needs to reflect both federal and state requirements, most specifically the statute of limitations for breach of contract – you are, after all, preserving these documents in case there is a legal dispute. Legal disputes have periods of time after which they cannot be brought forward – you want to make sure you have all documents from within that time frame. While there are general guidelines to follow, your local regulations may have a longer or shorter statute of limitations.
Texas, for example, has a four-year statute of limitations while federally, you’re generally protected from lawsuits after seven years.
If you’re already up to your elbows in paperwork, teaming up with a Property Management Company like Frontline Property can take that out of your hands (and off your desk)! Your applications, contracts, leases, and vendor receipts are stored digitally for convenience and accessibility, and you can rest in the knowledge that if necessary, we can and will bring the receipts to resolve any dispute!
Let us protect your frontline so that you can focus on your bottom line!
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