You don’t want to miss something HUGE in your Lease Agreement, do you? Why would you care what is in your lease agreement, they are all the same, right? I can just use the Colorado or Denver standard lease agreement form template, right?
From time to time, PMI Elevation helps a landlord take over a lease agreement from a previous owner when they bought the home or even from the owners themselves. I have seen it range from the leases you can buy at the Big Box office supply store to the generic online self-help leases. While it is commendable to have SOMETHING in place and you had every intention of doing it the right and best way and these forms may make you warm and fuzzy thinking you are protected, but are you? Colorado is considered by many to be a more Landlord-friendly State, but that is only if you are utilizing a lease drafted by a Colorado attorney optimized for use in Colorado.
Those generic leases you find online or box store to do not take into account the subtleties of Colorado real estate law or worse are outdated and do not consider the new laws that come into play almost every year. Real Estate brokers like PMI Elevation – Property Management Inc, have to attend several days of training each year to “keep up” with these law updates. They are a blanket application that can be utilized in ANY state, but often are not recommended for use in ANY state.
Some of the major issues that I have seen are the notice periods to terminate a lease which is different in Colorado than many other states. The same with the Grace Period to Cure a default such as unapproved pets or Unpaid Rent (3 days in Colorado, instead of 5 in most states). If you are using a generic form, you are doing yourself a disservice. Some forms cap the security deposits, but Colorado does not have a Security Deposit cap.
Another common one is that the lease says you will return the Security Deposit within 30 days (common in other states) but if you can have 60 days in Colorado, but ONLY if it is written into your lease. That is not likely to be 60 days if you use an online template. It happens to us a lot that we receive a notice or invoice from a utility company 30 days after the tenant vacated that the tenant shut off utilities early. If you already returned the Security Deposit – kiss that money good bye.
In this attached video blog, we go over the Elements of a good lease agreement that could be used in Denver, CO or the surrounding areas of Lone Tree, Highlands Ranch, Centennial, Parker, Castle Rock, Littleton, Aurora or Englewood.
At the PMI Elevation team at the Property Management Inc brokerage, we utilize a lease agreement form template that is drafted and endorsed by our legal counsel that specializes in Landlord-Tenant laws in the State of Colorado. They are in Denver and specialize in drafting lease agreements for the surrounding Metro Denver area. We share our experiences with them about programs that are unique to only Property Management Inc franchise and they help us optimize your asset protection and increase your return on investment.
In the video blog, we cover the major items that are required to in a lease agreement in a Colorado Lease Agreement. This may be helpful if you are a do-it-yourself landlord. These are the recommended items in the Colorado Real Estate Manual.
A lease is both a contract and a conveyance. As a contract, it embodies the agreement of the parties. As a conveyance, it transfers an interest in land, the right to possess and use it for a certain time. The following are the more common lease elements.
1. Date: Although not essential, a date can prevent controversy as to questions of time and related problems, such as the portion of the rent due for a partial month or year.
2. Parties: Must have legal capacity to enter a contract and be clearly named and designated. If there are multiple owners or tenants, all should be parties to the lease.
3. Consideration: A lease is not enforceable without consideration. The lessee’s payment (or promise to pay) and the lessor’s delivery of (or promise to deliver) possession are typical considerations supporting the lease.
4. Description of the Property: A lease must describe the premises with reasonable certainty. Tenancy of only part of an improvement, use of basement storage space, assignment of parking spaces, or other facilities should be clearly described.
5. Words of Conveyance: The lease should clearly state the extent and nature of the interest being conveyed, including the duration of the lease and the lessee’s rights.
6. Conditions and Exceptions: All conditions imposed on a lessee’s tenancy and exceptions to the rights that normally accrue to a tenant should be set forth.
7. Lessor’s and Lessee’s Covenants: Any and all covenants to be fulfilled by either party should be included in the lease.
8. Signatures: A lease for longer than one year must be in writing and signed by the parties. The best evidence of the parties’ mutual assent is a signed instrument. If a lessee takes possession without signing, only the lessor need sign to create a valid lease. The lessee’s taking possession is evidence of his or her assent to the lease.
9. Seal: A seal is not generally required, except in the case of corporations and governmental agencies.
10. Delivery: Like a deed, a lease must be delivered to be effective.
11. Recording: A lease need not be recorded to be valid. However, a long-term lease may be extremely valuable and should be recorded. As a rule, a landlord does not furnish a tenant with title evidence, but in the case of a long-term lease, a tenant might require the owner to prove clear title.
12. Acknowledgment: A lease need not be acknowledged. Again, in the case of a valuable lease that will be recorded, acknowledgment of the signatures should be made.
13. Lead-Based Paint Disclosure.
14. Any City or County Regulations on Occupancy.
Some other lease clauses that may apply include: cost-of-living adjustment; handling of the security deposits; use of premises; acceptance of the premises by lessee; surrender of premises at end of term; maintenance, repair, and alterations of premises during term; responsibility for payment of utilities; personal and real property taxes; entry and inspection by lessor’s agents; assignment and subletting; agent hold-harmless clause; repossession due to unpaid rent; abandonment of premises by the tenant; holding over; future sale of premises; cessation of lease by condemnation or destruction of premises; right of the lessor to mortgage or subordinate; sign regulation; renewal options; termination notice; and disposition of deposits/records upon change of property managers.
I hope you find this helpful when drafting your next lease agreement. There are many good resources for helping you execute a lease agreement on your own. Trying to save a few dollars upfront is good business in most cases, but not always when drafting your lease agreement. Spending just a few more dollars on a good lawyer approved lease agreement can save you THOUSANDS down the line. Just one misapplied clause in Colorado can strike disaster for the small Landlord. Many property managers also help homeowners and Landlords by providing leasing only services as well. The property management company provides you with expert marketing, screening, lease negotiations and move-in inspections.
At PMI Elevation, we do provide that service (leasing only services) to Landlords who are looking to self-manage, but do not want to spend the hours and hours it takes to create a marketing campaign, spending hours answering incoming tenant phone calls asking the same question for the hundredth time…”Is the property still available” and “can you show it to me right now?” And when you FINALLY find that tenant that loves your property, but has one hundred modifications to your lease agreement – do you want to spend all that time to find out which clauses are ok to change in Colorado or do you want to send it back to a lawyer at $200-$300 per hour? I just remember spending HOURS on the internet taking parts and pieces from about 15 different leases across the web to build the PERFECT lease template…only to find out many of those clauses would not hold up in a Colorado court. We have come a long way in 10 years since that first lease agreement. So, you may want to consider letting the leasing experts of PMI Elevation – Property Management Inc help you with your next property leasing event.
If this is something you do not want to tackle by yourself and are seeking the help of a Real Estate licensed broker, please reach out to us at PMI Elevation - Property Management Inc.
PMI Elevation - Property Management Inc
13709 Omega Circle
Lone Tree, CO 80124