Have you ever noticed how many documents you have to sign in a professional real estate sales transaction? The reason is that the sell and purchase of real estate is a major transaction that involves many legal considerations. Not covering your bases of material topics required to close in a buy-sell transaction can result in major problems down the road. The truth is, renting property is a similar major transaction, and it starts with the application process. Once an applicant is chosen for tenancy, the landlord kicks off the legal transaction with the “offer to lease”.
Offer and Acceptance
Contracts are created when there is a “meeting of the minds” between the parties as to the material terms of the agreement and legal consideration has been given. When the terms of the agreement are not clear and certain, problems can arise between the parties. To start the landlord-tenant relationship the right way, the landlord needs to know what terms and conditions should be required before the applicant can become a tenant of the property.
What is an Offer to Lease?
Once a landlord has chosen the applicant to whom he wants to rent the property, the landlord should make a formal, written offer to lease the premises. This offer to lease should provide for the terms and conditions that the applicant must satisfy to become a tenant. The terms and conditions must address important actions the applicant must take such that the landlord is protected from problems, such as:
- Non-payment of move-in monies,
- Delay in taking occupancy,
- Unnecessarily holding the property off the market,
- Disputes about lease terms and payment of fees,
and so on.
Terms and Conditions
So, what terms and conditions are important for an offer to lease? The terms and conditions must be legal and defined. Think through your applicant-to-tenant conversion process and address those important subjects in your Offer to Lease. Here are some sample subjects that should be included:
Express that You are Making a Conditional Offer
The Offer to Lease should express to the applicant that you are making an offer to lease that is conditioned on their satisfying the terms and conditions contained in the Offer to Lease. Below is a simple introductory provision to that effect.
Dear [Name of all Applicants Approved],
Congratulations! This is our conditional offer to lease the property at __[address of the property]____. Please carefully read all information in this email, as failure to comply with our offer terms and conditions will result in revocation of our offer to lease this property, and your application fee is non-refundable.
Lease Agreement
An important condition that the applicant should be required to satisfy to become a tenant is to sign the lease agreement you present by a specific deadline. It is this author’s opinion that the timeframe for signing the lease agreement should be a narrow window of time, because if the applicant ends up not wanting to sign the lease agreement, you will want to avoid wasting time to offer the property to another approved applicant.
Also, before sending the lease agreement to the applicant for signature, you should require the applicant to communicate their acceptance to the terms and conditions you have provided in your Offer to Lease. Once the applicant communicates his acceptance of your Offer to Lease terms and conditions, you can proceed with sending the lease agreement to the applicant for signature.
Below is a sample provision requiring the applicant to sign the lease by a deadline.
Upon your communication to us that you accept our Offer to Lease terms and conditions, we will email you the lease agreement for your review and signature. You must sign the lease within 24 hours of receipt and pay the move-in monies as provided herein.
Monthly Rent
Of course, one of the most important term that tenants are concerned with is the monthly rent required during the lease term. State what the monthly will be in your Offer to Lease, and include any money items that will be deemed “additional rent” on a monthly basis during the lease term. Below is a sample provision to that effect.
Your monthly rent is as follows (note: additional rent may apply based on the terms and conditions of the lease agreement, including additional services you may elect during the tenancy and fees for lease violations or payment for tenant obligations):
- Base rent: $_____
- Pet Rent: $_____/pet [assuming applicant made pet application and was approved]
- Tenant Benefits Package: $_____
- Utilities (name the specific utilities included): $_______
Move-in Payment
The Offer to Lease should state what monies the applicant is required to pay prior to becoming a tenant and when that money must be paid. Below is a sample provision to that effect.
You must pay the following Move-In payment within 24 hours of signing the lease.
- Pro-rated first month’s rent: $_____
- First full month’s rent $_____
- Pro-rated firs month’s pet rent: $_____
- First full month’s pet rent: $_____
- Security Deposit: $_____
- Attorney Lease Preparation Fee: $____
- Pet Fee: $_____
- $_[Other]____: $______
MOVE IN PAYMENT OWED: $________ due on _______________
Move-in Date
The Offer to Lease should notify the applicant that if they become a tenant, they must take occupancy by a date certain, which the lease agreement should state. This is important because a vacant property is more vulnerable to property damage, vandalism, or squatter takeover. Of course, provision can be made with the tenant for some flexibility if the tenant notifies the landlord that he needs perhaps a few extra days to take occupancy, but the move-in date should be made clear and certain.
The property you have applied for will be available on the move-in date as stated in the lease agreement on ___________. You must take possession of the property on the move-in date as provided in the lease agreement. If you need to request a later move-in date, you must notify us of your request and of the date that you are able to move into the property, and we must approve any request to change the move-in date in writing.
Pets
Having pets on the premises is a common request and issue in residential tenancies. The landlord should have a process by which to handle the applicant or tenant’s request for pets. The Offer to Lease is a good time to detail the process for the applicant to request a pet. Here is a sample provision that can be included in the Offer to Lease.
If the property is one that permits pets, and you desire to have a pet on the property, you must make application prior to having any animal on the premises. Here are the steps you must take to apply for a pet on the premises: [state the application steps]. Once you complete these steps, we will respond to your pet application. Terms and conditions apply for any pet approved to be on the premises, and you must agree to our written terms and conditions prior to bringing the approved pet on the premises.
Unpaid Fees
It is not uncommon that an applicant submits payment for pre-lease fees (e.g. application fee), but the payment is reversed after the applicant signs the lease and takes occupancy of the premises. Thus, the offer to lease should address that situation and provide the landlord with a remedy in that situation. Here is a sample provision in an offer to lease:
If you accept our offer to lease and become a tenant and any payment you owe is unpaid prior to your signing the lease agreement or taking occupancy of the premises, said unpaid monies shall become “additional rent” under the terms of the lease agreement.
This way, if the fee is reversed or unpaid, the landlord can include that fee in a 3 Day Notice to Pay or Vacate, which will help to more easily enforce the non-payment problem.
Disclosures About Important Services
Professional property managers are increasingly offering services to tenants as a benefit of their renting with that property management company. For example, tenant benefit services may include the following: online portal, pest control, lawn service, 24/7 maintenance call line, positive credit reporting, etc. While the lease agreement and addenda would and should address the specifics of the tenant benefit services, it is helpful to disclose certain tenant services during the tenancy. Of course, the provision in the Offer to Lease should be consistent with the lease terms and conditions.
Failure to Take Occupancy
It occasionally happens that an applicant will pay the move-in monies and sign the lease agreement but never takes occupancy of the premises. This can raise legal questions and issues if there is not a provision that addresses this situation in the Offer to Lease (and the lease agreement). Here is a sample provision addressing the tenant’s failure to take occupancy.
As provided in the lease agreement, if you sign the lease agreement and pay the move-in monies but fail take occupancy of the premises, we may revoke or terminate the lease agreement and are entitled to an amount equal to 1 month’s rent as liquidated damages for your breach of the lease agreement. If you need to request a later move-in date stated on the lease agreement, you must notify us of your request and the date you are able to move into the property prior to executing the lease. We must approve your request in writing to change the move-in date.
Lease Agreement Fees
Sometimes an applicant will complain that there are fees in the lease agreement that the applicant did not know about prior making application. To help avoid this situation, the Offer to Lease should disclose notable fees that the applicant would be required to pay if he becomes a tenant. Of course, the lease agreement will provide for details
The lease agreement provides for the tenant to pay certain fees if the tenant violates tenant obligations. There are fees charged for services rendered during the tenancy (e.g. tenant benefit package). We charge a cleaning fee based on the size of the rental unit: the fee or formula is [state the fee or the formula]. See terms and conditions for payment of fees in the lease agreement.
Acceptance of the Offer to Lease
The Offer to Lease should define the way the applicant must accept the Offer to Lease. This needs to be clear and certain. Otherwise, if there is question about whether or not the applicant accepted the offer, it may cause unnecessary problems for the parties. Here is a sample provision defining how the applicant must accept the offer.
You must communicate to us via email to [email address] or text to [text phone number] that you accept our Offer to Lease terms and conditions within twelve (12) hours of our email delivery of this Offer to Lease. Once we receive your acceptance, we will move forward with preparing and sending to you the lease agreement for signature. If we do not timely receive your acceptance of our Offer to Lease, we may revoke our offer, and this rental property may be unavailable for your renting.
Conclusion
Once the applicant has satisfied all terms and conditions to become a tenant, the tenant onboarding experience will be much smoother with less problems.
Landlords will do well to think through their applicant and approval process and identify common issues that need to be addressed by agreement of the parties prior to problems arising and to prevent problems from occurring. Of course, the terms of the Offer to Lease must be legal, so landlords should have an attorney on retainer to help guide them through legal issues in their rental management business.
Property Management Law Solutions, LLC is a Florida law firm that specializes in landlord-tenant law and is a landlord-only law firm. We provide statewide services including evictions, consultation plans, education and training, membership plans, lease agreement plans and more. If you are a landlord or property manager, contact us today or subscribe to one of our online membership plans.