As a landlord, you’re familiar with the complexity of rental agreements. Leases are packed with information you are required to include by law.
Sometimes the required information protects tenant rights, such as rules about late payment grace periods. If landlord tries to enforce late fees before they are legally applicable, a tenant has written proof that they were granted the grace period.
Other lease clauses protect you from potential litigation, such as notifications of certain contaminants.
By disclosing information about your property before move-in, you fulfill your obligation to inform your tenants of risks, rules, and resources.
However, the disclosures required by law vary widely by state. In order to know which information, you’re required to disclose, you need experienced property lawyers who understand all the ins and outs of a myriad of property laws.
Here is an overview of some of the most common required disclosures and the penalties for failing to include them.
What Are Required Disclosures?
Required disclosures are information you must give tenants prior to move-in, typically in the lease or rental agreement.
Required disclosures could be:
- Information about a contaminant or environmental hazard (e.g., mold, radon)
- Your rental policy (e.g., smoking rules, shared utilities, etc.)
- Federal or state housing policies
- Information about a resource or service provided (e.g., Voter Registration packets or resources for victims of domestic violence)
- Safety information (e.g., smoke and carbon monoxide detectors)
- Tenant rights (e.g. the right to be present at inspections)
- Inventories or move-in checklists
If the law indicates a required disclosure in your state, you must provide the necessary information in your rental agreement. In some instances, there are no regulations about exactly how this information should be presented. Other times, your state will require you to copy and paste the exact wording of a disclosure into your lease.
Federally Mandated Disclosures
There is only one federally mandated required disclosure: lead-based paint. The federal government requires landlords to warn tenants about lead paint health hazards for any buildings constructed prior to 1978.
The Environmental Protection Agency (EPA) also requires landlords to distribute a pamphlet called “Protect Your Family from Lead in Your Home” further explaining the risks and dangers of lead poisoning. You must also inform tenants of any lead paint dangers you know of specific to the building.
Common State-Mandated Disclosures
The federal lead-based paint disclosure is easy enough to remember. Unfortunately, there are dozens of state-mandated required disclosures, and they vary widely across the country.
Only seven states have no legally required disclosures: Colorado, Arkansas, Idaho, Mississippi, Louisiana, Missouri, and Vermont. All other states require you to disclose certain information.
Here are some of the most common state-mandated disclosures:
Landlord/Agent Identification – Tenants have the right to know the identity and contact information of the landlord, property manager, and other agents authorized to enter the property. 24 states have laws requiring some variation of this disclosure.
Security Deposit Receipt – The landlord must provide receipts with details for security deposits, including where it will be held, interest rates, when it will be returned, and what may be withheld.
Move-In Checklist – Landlords must allow tenants to inspect the property prior to move-in and note any existing damage.
Mold/Radon – Landlords must report environmental hazards like mold or radon if known to be in the property.
Nonrefundable fees – Landlords must disclose all nonrefundable fees, such as pet deposits or background check costs.
Methamphetamine Contamination – If the landlord knows that the property was formerly used to manufacture methamphetamine, they must disclose this to future tenants.
Shared Utilities Breakdown – If utilities are shared between multiple units, landlords must inform tenants how the bill is apportioned.
Foreclosure – Landlords must provide written disclosure if the property is under foreclosure. If not, landlords are responsible for tenants’ moving costs.
Penalties
Penalties for excluding a required disclosure from a rental agreement range from a notice of noncompliance to hefty fines/fees and even criminal charges.
The penalty for excluding the federal lead-based paint disclosure is $16,773 for each violation. You will be fined three times this amount if a tenant experiences damages from lead paint and you failed to disclose it.
Lease Writing and Editing Tools
As you begin the lease-writing process, consider using the lease editing tool on your property management software. Many property management software platforms offer lease templates, sample documents, and other tools you can use to craft the strongest rental agreement possible. Many templates have built-in sections for required disclosures.
Conclusion
Required disclosures make up only part of a rental agreement. A strong lease takes every circumstance into account by giving the renter as much information as possible. By researching the specific laws that apply in your state and local area, you can write a robust rental agreement that protects both you and your tenants.