Essential Rental Documents Landlords Should Have at All Times
Owning a rental home comes with lots of paperwork. Solid record-keeping of all of your rental documents is critical to your success as a property owner. It ensures you're on the same page with your tenant about every aspect of them living in the home. It also protects you when problems come up.
There are several rental documents that you need to keep at all times. Keeping these documents organized will help you prepare your tax return at the end of the year and protect you against legal issues. Here are 10 essential rental documents you should have at all times.
1. Rental applications
Prospective tenants fill out a rental application to show that they qualify to rent the home. The application also helps property owners place tenants in their homes that will pay rent on time, follow the lease agreement and take care of the property. It's a good idea to create an application template for each applicant. This will save time and ensure you're asking for the same information from everyone.
Rental agreements include the applicant's contact information, references, employment history, past and current residence information and proof of income. It also consists of a tenant's authorization for you to run a credit report and criminal history check.
2. Tenant screening documents
After a tenant completes an application, you'll conduct a background and credit check. Be sure to keep this information in the tenant's file in case a problem arises later. Create a list of pre-screening questions to ask potential tenants. This ensures you're asking everyone the same thing.
You'll also want to call the references listed on the rental application. Make a list of questions to ask every reference for consistency and transparency. Take notes and keep this documentation.
3. Lease agreement
A lease agreement is the most critical rental document you should have in your file. It's vital to keep on hand in case a tenant stops paying rent or doesn't adhere to the terms in the agreement. Lease agreements list the names of each tenant moving into your home, the date they're moving in and the length of time they can occupy the rental. The property owner and tenants sign the agreement.
Lease agreements spell out the rights and responsibilities of both property owners and renters. The document includes the amount of rent, when rent is due and how it can be paid, any late fees, security deposit amounts, whether renter's insurance is required and who is responsible for repairs and upkeep.
4. Lease agreement addenda
Other rental documents to keep on hand are any addenda to your lease agreement. Lease addenda are modifications to the document. This could include a pet policy or if your home has a pool. The addendum outlines the rights and responsibilities of the property owner and tenants in these specific circumstances, and both parties sign it.
5. Emergency contacts
To prepare in case of an emergency with tenants, it's a good idea to maintain a list of a few of their emergency contacts, including their phone numbers and email addresses. Having this information in your rental documents helps you know who to call if a renter is injured in the home or has another emergency. This information could also help you locate a tenant if they leave without providing notice and owe rent.
6. Move-in and move-out checklists
Create checklists to keep track of the condition of the rental home when a tenant moves in and when they move out. The lists should include every room in the house and a place to note the condition of the floors, walls, light fixtures, doors, windows, appliances, countertops and everything else.
Before tenants move in, go through the property and write down the condition of each item on the list. Then, do the same when they move out. The move-in and move-out checklists protect both tenants and homeowners. Tenants will feel assured that they won't be held responsible for damage that occurred before moving in. Property owners can also use the checklist to hold tenants accountable for any damage that they did cause, beyond normal wear and tear.
7. Maintenance and repair records
Whenever you need to repair something in the home, buy something or perform maintenance, keep track of it in your rental documents. Hang on to invoices, make detailed notes about the work, how much it cost and the date. The records serve as proof that repairs and upgrades were made. It'll also help you at tax time because the cost of repairs and maintenance is tax-deductible.
8. Communication with tenants
Rental documents should also include copies of any communication between property owners and tenants from their application to when they move out. Keep emails and text messages and take detailed and dated notes after telephone calls or in-person meetings. These documents will protect you if there's ever a dispute or if you ever need to evict a tenant.
9. Lease renewal letter
Before a lease agreement expires, send tenants a lease renewal letter to find out if you need to create a new lease or start looking for a new renter. Lease renewal letters are typically sent 60 days before a lease end date, but some state laws specify the timeframe for sending the letter, so be sure to check what's required in your area.
The lease renewal letter should be addressed to the tenant and include the date the lease expires, information about the terms of a new lease, any change in the rent amount and a date when the tenant should respond. Create a lease renewal template to keep with your rental documents to save time when a lease is about to end and prevent you from having a vacancy, which can be costly.
10. Move-out letter
If a renter decides to move out, you need to send them a move-out letter to outline what's expected of them before moving. Deliver the letter two or three weeks before the move-out date. Keep a copy of the move-out letter that you send in your rental documents. And, like with the renewal letter, make a move-out letter template that you can use again later to streamline the moving-out process.
The move-out letter should request that renters lock the door once they move out, list their responsibilities for cleaning up the property, state when you'll complete the move-out checklist, discuss the process for returning the security deposit balance and ask for a forwarding address. Use the letter to remind the tenant of the lease agreement and any repercussions of violating the lease terms.
Essential rental documents for every landlord
Paperwork is an essential part of owning a rental home. Maintaining key rental documents — preferably digital copies — will ensure you're prepared for anything that arises. It'll also keep you organized so you're successful in being a rental owner.