Wondering, “what is a lease addendum?” Essentially, a lease addendum is a legally binding document landlords use to add or expand on specific terms to an existing rental agreement without needing to rewrite the original lease. However, that’s just scratching the surface. So, in this article, we’ll explain exactly what a lease addendum is, its purpose, and how to use them properly. Ready? Let’s begin!
Key Takeaways
- A lease addendum is a legally binding document that adds or clarifies terms without replacing the original lease.
- You can use addendums for situations like pet policies, utility changes, parking rules, or lease renewals.
- Clear, specific language and tenant–landlord signatures are essential for enforceable addendums.
What Is a Lease Addendum?
To start, let’s determine what is a lease addendum. Drawing from our experience as one of the apartment management companies Austin landlords trust, we know that a lease addendum is an additional document affixed to an already existing lease agreement. The purpose? To introduce more terms, conditions, and provisions that are not covered by the original contract. It can also be used to modify, clarify, and expand the current lease for a more comprehensive coverage.
Let’s use an example we come across frequently in our work: imagine your current lease agreement with your tenant doesn’t discuss pet policies. However, you have a tenant who, in the middle of their lease, requires an assistance animal (a service animal or emotional support animal). This is a situation that you may be legally required to accommodate, according to the Fair Housing Act (FHA), as it may constitute a reasonable accommodation for a tenant with a disability.
In order to incorporate terms regarding the tenant’s responsibility for the assistance animal, such as property damage, and to formally document the approved reasonable accommodation, you can write a lease addendum. This addendum will affirm that the animal is not considered a pet and therefore the landlord will not charge a pet deposit or pet rent, as required by the Fair Housing Act (FHA). The addendum will also ensure specific terms and provisions, such as liability for damage beyond normal wear and tear, are legally covered in your contract, effectively protecting you and your tenant.
When Do Landlords Need a Lease Addendum?
Now that you have a better understanding of what is a lease addendum, this raises the question of when and why landlords need addendums on their leases. Let’s take our earlier example about a tenant needing a service animal in the middle of their lease.
In this context, adding a lease addendum allows you to add terms, provisions, restrictions, and conditions that will serve as legal protection for you and your tenant. It’s an effective way for you to adjust, adapt, and accommodate to changes and new situations while making sure that you, as a landlord, are protected from potential liabilities or disputes.
To give you a better idea of the practical applications of lease addendums, here’s a brief review of some of the most common situations property managers like us (and landlords) utilize a lease addendum in their rental property business:
- Pet policies: Cover specific pet screening requirements (size, number of pets, vaccination, behavior, etc.), pet rent, deposits, and other related rules and regulations:
- Month-to-Month lease renewal: If your tenant wants to extend their tenancy without committing to a full-term lease, you can use an addendum to transition them into a month-to-month lease term without drafting a new agreement completely.
- Temporary occupancy cases: for cases where your tenant requests a roommate or to allow them to sublet or sublease, you need an addendum to establish the specific rules, conditions, and guidelines among all concerned parties.
How to Draft a Lease Addendum (Step-by-Step for Landlords)
Understanding what is a lease addendum and its purpose is one thing, but knowing how to properly draft one is a completely different matter. Considering that lease addendums are legally binding documents, you need to know what to include, key elements, and essential clauses. And while you’ll still have a qualified attorney look at your drafted addendum, it’s still better to get ahead of it and know the process. With this in mind, here’s a fairly simple step-by-step guide on how we do it, in our experience:
Step #1:
Reference the original lease by identifying key details such as the original signing date, the names of all tenants, your name as the landlord, and the property address. This helps avoid confusion about who and what the addendum applies to.
Step #2:
Clearly state the purpose of the addendum. Indicate whether it’s about the lease’s pet policies, lease renewal, subletting, and the like. The purpose of this step is to determine the coverage of the addendum and to avoid misinterpretation of the terms on the supporting document.
Step #3:
Write in clear and concise language the different terms, provisions, conditions, and restrictions regarding the topic of the addendum. Be as specific as possible and avoid vague phrases that can leave too much room for misinterpretation and disagreement in the future. Include details of tenant and landlord responsibilities to establish a clear distinction and balance on obligations.
It is absolutely critical that you have legal advice and counsel for this step to ensure that the terms are adequately protective and not predatory in any way. Furthermore, you need them to make sure your terms must comply with local and state laws and regulations. Be sure to have it reviewed by an attorney before finalizing the addendum.
Step #4:
Have the final document signed by all parties and attach the addendum to the current lease agreement. Make sure to provide your tenant with a copy of the additional lease terms and conditions written in the addendum to make sure that you’re both on the same page and avoid disputes later on.
Common Mistakes Landlords Make with Lease Addendums
A lease addendum is an extension of your current lease agreement. So, it is equally as powerful and legally binding as the initially signed contract. Taking this into consideration, it is important for landlords like you to also know the most common mistakes in drafting and implementing lease addendums in your rental business. Here are some examples for you to keep in mind:
- Don’t rely on verbal agreements between you and your tenant. Lease addendums need to be signed by both parties for it to bear legal weight.
- Avoid sounding a little too vague or too complicated. Be clear in outlining key information that a tenant needs to follow, given the changes in the property.
- Adding unenforceable or illegal rules. While you want your lease to protect you as much as it can, you can’t use addendums to bend the lease to your advantage (increasing late fees, restricting support animals, relinquishing obligation over property repair, etc.)
- Relying on addendums instead of writing a new lease agreement. Adding to many addendums to a lease can lead to confusion, so consider revising the full lease when it’s time to renew.
Enhance Your Rental Property Business With BMG
Now, this is where home rental companies like Bay Property Management Group come into play. As expert rental property managers, we are well-equipped to provide you with the support you need to draft compliant lease addendums. On top of that, we can help mediate communications between you and your tenant, streamline documentation processes, and protect your rental property business. Interested? Contact us today to learn more about our services.