Most of the time, we send tenants the lease to sign and they send it back quickly, leading us to wonder whether they’ve read it at all.
Sometimes, though, we’ll have tenants who question some of the terms or push back against some of the restrictions. That’s always interesting.
We take the time to walk through the details of every lease we create, answering questions and explaining complications. It’s more of a discussion than a negotiation, but sometimes tenants have specific things that they want included or don’t want to agree to. Then what?
As Philadelphia property managers, we can tell you that understanding how to negotiate a lease agreement successfully with tenants is an important part of your success and also your relationship with your new residents.
Here are our best tips for Philadelphia landlords who find themselves negotiating lease terms with tenants.
Non-Negotiables for Philadelphia Lease Agreements
Before you know what you’re willing to talk about, it’s important to understand what your lease agreement absolutely must include.
- Names of All Tenants
It might seem basic, but make sure every adult 18 years of age or older living in the rental unit is named on the lease agreement. This ensures all tenants are equally responsible for abiding by the terms and helps protect your rights as a landlord should any disputes arise.
There’s room for negotiation around guests, but include a clause prohibiting unauthorized guests staying for extended periods without approval.
- Lease Term
You can negotiate with your tenants about how long the lease lasts. Typically, it’s a year, but maybe they’re looking for a nine-month lease or an 18-month lease. Whatever the term you decide one, specify whether the lease is for a fixed term (e.g., one year) or operates on a month-to-month basis. Clearly outline the start and end dates for a fixed-term lease to avoid confusion—and potential legal disputes.
- Rent and Security Deposits
Payment of rent, obviously, is non-negotiable. A good lease will include your rent collection policy, which includes when rent is due, how much rent is due, how it should be paid, and what the penalties are for late rent.
There’s not much room for negotiation around security deposits, either. Philadelphia landlords must adhere to strict rules regarding security deposits. They cannot exceed two months’ rent for the first year. After the first year, deposits are capped at one month’s rent. For leases exceeding two years, the deposit must accrue interest. Clearly outline the conditions for withholding part of the security deposit to cover damages or unpaid rent. Including this clause avoids misunderstandings (and legal headaches) when it’s time to refund the deposit.
- Philadelphia-Specific Disclosures
Philadelphia has specific rules that landlords must follow when drafting a lease agreement. There’s a rule around lead disclosure. Federal law requires landlords to disclose any known presence of lead-based paint for homes built before 1978. There’s also the Partners’ HEC Compliance Certificate. If your property has three or more housing units, ensure you provide tenants with a copy of the Partners for Good Housing compliance certificate mandated by local law. Failure to include these disclosures could lead to penalties, so double-check you comply with these requirements.
Where There’s Room to Negotiate and How to Do It
Talk to your tenants so you know what their priorities and needs are ahead of the lease negotiations. Maybe they’re worried about snow removal and want to make sure you’re willing to provide a service that can clear snow. Perhaps they insist on painting the bedroom walls and want to make sure your lease agreement will allow for it.
- Negotiate Maintenance Responsibilities
Clarify who is responsible for maintaining the rental property. You and your incoming tenants can discuss your obligations as the landlord, which will include maintaining the property. Hash out what the tenant will be responsible for, such as keeping the property clean, disposing of waste properly, and reporting maintenance needs right away. Together, you can decide who is responsible for landscaping and snow removal. You can negotiate utilities and whether tenants need to set up their own accounts. If you’re renting out a multifamily property, discuss guidelines for using common areas.
Negotiating things like maintenance ensures that everyone understands expectations from day one.
- Negotiate Pets
If you allow pets, you’ll have to come to an agreement with your tenant about the elements of your pet policy, including what types of animals you’ll permit and whether there are any additional pet fees or pet rent. If pets are prohibited and you’re unwilling to negotiate this, state it explicitly to prevent misunderstandings.
- Negotiate Modifications
When a tenant wants to paint, bring in their own washer and dryer, or make other modifications to your Philadelphia rental property, decide what you’re willing to allow and what you’re not interested in permitting. Talk it through with tenants and see if common ground can be reached. Painting, for example, might be easy to negotiate if they’re willing to re-paint before moving out, so the property is restored to its original condition.
Be Flexible When You Can
While it’s important to protect your interests, showing flexibility where possible can lead to better outcomes. For example, if your tenant expresses concern about rent increases, you might propose a longer lease term. At lease renewal time, if the tenant wants an appliance upgrade in exchange for higher rent, consider the long-term benefits of improved property appeal. Flexibility makes tenants feel valued and helps to establish mutual trust.
Approach negotiations with a collaborative mindset. The most successful agreements are those where both parties feel their needs are met. Instead of viewing negotiations as a battle, treat it as an opportunity for partnership. This is an opportunity to show your tenants that you’re an easy landlord to work with.
When negotiating a lease agreement seems like too much, hand it over to Philadelphia property management experts. If you contact us at TCS Management, we can help.
TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the Atlanta, GA and Charleston, SC metro areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
