Landlords, Think Twice About Signing a Written Lease With Your Tenant.

     Many landlords feel a need to memorialize in writing almost every word exchanged with their tenants.  But is having a written lease agreement really in the landlord’s interest?

     Written agreements are vital in commercial leases, and they are important for corporate landlords who own apartment complexes.  But for the most common type of Long Island landlord — the homeowner with an accessory apartment in his or her home — a written lease agreement often does very little for a landlord and only serves to protect the tenant.  In sharp contrast, an informal tenancy at will tends to serve the interest of the landlord, leaving the tenant with only those rights provided by law.

     For example, without a written lease agreement, the landlord can change the amount of rent anytime he or she desires.  The landlord can also change the rules of the tenancy at anytime.  But most importantly, without a written lease agreement a landlord can also terminate the tenancy at any time for virtually any reason at all.  All of those abilities are lost to the landlord the moment that written lease agreement is signed; hence the tenant is protected.

     There are actually instances where the existence of a written lease agreement can spell disaster for the landlord and puts the tenant in a position where he or she can remain in possession without even having to pay rent.  Worse still, if the landlord does not simply grin and bear it, he or she can be convicted of a misdemeanor and forced to pay a heavy fine.

     I am referring to a situation where a landlord is renting an apartment in a jurisdiction whose code prohibits the collection of rent without first obtaining a rental permit, the landlord has not obtained the permit, and he or she enters into a written lease agreement with the tenant for a term, such as one year.

     What happens if you have a signed lease in those circumstances and the tenant stops paying rent? The landlord cannot bring an eviction proceeding based on non-payment of rent, because the town code prohibits the collection of rent and thus the court must dismiss the action.  Nor can the landlord bring a hold-over action to remove the tenant because the tenant has a written lease agreement for a term that has not expired.

     And if the tenant decides to report the landlord to the town, the landlord can expect a visit from a zoning inspector, followed by a misdemeanor appearance ticket and several trips to court.  Town ordinance violations should not to be taken lightly, as they often carry heavy fines and sometimes, depending on the circumstances, even the possibility of imprisonment.  And a signed written lease agreement is all the evidence the town needs to prove its case.

     In addition, many of the terms in most written lease agreements are not enforceable in court in Nassau County and Suffolk County.  Terms in written leases allowing for late fees and attorneys’ fees are meaningless in eviction proceedings as they are not recoverable under the law.

      So why have a written lease agreement?  If you are a homeowner with an accessory apartment in your home, you may want to ask yourself that question before entering into a written agreement with your tenant, giving ample consideration to the pros and cons of written lease agreements.