Everything is a negotiation in real estate!
This old saying rings true for all leases and contracts involving real estate. As an experienced attorney and real estate agent, I can assure you that every single deal involves different aspects of negotiation and terms. What does this mean when looking for a new place to live?
Starting with the Lease
From the beginning, you can take into consideration the start term of the lease agreement. While the landlord may have a preferred timeline, even this term is negotiable. For example, perhaps the first of the month falls on a Wednesday. While this may be a cheaper date to rent a truck than a weekend - you may not want to take a day off work. So, it is totally reasonable to request a start date to the lease that works best for your move.
Security Deposits, Rent and Renewal Rate : Negotiable, or Not?
At the same time, most landlords will be unwilling to negotiate the security deposit if they have multiple properties. This term is likely standard across all their properties and, therefore, the landlords will not want to make changes to this provision of the lease. On the other hand, if you are negotiating with a landlord who only has one or a few properties, then the landlord may be more willing to discuss the security deposit amount.
In my experience, it is very important to review the terms for the return of the security deposit. In almost every place in the United States, landlords are required to keep these funds in an escrow account, meaning that the landlord is not using the funds while they keep the deposit. In my experience, there can be disputes and delays if the terms for the return of any security deposit are unclear. So be sure to have a good understanding of this provision as well as the requirements for any walk through at the start and end of the lease - is the property required to be “broom clean”? If so, what does this mean? Spotless or simply empty of belongings?
Depending on your rental history and credit score, the landlord may also be willing to negotiate the actual rent amount. If you are agreeing to a longer term lease, the landlord may have an incentive to reduce your rent for the length of the lease. To the contrary, short term leases require the landlord to have more transactional costs more quickly, so these leases tend to have a higher base price for rent.
What else is negotiable? Well, a big one to consider is how much the landlord can charge if the lease is renewed. Market conditions may fluctuate so it is important to plan how much the rent may increase after the initial term expires. Landlords are motivated to keep good tenants so, if the initial lease period goes well, there may be an opportunity to negotiate a modest increase in rent or other more favorable terms.
What About Utilities and Parking?
What else might be negotiable? Payment of utilities! Depending on the condition of the property, utility bills may vary during the year in climates where the weather gets really hot or cold. Tenants should ask about what utilities are their responsibility during the period of the lease. If the property has been updated heating/cooling systems, then it is reasonable for the landlord to ask the tenant to pay these bills or to set up independent accounts with the utility companies.
Tenants should also inquire about availability of parking, Reserved parking is a real premium in some areas so inclusion of parking may be an important aspect of the property’s attractiveness - and sometimes cost.
Maintenance and Decorating
Another important aspect of shared costs and responsibilities is overall maintenance. For example, if the property has a yard, the landlord may be willing to pay for landscaping services or, alternatively, you may be able to offer to maintain the landscaping and yard maintenance in exchange for a small reduction in rent.
What if you want to make your own decorating choices? Ask the landlord if you can include a term that allows you to make improvements to the property or to alter the space. For example, a lease may include the right to alter the property. If such a provision exists, then the tenants can modify or improve the space, such as redecorating, adding fixtures, or even structural changes. When negotiating this clause, it’s essential to outline the alterations that require landlord approval and those that can be done by the tenant independently.
Getting It In Writing and the Lease Term
No matter what, my experience is to make sure that all the agreements are in writing – it creates so much risk for misunderstanding and frustration if the parties do not have all their agreements in writing. Even if something seems like a small change, take the time to write it down in an email – if it is a major change, then I will always write up an addendum to the original contract. The addendum does not have to be long or fancy - it just needs to describe exactly what is changing in the original written agreement.
Lastly, the end of the lease is a very key term to negotiate. Be sure to write down all the expectations so there is a clear understanding – especially when the security deposit is on the line. Some landlords will be fine with small issues that may result from wear and tear. At the same time, any major damage to the property can result in a loss of the security deposit. In some cases, the contract may even specify that a professional cleaning is required upon vacating the property.
So What’s off the table?
Unfortunately, even in real estate there are some non-negotiables. Federal, state and local laws and regulations provide important protections around residential property and conditions. Legal requirements can’t be waived and, from my perspective, for good reason! Some non-negotiable items may be whether the landlord has to keep accessible entrances to a building, prohibitions on smoking, and more significantly non-discriminatory practices. Another example is the requirement to disclose the potential presence of lead paint in any building built before 1978. Legally, the landlord has obligations to share this information with any prospective tenant.
At the end of the day, be prepared to come to the table ready to negotiate. Be informed about the market rates and terms. The goal is to find a mutually beneficial outcome for both sides so the lease negotiation results in a good start to a positive relationship!
