Have you ever noticed that most of the larger management companies on the mainland use their own lease agreement? This is usually done because as companies become larger, they start to run into more technical problems which sometimes can be difficult to handle. Let’s face it, as more and more staff members are introduced, it becomes harder and harder to maintain a certain level of quality because you start to lose control over what and how it is said to the client. When growing your own business, property managers learn how to interact with their clients in a certain way no only to minimize work, but to also avoid problems. For whatever reason, when you hire licensed real estate agents in Hawaii, it is harder to find someone with the same ability to do this.
This is where customized lease agreements come into play. It helps take out some of the challenges that larger companies face which the staff may not have the complete skill set to handle. In addition, it also offers additional protection for both the manager and owner.
Basic lease terms
While the required lease terms vary between Hawaii and other states, most lease agreements in the United States will have standard terms such as when rent is supposed to be paid, late fee policies, inventory, and how much the security deposit its. Other terms that should be included is a section which discusses maintenance responsibilities, entry and inspection, holdover tenant policy, how long a guest is allowed to stay, etc. If writing you own lease agreement, it is important to make sure it contains all the sections required by your state in addition to the ones just listed. While it may seem like a no brainer, it is always important to have an attorney review the lease in order to verify that everything is in order. It is amazing at how many agents don’t do this assuming that they work with contracts all day and therefor know have to write a lease.
What most agents use
Many agents are members of the Honolulu Board of Realtors (HBR). Generally, members have free access to generic lease agreements provided by HBR organizations while non-members can pay to obtain a copy. This is by far the most commonly used agreement because it is designed by the Realtor organization and reviewed by an attorney so you don’t have to go through the trouble and do all the leg work yourself. These leases tend to be unbiased and do not typically lean in favor of one side over the other.
Drawbacks of generic leases
Generic leases do not always create defined roles in areas such as maintenance, requirements for a security deposit refund, hold over tenants, etc. The main reason for this is that each company conducts themselves differently so the Realtor organization leaves certain clauses out while other clauses are vague in order for the agent to establish their own terms. As you could imagine, most agents do not create an addendum to cover all the areas that are not well defined in the standard lease supplied by the Realtor organization
The main benefits of using a generic lease agreement is that usually it has all the required fields for that state and it has been reviewed by an attorney. The drawback is that they are, well generic. These work great for small companies or independent agents who are able to control problems as they arise, but for larger organizations its usually in their best interest to draft their own lease agreement to tailor to their management style, offer the most protection for themselves and their client, and to help minimize mistakes that could happen by those who do not possess the same skill set as the founders of the company
December 5, 2013