Residential Lease Negotiations
Is it time once again to consider renewing your residential lease? Often that leaves tenants asking if they should stay another year. Is there room to negotiate a better deal or should tenants save time, energy and effort and move to a new place?
Previously, we’ve looked at commercial lease negotiations best practices, but we at Holmquist + Gardiner often receive requests for guidance with residential property lease negotiations as well.
As a real-estate attorney with Holmquist + Gardiner, I see a number of lease agreements that have evolved into full litigation over terms that should have been clarified or more fully developed during the negotiation stages. Negotiation is a part of life, a way to ensure that both parties have a clear understanding of the terms in order to forge a longstanding, beneficial relationship.
Whether you’re looking to renew a current lease, or you’re signing an initial lease agreement with a new landlord, this article will help you become your own best advocate at the negotiating table. Below I lay out my advice for achieving a successful, good-faith lease negotiation with your landlord.
You miss 100 percent of the shots you don’t take. Too often, tenants pass up opportunities to discuss their lease rate with their landlord. The reality is, both tenants and landlords have equal right (within confines of Washington State Law) to obtain the best price possible for each party’s individual benefit.
The number one rule is ask, no matter your expectations. And do it early. As soon as you receive information about renewing your lease, it’s important to start preparing your response. I can’t stress this enough, wait too long and your leverage is lost.
Check your mentality at the door. It’s important to enter a lease negotiation with the proper mindset. I love negotiations because they’re the building blocks of long-term relationships. Your objective is to build a rapport with your landlord that allows each party to better understand one another’s values and interests. A negotiation is a way to get what you want, without pulling the rug out from anyone.
Know who maintains the leverage. Landlords in big cities like Seattle often distribute form lease agreements that make lease negotiations somewhat limited for tenants. Therefore, landlords and property management firms tend to maintain a “take it or leave it” attitude.
As the tenant with a long-term leasing goal, how can you counter your lack of leverage? By practicing due diligence. The old saying, “buyer beware” isn’t just for homeowners. Check the current market trends. For example, what is the average square footage rate in your area? What services are your landlord or property management company providing as a part of the lease? Has the landlord and/or property management company appropriately responded to concerns during the lease? Further, if a month-to-month lease is being offered, it is important to understand the current Seattle Landlord-Tenant Laws to better understand how the landlord/tenant relationship can shift in the future.
Landlord’s know that moving is expensive and will use this as a leverage point. However, it is important to remember that landlords want to lock-in good long-term tenants. Your negotiations should stress a positive first lease experience. If you are intent on staying for a longer term, these conversations should begin as soon as that is known. Waiting too long to have this discussion puts your back against the wall. Landlords are fully aware that any move is going to require a security deposit, first and last month’s rent, and moving fees that come at a premium in a time crunch. Make your intention known early and work to get a lease renewed well before the original expiration date.
Maintain a clear definition of success. If you don’t succeed at achieving a monthly lease rate adjustment, you can still come out of the negotiation process better off than you started. Negotiations are empowering because they increase your understanding of the players and process. Newly acquired information can dictate future decisions that can improve quality of life.
Reducing your monthly lease rate is your main motivation, but what other specific terms must be clarified in order to empower your future decision making?
Clearly establish the terms that matter. Saving money is a thrill, but that’s not the only reason to negotiate. As a tenant, you should walk out of any lease negotiation with increased clarity and transparency regarding the terms of your lease agreement. There are a few fundamental provisions that you must specifically establish.
Rate: Have a specific amount in mind. You won’t be taken seriously without it. Use resources, like Zillow, to help better understand the rental market in your neighborhood.
Term Length: Common lease agreements are either 6-month or 12-month terms. The longer the term, the better chance you have at reducing the lease rate.
Buyout Mechanism: Seattle, in particular, is a very mobile crowd. Tenants shift jobs, get different placements/assignments and are constantly moving in and out of the city. If you have any reason to think that you might need to vacate your unit prior to the expiration period, a clear buyout mechanism is essential. If you exit negotiations with your landlord and do not understand how to break your lease and the specific terms associated, then you potentially risk liability in the event of a need to vacate early. Cleary outlining an exit strategy allows you to financially account for an early termination and limits your potential liability.
You don’t have to be a PhD in game theory or the grandmaster of persuasive oratory to succeed at the negotiating table, but you must understand how to leave the negotiation better off than you started. A successful lease negotiation is achieved if you have a stronger relationship with your landlord, and if you exit talks feeling more empowered than before.
Of course, it doesn’t hurt if you save a little money along the way.
At Holmquist + Gardiner, our talented attorneys provide our clients with a balanced legal approach that combines aggressive action and smart decision making. Our attorneys have seen the gambit and are here to assist you through the legal process.
We love advocating for our clients on behalf of their real-estate interests. If you’re interested in reaching out to an attorney on our team, contact us today!
