Oral Leases are Valid but Risky
A North Dakota residential rental lease agreement is a written contract between the landlord and tenant that all North Dakota landlords should use whenever they lease a dwelling under any circumstances. Oral leases are valid so long as they are not for more than one year, but you risk having disagreements with your tenant over certain terms and required disclosures. Avoid disputes and possibly having a court decide over whose rights or interpretations prevail by having a comprehensive rental agreement that clearly delineates the duties and responsibilities of each party.
Obligations of the Landlord
All landlords are under an implied covenant to provide a dwelling that is fit for human habitation and contains the basic essential services. As landlord, you are required to do the following:
- Comply with all housing, building and health codes affecting the tenant
- Make all necessary repairs within a reasonable time regarding conditions, systems and services that affect the habitability of the premises
- Maintain common areas and keep them free of trash and hazardous conditions
- Provide services including heat, electricity, air, plumbing, ventilation, sanitary, elevators and appliances in good and working condition
- Provide running and hot water and heat between the months of October 1 and May 1 unless the building is exempt or where the tenant has exclusive control of the heating or hot water and a direct public utility connection is in place
- Provide trash or garbage receptacles and a means of removal
- Provide each tenant a move-in checklist before taking possession that advises of the condition of the premises and any damage
- Provide smoke detectors in all dwellings
Further, you must treat all tenants and tenant applicants equally and not deny leasing to anyone on the basis of race, color, creed, religion, national ancestry, family status, gender, age, sexual orientation or disability. For disabled tenants, you may not refuse to provide reasonable accommodations in the dwelling, common areas or in the rules that apply to all other tenants nor charge a disabled tenant a fee or additional deposit.
Finally, be cautious in your lease regarding your and your tenants’ duties and responsibilities and do not include provisions that alter your own basic obligations, conflict with state laws or local ordinances or waive the tenant’s rights to certain remedies or damages.
Obligations of the Tenant
You want a responsible tenant so you should consider setting out the tenant obligations so there are no disagreements. Basic tenant responsibilities are:
- Maintain the dwelling in a safe condition and do not damage, deface, modify, alter or remove any part of the unit
- Comply with building and health codes to keep the premises safe and clean
- Use all appliances and systems such as air, heat, electricity and plumbing in the appropriate manner
- Do not engage in unlawful activities on the premises
- Dispose property of garbage and rubbish
- Pay the rent on time and adhere to all terms and provisions of the rental agreement
- Do not disturb the right of other tenants to the quiet enjoyment of their own premises
- Promptly notify the landlord of needed repairs
Provisions of the Lease
All contracts, including lease agreements, must have certain essential terms. You can add optional provisions to address common landlord/tenant situations as well. Consider the following terms and provisions for your North Dakota residential lease agreement:
- Name of property owner and property manager; address where rent is to be paid; emergency or maintenance contact information; address and name of person to whom legal documents and notices are to be served
- Names of all the tenants and any other occupants—have all adult tenants sign the lease so that they are jointly and severally liable for the lease terms, including the rent
- Description or address of the premises
- Beginning and end dates
- Amount of rent and date it is due—state grace period and amount of late fees and when the fees apply
- Insufficient check fees—$40
- Provide rules that apply to all tenants fairly, are clearly worded and that promote the convenience, safety and welfare of the tenants; preserve your property and are not intended to avoid your own duties and obligations
- Security deposit:
- one month’s rent
- funds to be kept in a separate account
- if paid in cash, should give tenant a receipt
- interest required to be paid once tenant’s occupancy exceeds 9-months
- provide a check-in list and statement of the condition of the property to be signed by both parties
- state that that the funds are to be used for damages that exceed normal wear and tear, unpaid rent or utilities for which the tenant was responsible and cleaning costs
- that funds will be returned no later 30-days of tenant vacating unit and sent to a forwarding address that is supplied by the tenant or advise tenant within this time that a specified amount of funds will be deducted for damages
- recommend that you set a time and date for a mutual inspection a short time after the tenant vacates with check-out list on hand
- Landlord’s obligations as noted above—may provide house or conduct rules that apply to all tenants and are for the convenience, safety and welfare of all tenants, provides for the fair distribution of services and facilities to all and preserves the landlord’s property from damage
- Tenant’s obligations as noted above—you may require the tenant to perform specific minor repairs or maintenance if it does not diminish the obligations of the landlord to provide a residence fit for habitability
- Party responsible for certain utilities
- Major appliances and furnishings being provided
- No commercial, business or illegal use of premises by tenant or conduct that constitutes a nuisance or is unlawful
- Pet clause—may limit type of pet, weight and require tenant to clean up pet waste in common areas; may charge a deposit of 2-months or up to $2500, whichever is greater, and which includes the regular security deposit; no deposit for service dogs is permitted
- Subletting clause—whether you allow it and that you have to consent to whomever is the sublessee
- Your right of entry to make repairs, inspect and show to future tenants or purchasers—give reasonable notice and entry at reasonable hours; indicate that you may enter immediately if it is an emergency or if you have a reasonable basis for believing the tenant is substantially damaging the premises
- Notify landlord if absence from unit is to be 7 days or longer
- If lease is monthly, either party may serve a notice to terminate upon 30-days’ notice without cause or any other notice period if you so specify though give yourself and the tenant a reasonable time—failure to give proper notice can result in the tenant forfeiting the security deposit and liability for the rental period
- 3 -day notice to quit required for nonpayment of rent and other violations of the lease if so specified such as:
- substantial damage or waste to the premises caused by tenant or persons under tenant’s control that has not been repaired
- unauthorized pets or occupants
- engaged in criminal activity that endangers the safety of other tenants including the manufacture of illegal controlled substances
- sublease without consent
- being a constant nuisance to other tenants
- refusing entry to landlord after being given reasonable notice
- Notice for increasing rent or changing any other lease term—30-days in advance of the effective date of the increase in a monthly lease (may not be for a discriminatory or retaliatory purpose); otherwise, not until the fixed term expires; tenant to give 25-days’ notice to terminate at the end of the monthly term after receiving notice of the rent increase or any other term in the lease
- Automatic lease renewal by giving tenant 30-days’ notice before the expiration of the current lease term that the lease will automatically renew—must ask for rent increase at this time or lease renews with same terms for the same term period as original lease—if no notice given, the lease becomes a month-to-month agreement
- Provide disclosure of the presence of lead-based paint on the property for all rental property built before 1978—provide the tenant with an EPA pamphlet entitled “Protect Your Family from Lead in Your Home.”
Security Deposits Limited
You may charge a security deposit of no more than one month, though if you allow pets, the deposit may be 2-months or $2,500, whichever is greater. Deposit the funds in a separate, interest bearing account. You do not have to pay interest on the deposit unless the tenant has possession that exceeds 9-months. Specify in your agreement that the deposit is to be used to pay for damages that are more than usual wear and tear, for unpaid rent when the tenant vacates, unpaid utilities or to clean the apartment so that it is restored to the condition it was in when first leased.
You are required to provide a move-in checklist or statement of the dwelling’s condition when accepting a security deposit and/or pet deposit. Use this list when the tenant vacates the unit and give your tenant an opportunity to have a mutual inspection of the premises to review its condition.
Deposits must be returned within 30-days to a forwarding address supplied by the tenant or send a written statement detailing any damages found and the amount that will be withheld. If you fail to do this, the tenant may sue you for 3 times the amount of the deposit.
Lease Termination in North Dakota
All leases with end dates or fixed terms terminate on the final day. Include an automatic renewal provision and give the tenant 30-days’ notice before it expires regarding the renewal provision and, if you wish, that the rent will increase or other terms will be added or modified. Your tenant is to be advised that he/she has 25-days after receipt of your letter to terminate the lease on its expiration date. If you do not state the rent will increase, you forfeit your right to do so and the lease automatically renews with all of the same lease terms in effect for the length of the original lease term.
For nonpayment of rent, serve a 3-day notice to quit within which time the tenant can cure by paying the rent in total. The 3-day notice applies to other material lease violations that you should specify in the lease agreement. It is your option whether to allow the tenant any time to remedy the violation such as by expelling unauthorized occupants or pets.
If you evict a tenant or the tenant vacates early in violation of the lease, you must mitigate your losses by undertaking reasonable steps to find a suitable replacement tenant. You cannot collect the rent from two different tenants.
Servicemembers’ Act Exception
Under the federal Servicemembers Relief Act, a tenant who is a member of the American Armed Forces including any of the uniformed services may terminate a fixed term lease if the tenant receives deployment orders to move more than 35 miles from the premises for more than 90 days or must live in a barracks or other residence supplied by the government. The tenant must provide a copy of the orders or at least a written statement from the commanding officer. The tenant must give 30-days’ and has no further obligations under the lease so long as the rent owed for the final rental term is paid.
Domestic Violence Exception
A tenant who is the victim of domestic violence, stalking or sexual assault and who fears imminent domestic violence from a person who is the subject of a protective order or other record filed with a court may terminate a fixed-term lease by giving notice with a specified date. The tenant is responsible for the rent to the end of that month only and is relieved of any further obligations under the lease.
You may not terminate a lease or refuse to rent to someone who is a victim of domestic violence.
Tenant May Elect to Withhold and Deduct for Repairs
If repairs are necessary and you are given notice by the tenant, you have a reasonable time to perform the repairs. If you do not, the tenant may elect to do the repairs and deduct the cost from the rent if written notice is given. Your tenant may opt to terminate the lease without further obligations if the repairs are serious and essential to keeping the dwelling in a fit and habitable condition.
North Dakota residential lease agreements can be complicated and require that you include certain provisions or you may forfeit certain rights and be liable for damages or other losses. Consult with an experienced North Dakota landlord/tenant attorney if you have any questions about your rental agreement.