How to Decide Whether Requirements Belong in Leases or Site Rules

Like most owners, you probably include some residency requirements in your leases and some in your site rules. But if you include a requirement in the wrong place, you could create confusion and face enforcement problems. To help you avoid such problems, we’ll tell you which requirements generally belong in your leases and which generally belong in your site rules. And we’ll explain why you should consult your site’s attorney when trying to decide where a requirement belongs.

Which Requirements Belong in Leases

When someone agrees to rent or lease an apartment, he signs a lease or rental agreement outlining the terms of the agreement. It’s a legally binding contract between the tenant and the owner that details the rights and responsibilities of each party. In general, a lease includes requirements that relate to the basics of residency, such as rent, occupancy, or the lease term. For example, basic lease requirements would require your residents to pay their rent by a certain day each month; inform you of occupancy changes; give you notice of early lease termination; follow certain procedures to request apartment transfers; and include language on avoiding damaging their apartments (beyond reasonable wear and tear).

Unlike a typical market-rate apartment, however, a tax credit site or unit participates in the federal Low Income Housing Tax Credit (LIHTC) program. This means the provisions of Section 42 of the Internal Revenue Code (IRC) are applicable to the lease. An income-eligible tenant in a tax credit unit pays a restricted rent, and the site owner receives valuable tax credits in return for keeping a required percentage of units affordable.

The LIHTC program doesn’t have its own mandatory lease. As a result, many owners have tenants sign typical apartment leases that include lease clauses or addendums specific to the tax credit program. For example, a tenant at a mixed-income site can probably expect a clause requiring cooperation when recertifying and verifying his income each year, and there may be language saying that if the owner learns that the tenant knowingly gave false or incomplete income information when determining eligibility, this could be grounds for terminating the lease. These types of clauses ensure that you have the authority you need to keep the site in compliance.

Your state housing agency that monitors compliance may require you to include certain requirements in the leases of participating or eligible residents. But even if the monitoring agency for a program your site participates in doesn’t require you to include any requirements in your leases with participating or eligible residents, it’s wise to at least include basic program requirements in their leases, because such requirements affect their residency.

Which Requirements Belong in Site Rules

In general, include in your site rules requirements that are specific to your community and that may at some point be changed. For example, include requirements relating to the following in your community rules:

• Use of common areas, such as your swimming pool or fitness center;
• Potential hazards, such as halogen lamps, space heaters, and grills;
• Pets that residents can keep in their apartments; and
• Residents’ general conduct, such as recycling and excessive noise.

It’s easier to change your site rules than your leases. Because site-specific requirements are likely to change, you should include them in your site rules. If you include site-specific requirements in your leases, you’ll have to amend all your residents’ leases every time you want to change such a requirement.

Don’t Include Requirement in Both Your Leases and Your Rules

You might think it’s a good idea to include a certain requirement in both your leases and your site rules. But doing so could lead to problems. If you argue that you included a requirement in both places to emphasize its importance, you’re implying that requirements that appear in one place aren’t as important as ones included in both places. And if a requirement appears in both your leases and your site rules but isn’t worded exactly the same way in each, you could face arguments about the requirement’s interpretation. As a result, you could have trouble enforcing the requirement against your residents in the way you intended.

Consult Attorney When Making Decision

Consult your site’s attorney when deciding whether a requirement belongs in your leases or in your site rules. Your state or local law may require you to include certain requirements in your leases. And your attorney can advise you of any such laws. Also, your attorney may tell you to include a certain requirement in your leases because she believes your residents will take it more seriously if it’s there, or because she has had more success enforcing that requirement in court when it was included in the leases. Or she may tell you to include a requirement that would normally belong in your lease in your site rules, because she believes you’re likely to change it. Also, be sure to refer to your site rules in your leases so they’re as enforceable as your lease requirements are.