What is a Residential Lease Agreement?
A residential lease agreement is a contract between a landlord and a tenant, providing for the tenant to occupy the premises owned by the landlord in exchange for the payment of rent. It is used to define the terms under which the tenant will use the property and under which the landlord is allowed to take that property back when the lease ends. A lease agreement is an important document because it provides guidance for when disputes arise between a landlord and their tenant.
For example, the lease may provide that the cost of utilities is the responsibility of the tenant or the landlord, and will identify the specific utilities at issue. In addition, the lease will likely identify the party responsible for performing any necessary repairs to the leased property and when such repairs are to be completed.
The New Mexico Residential Lease Agreement is a standardized contract prepared by the Real Estate Commission. The New Mexico Residential Lease can also be referred to as the NM Residential Rental Agreement or the NM Lease Agreement. This document meets New Mexico law requirements for what items must be included in a residential lease agreement .
While the document is standardized, there is space in the New Mexico Residential Lease for the parties to address other issues that may be important to them. For example, the Residential Lease Agreement can be modified to provide for:
• The lease term, if it is different from the default term set out by the law;
• Provision for subletting of the leased space, if that is important to the parties;
• Provisions prohibiting smoking or keeping pets on the leased property;
• Requirements for the maintenance of the property, including a schedule for any planned or routine maintenance;
• Circumstances when the tenant should contact the landlord about issues with the leased property.
Every landlord in New Mexico should have his or her attorney review the Residential Lease Agreement and modify it as necessary to fit the specific needs of the landlord. While it is always recommended that landlords have an attorney prepare a commercial lease agreement, instead of using a form lease, New Mexico Residential Lease Agreements are standardized and the Real Estate Commission prepares these forms.
Elements of a New Mexico Lease
As a New Mexico landlord, it’s important to understand the essential elements of a residential lease. While New Mexico doesn’t have a set form for residential leases, certain key components are required. Each New Mexico lease must contain the following:
Lease Duration. Every New Mexico residential lease must clearly state the duration of the lease. Will the lease be month-to-month, or will it be for six months or a year? If the lease is for a term of months or years, the lease must also state the exact end date.
Rent Amount. Every residential lease must state the rent amount. The lease should also state the due date for the rent. By law, rent may be paid by the month for the month ahead. NM statutes contain no rules about paying rent by the week.
Rent Payment Location. A residential lease must include a payment location. Does the tenant pay the rent by mailing it, or giving it to you in person? These details should be included in every residential lease.
Security Deposit. Like the lease must state where the rent is paid, the lease must also state where the security deposit is paid. Nowhere in the lease may the payment of the security deposit and rent be linked. For example, the lease may not state that the tenant can pay both the security deposit and rent in equal installments over the months of the lease term. A New Mexico commercial lease, on the other hand, does not have the same restrictions with regard to linking rent to the security deposit.
Maintenance Responsibilities. The New Mexico landlord-tenant laws are found in the Uniform Owner-Resident Relations Act (UORRA). The UORRA specifies certain implied phrases that every lease contains. One of the implied provisions is that the landlord must keep the premises in repair and comply with all applicable health and safety codes. A New Mexico lease agreement may give the landlord the right to place the responsibility for repairs on the tenant. If the lease attempts to do this, the tenant may still give notice to the landlord if something needs mending. It is optional for the tenant to actually make the repair.
Legal Leasing Requirements in New Mexico
New Mexico tenancy law imposes various requirements on landlords. Most important is the requirement that a lease be written. If a term longer than a year is involved, or the rent is more than $500, a written lease will be required. Regarding the right to terminate, requirements about time frames for rent payment, or any other requirement that a written lease would contain, the law will treat the parties as if a written lease is in effect. However, the tenant cannot use any of the benefits of the law without having a written lease.
Once a written lease is in place, what kind of requirements must it meet? In terms of plain language and structure, the lease should be easy to read. The font should be large enough that the average reader could follow the print and understand it. A lease should be in plain English: no legalese should mar the document.
NMSA 70-12-1 requires that a landlord disclose in writing any person who will be entering the dwelling unit, other than the owner or their employees, during the time period covered by the lease. If the owner or their employees will be coming into the unit with any regularity (such as a lot of maintenance issues,) the tenant should be aware who they are up front.
For leases in force after July 2017, the "Landlord’s Information" sheet must be attached. This information sheet should provide contact information, including the mailing address and phone number (in-state only) of the person to contact in case of emergency. If the lease is less than two months, the landlord’s agent may be the person to contact (NMSA 47-8-7). Once the lease goes over two months, the landlord must give the information or lose the ability to collect back rent.
A New Mexico lease doesn’t have to be for a set amount of time. Tenants often sign "rent-to-own" agreements because the rent goes towards the purchase price of the home. Leases can be on a monthly, daily, even at-will basis. For example, as long as the tenant continues to pay, they keep on renting the home as if their agreement is on auto-renew. The downside is the tenant could decide at any moment according to their wishes the lease is void, without any recourse to the landlord.
Tenants and Landlords: Rights and Duties
Tenant’s rights are important in a lease. It’s common to think that leases mainly protect landlords but residential leases also protect tenants if you know what to look for.
One portion of the lease protects the tenant’s privacy with a reasonable expectation of privacy. In no case can a landlord or their agent enter the leased premises without either consent from the tenant or giving reasonable notice of intent if the tenant doesn’t give consent.
The lease will identify the maintenance obligations of each party. Typically, the tenant is responsible for carrying out ordinary maintenance with the landlord performing anything major.
Sometimes a tenant will move into a property and it will not be in repair. The tenant should notify the landlord if the premises aren’t habitable. Sometimes they may choose to remain in the property and require the landlord to make repairs. In either case, communicating about the repairs is the critical part of the tenant’s rights.
Most leases will have a provision that if the premises are non-habitable the tenant has the right to not pay rent until the repairs are made. That being said, if the premises are legally non-habitable, the tenant has the right to move somewhere else and not pay rent.
One of the most basic responsibilities of a tenant is paying rent.
The lease may have requirements for cleaning standards during occupancy and at the end of the lease. Failing to clean a dwelling at the end of a lease often results in some difficulty getting the security deposit back.
Tenants must give a 30-day written notice before moving out. It’s best to give notice in the form of a letter and follow the procedures stated in the lease.
Frequently Used Clauses in New Mexico Lease Agreements
There are several other common clauses that you will likely see within the New Mexico Residential Lease Agreement that we have not yet highlighted.
Early Termination Clause: While a Residential Lease agreement generally runs the full term of the lease, there may be an early termination clause for circumstances such as job transfer to another area or unexpected hardship. Early termination clauses can vary substantially, so be sure to carefully review before signing the lease.
Renewal Option: Some landlords may give you the option to extend the lease for an additional period of time under the same terms. If you see this option , you will want to pay close attention to the deadlines and methods used to notify the landlord of your desire to renew.
Penalties: A lease agreement should specify any penalties for breaking the lease or how and when rent is to be paid in order for the lease not to be broken. This is particularly important if you move out early and the owner decides to make deductions from your security deposit.
No Pets: While it may be difficult to find a rental property that will allow pets, we are starting to see more landlords loosen their rules. In New Mexico, a landlord can request an extra security deposit for damages that may be caused by the pet.
Resolving Disputes Under a New Mexico Lease Agreement
The New Mexico Residential Lease Agreement provides landlords and tenants with several options for resolving disputes that may arise during the tenancy. The resolution of disputes is important because allegations of wrongful behavior such as harassment, obligation to repair, eviction and intoxication can be resolved either in or out of courts whether at the instance of the landlord or at the request of the tenant. Tenants’ remedies must be exercised fairly and reasonably and at all times in good faith (i.e. without malice).
One method of resolving a dispute between the parties is through mediation. Under this process, an impartial third party facilitates the conversation between the landlord and the tenant, helping them find a common ground and perhaps identify a solution to the dispute. A mediator does not impose a decision on the parties. Mediated solution tends to be forward-looking and allows the parties to resolve their dispute amicably.
If mediation is unable to resolve the dispute, the next options for adjudicating a dispute between landlords and tenants involves arbitration or court proceedings. One option is for both the tenant and the landlord to voluntarily agree to resolve the dispute with the help of an arbitrator. Arbitration is similar to mediation in the sense that it involves the use of a third party to facilitate the process. However, in the case of arbitration, the third party comes to the parties with the understanding that he or she will decide the outcome of the dispute. When parties select arbitration as a method of resolving their disputes, they usually agree to be bound by the arbitrator’s decision.
Another option for resolving a dispute between a landlord and a tenant under the New Mexico Residential Lease Agreement involves going to court. Disputes are commonly adjudicated with regular access to the court system. Litigating a dispute in court is a rather formal process that requires adherence to complex rules of civil and evidentiary procedures. Because the country’s legal system is adversarial in nature, judges or juries adjudicating cases will decide the outcome of disputes, and these decisions will be binding on both parties.
How to Draft a Thorough Lease Agreement
Writing a residential lease agreement requires careful attention to detail and a clear understanding of the law in New Mexico. A concise, well-structured lease agreement is vital for minimizing potential disputes between the landlord and tenant. Below are tips for writing an effective lease agreement:
Obtain Legal Assistance in New Mexico
An experienced attorney can help ensure that a comprehensive lease agreement will be in compliance with state laws. For example, New Mexico requires that annual residential lease agreements contain specific terms. By obtaining the assistance of a qualified real estate attorney, you can be assured that your lease agreement covers necessary terms and is in compliance with the law.
Terms of the Lease Agreement
A comprehensive lease agreement should include all essential information related to the rental property . For example, who are the parties to the rental agreement, and what is the property address? The duration of the lease should be clearly outlined, along with methods of payment, the name of the landlord, and any additional terms. A well written rental agreement should include all applicable terms and requirements to the agreement.
Avoid Common Mistakes
Many landlords and tenants overlook the importance of spelling out specific details in rental agreements. For example, if pets are allowed within the rental property, it should be stated in the lease. Failure to do so can result in security deposit disputes. If a pet causes damage to the property, for example, the landlord may seek to retain a portion of the security deposit for repairs and maintenance in the form of withheld rent. By listing the possible damages that may occur, pets, for example, the parties can be on the same page when it comes to refunding the security deposit.