NAA Lease Agreements Demystified
Often agreed to alongside an LGSIA, a National Apartment Association Lease Agreement, more commonly referred to as a NAA Lease Agreement, is a form lease designed to be used in the leasing of apartment units. The NAA originally created the lease for use by its members and, due to its sound legal footing and comprehensiveness, it has rapidly become a popular form lease among non-members in the leasing and tenant landlord industry throughout Illinois and the nation. The NAA Lease Agreement has been revised in accordance with numerous changes in law and market practices. An updated form that incorporates all the latest legal changes and market practices was released in July 2010. The preamble to the NAA Lease Agreement sets out the names of the parties to the lease and describes the leasehold interest that is being granted to the tenant. Typically , this will be some type of apartment unit. The rent is described in the body of the lease. Importantly, the NAA Lease Agreement does not automatically become effective upon execution by the owner and tenant. Instead, the lease is contingent upon the owner delivering occupancy of the apartment unit and a copy of the rules and regulations, which are expressly included in the NAA Lease Agreement. An initial inspection is performed to ensure the unit is in an acceptable condition and is then delivery to the tenant.
Key Elements of NAA Lease Agreements
As with any legal document, an NAA Lease Agreement should be adequately detailed in order to protect the interests of both parties to the rental contract. The following details are essential components of NAA Lease Agreements:
Tenant Obligations
Space restrictions (i.e., how many tenants may occupy the space)
Duty to pay rent on time
Violation of the lease terms or applicable laws
Failure to report necessary repairs to the landlord
Duty to report all damage as soon as possible
Liability to landlord for damage caused by guest, family member, tenant, etc.
Obligations upon moving out of the unit (i.e., cleaning, removing all personal items, returning keys, etc.)
Landlord Responsibilities
Duty to provide a habitable residence
Duty to maintain and repair the property
Duty to comply with state and local laws regarding rental properties
Duty to return the security deposit within a state-defined period of time
Duty to accommodate tenant requests such as one-day rent grace periods, walk-through inspections prior to move out, etc.
At-Will vs. Fixed Term Agreements
Most NAA Lease Agreements fall into the category of "Fixed-Term." This means that the tenant agrees to pay rent on a steady basis each month for an agreed duration such as 12 months or 2 years. Some rental agreements may still be classified as "At-Will," meaning that the parties are under no obligation to renew the contract and the tenancy may be terminated by either party at any time.
Rent Amount
Due date
Grace period
Discount for early payment
Additional fee for late payment (may be scalable)
Rent increase clause
Eviction Protocols
What common violations may result in termination of the lease
What is needed to conduct eviction
Role of the judge during the mediation process
Advantages of NAA Lease Agreements
For both landlords and tenants, utilizing the NAA Lease Agreements can bring a number of benefits. For landlords, the ability to quickly incorporate the standardized legal protections approved through the NAA Lease Agreement can save time and money as time previously spent on extracting bottom line details from previous agreements can now be spent on the fine-tuning of any specific details. Existing clauses in other lease agreements can be slightly modified in order to use some of the most commonly-used protections found in the NAA’s standardized leases.
While the NAA Lease Agreements embody a wide range of different state and local laws, in some instances unique state regulations can be simply incorporated by the use of additional addenda. While many landlords choose to include additional addenda such as comprehensive pet policies, move-out checklists and extensive smoking regulations, some prefer to choose the simplest option and keep the addenda to a minimum, often to just the fair housing addendum and the mandatory disclosures;
103. Fair Housing Addendum
The Fair Housing Act and applicable state and local law protect individuals from discrimination based on race, color, religion, sex, disability, familial status, and national origin. Landlord does not discriminate against individuals based on any of these categories.
Likewise, for tenants, having a standardized font and font size found in NAA Lease Agreements can make them easier to read. For those tenants that are non-native speakers of the English language, having paragraph numbering, headings, underlining and italicized print can make navigating standard terms easier and faster.
How to Tailor an NAA Lease Agreement
NAA lease agreements are customizable, and that is part of their appeal. The tool bar in the NAA version of the lease provides the flexibility to include clauses or strike those that don’t apply to the unique circumstances of your community. It is a good idea to have your community’s attorney review any changes you make to the lease before you circulate it to your residents so that you don’t inadvertently run afoul of state law.
The flexibility of the NAA lease agreements really become evident when you consider what happens if a resident needs to modify the NAA lease agreement. It could be as simple as the resident requesting the landlord keep the pool open for an additional month or a more complex request for a modification of the lease to accommodate a medical condition or disability. Whether the resident requests a modification of the terms of the lease or you want to include modifications that were discussed during the leasing process, the process is fairly similar. If you need to make changes to the NAA lease agreement before it becomes a binding contract, you simply go into the document and make the changes you want. It will basically function as a word processor and allow you to "track" the changes you made and remove those changes if you need to.
If you have already leased the unit to the resident you can review the lease agreement in the property management software and make the changes you want. If you are using a software that allows you to download a PDF of the lease agreement, simply make the changes you want. Then sign and initial all of the changes and print the revised version of the lease agreement so the resident can have a copy.
The key component to this process is ensuring that the resident understands that you want to include the modified lease agreement with their files and that they have the option to decline the modified terms of the lease agreement. For example, if you are allowing a resident to keep a trampoline on the premises and they signed a lease agreement that includes some restrictions on the size and description of the trampoline with a few photographs. Therefore, if the resident decides to keep a trampoline that is not part of the original agreement you can terminate the tenancy and evict the resident. However, if you allow the modification to the lease agreement, it would be part of the resident’s lease agreement.
Legal Considerations and Compliance
NAA Lease Agreements are not just contractual agreements. They are enforceable legal documents that must comply with all relevant state and federal laws, and enforcement of these documents can have serious legal implications. All provisions must be within the bounds of federal fair housing law and state law where the property is located. Anything that goes beyond those bounds can open the property owner up to lawsuits.
Additionally, apart from any federal laws , there are a variety of laws at the state level that govern security deposits, late fees, pet deposits, and other landlord-tenant issues. If an NAA form is adopted as is, without consideration at the state level, it could be difficult and even impossible to egregiously modify the language to become compliant with state law.
NAA Lease Agreements may not be appropriate for all states or all properties, and in some situations it may become necessary to alter the standard NAA form or use a hybrid or alternative leasing form altogether.
NAA Lease Agreements: Common Pitfalls to Avoid
Both landlords and tenants often make significant mistakes in the drafting or execution of an NAA Lease Agreement. Some of the most common mistakes include: 1. Confusing the NAA Lease Agreement with a Property Appraisal or a Property Condition Report. 2. Failing to properly identify the parties to the Lease. 3. Failing to identify the tenancy as a joint tenancy, a tenancy in common, or a tenancy in severalty. 4. Not correctly identifying the owners of the property. 5. Not clearly stating the commencement and termination dates for the tenancy. 6. Not clearly stating the obligations of the landlord to maintain and repair the dwelling. 7. Not clearly stating the tenant’s obligation to "quietly enjoy" the premises. 8. When drafting a NAA Lease Agreement, failing to include any required disclosures or notices. 9. When executing the NAA Lease Agreement, failing to have all parties sign and date the agreement. 10. When executing the NAA Lease Agreement, failing to have all parties initial each page and sign and date any required certification. It is critical that both landlords and tenants are aware of the common mistakes that can occur when creating a NAA Lease Agreement.
FAQs on NAA Lease Agreements
What does "NAA" mean in the NAA Lease?
The term NAA refers to the National Apartment Association.
Where can I get a copy of the NAA Lease?
Copies of the NAA Lease are on the NAA site or by clicking on this link. The NAA has a range of leasing addenda and documents available for download.
How long is the typical lease?
Most leases are one year, but not the NAA Lease. The purpose of the NAA Lease, well-covered in an upcoming blog, is to be as flexible as possible to meet the needs of the Parties. Originally, the NAA Lease included a lease term of up to two years. That has been been deleted in 2019. Tenants and Landlords must now agree to length of the lease term.
Why do you recommend using the NAA Lease?
Because it is the best lease – that’s pretty straightforward. The NAA Lease covers everything that is included in the standard residential real estate purchase and sale agreement as well as everything you need to know in a standard residential lease. Also, the NAA Lease is constantly updated to keep up with changes in reality and the law. In short, it is an invaluable resource.
Does my tenant have to pay the rent every month?
The NAA Lease is intentional that payments need not be made monthly. On the first of each month , for example, all rent is due and all rights to possession based on nonpayment of rent are preserved. A landlord cannot simply lock out a tenant, at least in most states, if the rent is a day late. The NAA Lease preserves the landlord’s rights to possession by allowing the landlord to continuously calculate the overdue rent. The landlord can then proceed under state law to enforce his or her rights to possession.
Can I rent a room in my house and not be subject to the NAA Lease?
The NAA Lease is designed to apply to all residential leases, even those for a single room in a house. If you are renting a room or two in your house to someone, that person will be entitled to the protections available to all tenants under the terms of the NAA Lease.
Does the NAA Lease fit my jurisdiction? What if I live in a state with rent control, an implied warranty of habitability, or other tenant protections?
The NAA Lease is dynamic and flexible, designed to apply in all states and jurisdictions. It includes general provisions that will comply with all legal requirements and allows you to attach addenda to address specific issues in your jurisdiction.