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Making the Switch to Digital Leases: What Property Managers Need to Know

Digital Leases

Mary Gwyn of Apartment Dynamics offers advice on getting tech-savvy tenants to actually read what’s in a lease before signing on the electronic dotted line.

As people look to their smartphones and tablets to access information in real time, it’s no surprise that digital leases are replacing paper documents as the new normal. A digital signature offers a quicker, more convenient way to get the keys to a new rental, but it sometimes leaves property owners hanging with an unread document … and an uninformed tenant.

The digital lease compounds an age-old problem: getting residents to pay attention to a lease’s terms. “People don’t want to take the time to read the documents. Even before electronic signatures and digital leases, we’ve had trouble getting residents to focus,” observes Mary Gwyn, chief innovator for Apartment Dynamics, in High Point, North Carolina, a consulting firm that helps the apartment industry train and manage staff. 

More than one property owner has been pressured to review the terms of a cumbersome lease at the last minute, as a tenant’s friends wait outside with a moving van, ready to start hoisting the living room sofa. Blogger Lori Hammond expounds these frustrations, noting that leasing teams are often reluctant to discuss rules and policies prior to a move-in, because they don’t want to detract from the positive experience of moving to a new place. 

As a result, the tenant moves in thinking about getting a kitten or puppy — but the lease specifically says pet ownership is forbidden. 

A few digital signatures and the absence of a paper document make it even more tempting — and easier — to get through the process of signing a lease without even reading what that lease says. 

“Even if you require that they initial electronically on each page, they can get through it pretty quickly,” Gwyn says. It’s the same mindset that iPhone users assume when they sign Apple agreements for upgrades.

“As a society, we are starting to really take for granted the terms we’ve agreed to. You hope for the best if you check off and e-sign.” Invariably, tenants who sign a lease without thoroughly reviewing it are surprised when they get a letter from the property manager, saying that rent is overdue or that another term in the lease has been violated. 

“They’ll complain, ‘you never told me that.’ You can imagine what we’ll face as more people sign electronically,” Gwyn says. 

To get residents on the right track, and to make sure they know what’s in a digital lease, Gwyn offers the following pointers:

1. Make sure the tenant gets it — before they get the key.
Prospective renters need to acknowledge that they have reviewed the lease in full and understand essential provisions, such as when the rent is due or how property damage is handled. 

2. Include a summary agreement in the lease.
Gwyn says she uses the Apartment Association of North Carolina lease and is also familiar with the NAA lease. Both have very strong terms and include the most important summary items on the first page. This makes it easier for the tenant to review the lease’s key points and understand what’s in the lease.

3. Try to schedule an in-person meeting.
Meeting with the resident prior to the move in date presents the opportunity to answer any outstanding questions or review any critical points and, if possible, go over a paper copy of the lease. The reality is that most people prefer a digital form of communication, such as a tablet or laptop computer, to review a lease, Gwyn says. “We are, as with many industries, becoming less paper-oriented. I think most residents are okay with reviewing it in the office on an iPad or tablet.” 

4. Know what the legal risks are.
A magistrate could decide that a digital lease was unfair because the tenant never received a printed copy or a thorough review of the lease’s terms. Because landlords write leases, the lease is considered pro-landlord, so magistrates will often rule in favor of the residents. 

That’s why it is so important for property managers to be savvy about their communications with residents who use digital leases. 
Gwyn said if she were renting a unit right now, she’d want the convenience of a digital lease agreement. “But I would really read it.” 

One helpful resource property managers can look to is NAA's Click & Lease, which is one of the most user-friendly and popular digital-lease programs in the world.