When landlords and tenants enter into a rental agreement, each must sign off on the agreement, and each gets a copy to keep for their records. This is the standard protocol. However, you may be wondering: "how long should a tenant keep old lease agreements?" and "do I need to keep old lease agreements?"
The answers to both of these questions may depend on whether you anticipate any legal matter arising and whether you intend to pursue litigation or some sort of legal relief if you have had the misfortune to have had issues with your rental unit or your landlord.
Key Takeaways
Landlord Responsibilities
The general advice is that landlords should keep rental documents for at least six to seven years. This is in case a dispute emerges between them and their tenants, even years down the line. In fact, it may be necessary to keep records for quite a bit longer than even that.
The rental documents that landlords must keep include rental contracts and any addendums or attachments that are incorporated and made a part of the rental agreement between the landlord and the tenant. It is also important and advisable that they hold on to past tenant contact information, communications with prospective and actual tenants, applications that were approved, applications that were rejected, and even applications that were withdrawn.
The Internal Revenue Service has some requirements for landlords too and recommends that they keep their rental unit tax records for at least three years. Landlords need to keep records which show what their income was from their rental units, as well as their expenses. If they listed credits or deductions related to their rental properties, they will need to be able to prove their legitimacy to the IRS should they be audited.
Some more records which landlords will want to keep are rental payment histories, utility bills, itemized receipts which show their spending on upkeep of the units, bank statements, receipts of security deposits, history of insurance payments, and things of that nature. These records should be kept for each individual unit or property that the landlord rents out.
If landlords have employees, there are additional records to keep for them as well. These will include history of wages and salary payments, tax filings related to the employees, and any official employment-related documents.
Residential Rental Units versus Commercial Rental Properties
Depending on the local zoning and the type of property that it is, a landlord may choose to rent out their properties to either a residential tenant, such as a family, or a commercial tenant, such as a business or organization. Landlords of either residential tenants or commercial ones will need to keep fairly detailed and meticulous rental records for their tenants, previous or current. There may be separate considerations related to the differing types of rental contracts, but regardless of the character of the tenant or the rental agreement, landlords have an obligation to keep track of all the documentation.
Litigation
If a landlord and a current or former tenant end up in a dispute over whatever issues may have arisen and it escalates all the way to court, landlords will want to be able to prove whatever their side is in the litigation. Otherwise, they will run the risk of undermining their positions by offering up no evidence in support of their case. It is not legally sufficient to simply affirmatively state something or deny it without being able to back it up. It is not a situation that any landlord would want to be in.
There are other, more specific, reasons that a landlord may want to keep tenant rental records. A situation may arise in which, years down the road, a landlord is trying to sell their property, and records are requested as a part of the sale, which will indicate to the prospective buyer what type of repairs, improvements, and abatements have been done to the property in question, and evidence of such repairs, improvements, and abatements will likely be kept as part of the landlord's business records in general. It is good business practice to keep such records on hand.
Sometimes landlords allow their tenants to make changes to their units, and this may increase the value of the property. This type of information may be useful for a tenant in a future dispute with their landlord if they are trying to show that they created an added benefit during their time as a tenant.
The main reason why they would want to show this would be if the landlord, later on, says that they have some outstanding debts that need to be settled, and the tenant may counter that by providing a benefit to the landlord via the changes they made (and ostensibly paid for), they have mitigated whatever money may be owed to the landlord. Landlords may want to keep such records, too, in order to be as clear as possible about what benefit they actually gained.
For example, imagine a tenant has moved in and asked for permission to fully repaint the apartment and add a backsplash to the kitchen walls at their own expense. This raises the value of the unit so that when the landlord rents it out in the future, it may fetch a higher monthly rental fee. If the landlord then claims that the tenant won't get their security deposit back because they damaged something minor on the property, the tenant may try to negotiate with the landlord to get back some of the deposit in consideration for the added value they bestowed upon the landlord with the painting and the backsplash. The landlord can then reference their records in relation to the actual value of the painting and the backsplash and evaluate what may be a fair compromise with the tenant before the situation escalates.
This is, of course, a somewhat specific situation and does not have any hard-line legal rule attached to it in terms of record-keeping, but there are so many considerations around what types of records to keep and for how long. Another reason is that landlord records may be requested by some governing or administrative authority, depending on the local municipality and the offices and programs they maintain, for the purposes of demographic and census data. Local housing authorities will also want to know if a rental unit has sat vacant for an extended period of time and whether or not there are any issues with a unit that needs to be taken care of on the municipality's end.
Another example of why it is important for landlords to keep rental property records is if they have a tenant who is always either paying their rent late or not at all and the landlord decides to pursue an eviction against that tenant. If the eviction is challenged in court, the landlord will want to offer evidence of the late or missed payments with bank statements and text conversation logs showing them requesting the payment and being either denied or given the runaround. This is a much more common scenario.
Rental Housing Support Program
The Illinois Administrative Code provides a rental housing support program for people on the lower end of the economic spectrum, to aid them in being able to attain affordable housing. With this program specifically, landlords which take part in it have additional responsibilities when it comes to record keeping.
According to the Administrative Code, Record Submission and Retention provision:
a) Landlords shall maintain monthly records of the Tenant Contribution and Rental Assistance payments received for each Unit, including Unit vacancies. Landlords shall submit copies of these records to the LAA at least quarterly unless the contract between the Landlord and the LAA requires more frequent submittals. Landlords shall also submit the quarterly certification forms described in Section 380.410.
b) Copies of all records described in this Section shall be retained by Landlords for the term of the lease plus three years from the date of termination of the lease.
The LAA which is mentioned in the words of the Administrative Code above is a Local Administering Agency. They are also known as Community Action Agencies, and they are meant to assist their local community and its housing and development with financial grants and such other support as may be needed.
Private Individual Landlords versus Property Rental Companies
An individual landlord who has not formed a business entity in order to run their rental property may have a different sort of situation than a property rental company, which has a large staff and various other expenses related to running the business. Sometimes, there will be differences in how records are kept, and this makes sense, given that the expansiveness of their operations may vary significantly. One person who rents out an investment property on the side and who is not primarily engaged in the business of property rentals outside of this one unit will obviously be different from a large conglomerate that owns dozens if not hundreds of properties in different locations, which each have different rules surrounding their operations.
In Conclusion
The general rule of thumb is that landlords should keep their rental property records for at least three years, but for various reasons such as tax audit timelines and the potential for litigation, it is best that they do so for at least twice as long as that. Better to be safe than sorry.
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