Leveraging GenAI to Draft a Residential Property Lease--Part 2

Three Ways For Lawyers To Draft a Lease Using AI To Improve Productivity -- PART 2 ITERATIVE COLLABORATION

As discussed in PART 1 of this Article, document generation represents a prime area for you to apply AI technology in your law practice. For purposes of this article, I’ve used ChatGPT 4 as my GenAI platform or tool. The same approach will work with other platforms such as Claude, or whatever you feel most comfortable using. Just be certain that you have an understanding of the AI tool you are using, and an idea of its capabilities, limitations, and whether your input will be used to train the model, among other considerations. 

In this 3-Part Article we’ll go through how to use three different methods to produce a residential lease agreement using AI:

Part 1.         Direct Drafting the Lease Agreement in ChatGPT

Part 2.         Iterative Collaboration

Part 3.         Mirroring an Existing Lease Agreement.

METHOD 2 -- ITERATIVE COLLABORATION

The second method to consider using is Iterative Collaboration.  This is exactly what it sounds like – you and the AI platform engaging in an interactive written “conversation” through a number of different iterations.  The benefit of this method is that your AI platform will learn more about your particular drafting and editing style.  The more you engage with your AI tool, the more it will reflect your “voice,” writing style, syntax, and even punctuation, for that conversation. 

You can use this format of drafting with any type of document that you need. For our purposes today we’re preparing a lease. Both the beauty and the agony of this process is the iterations you will need to go through, but if done correctly this process will get you to a fairly good document, even if you have not drafted one before. Engaging with your AI platform through an iterative process offers a more detailed and tailored drafting experience. You might find additional clauses that you hadn’t considered, as I did in going through the process of drafting this lease.  And at the end you will have a document that you are familiar with because you and the AI platform will draft it together, piece by piece.

As you go through this process, sometimes you will be teaching the AI platform—through the Socratic method, of course—and sometimes it might be teaching you. Again, think of this approach as more of a conversation.  This method works best if you ask as many questions of your AI tool as possible.

To draft your lease, start by asking the AI tool for the essential elements of a high-quality [fill in the type of document you are writing]. Then go through each of these elements and flesh them out. Ask for explanations — Why include a section on health and safety? What is the highest security deposit you can require in your state? Can you require more rent or a cleaning fee if the tenant brings a pet? Ask as many questions as seems reasonable, and then ask a couple more. If you are considering a certain clause, ask it for the pro’s and con’s of including the clause. And ask it to fill in citations to the law. I love this part, because it seems like a nice shortcut. You can tell it what format you want the citations to be in, or just trust its format. Be sure to verify that these citations are correct. I cannot stress that enough. Unless you are so familiar with the relevant law that you know the citations by memory, go verify the citations. In my experience, citations to law provided by AI tools have been correct. But just like printed legal books need to be updated with paper supplements as laws change, AI models trained on data before a law is passed will also likely be out of date. As we have seen recently, failing to check caselaw citations provided by AI models has resulted in a failure to spot hallucinations, and sometimes even sanctions.

Advantages:

·      Depth: Enables a more thorough understanding and incorporation of legal nuances.

·      Flexibility: Adapts the drafting process to your pace and specific needs, allowing for deep dives into complex areas.

·      Future Time Savings: This method is essentially training your AI tool with what you expect for legal documents. Although we used a residential property lease as an example, it will work for other documents as well. Remember, the training you provide is limited to that specific chat.

Disadvantages: 

This requires a more significant investment of time in the beginning of the process. It will likely save you time in the long run, however, because it might be more comprehensive. And as you continue to engage with your AI tool it will mimic your style more closely and will continue to add clauses or phrases that you have requested, for that chat.¹

Best For: 

This method works well for legal professionals who have little to no experience drafting the type of legal document they would like to draft. It also appeals to legal professionals seeking a deep, hands-on approach to document drafting, ensuring every detail is meticulously addressed.

As you will see from the example, you can ask what provisions or elements your AI tool suggests, and add some suggestions. Remember to ask it about why it included a certain element, and even have it add in the relevant citations (which you then must check). You can also have your AI tool change the tone of the document; simply ask for a more formal document, or a more conversational document. And if you always include certain clauses, tell your AI tool that each legal document should have that clause. For example, I told ChatGPT to always include an integration clause for every contract I draft.

HERE’S WHAT THE PROCESS MIGHT LOOK LIKE:

Note: My example of the Iterative Collaboration method was so long that it exceeded the limit for a Substack article. I’ve included a small part of it below, but check out the entire conversation here: METHOD 2 EXAMPLE.

ME: What are the most important elements of a high-quality lease for a residential property?

ChatGPT

A high-quality lease agreement for a residential property is crucial for protecting both the landlord and the tenant. It serves as a legal contract that outlines the rights and responsibilities of each party and sets the terms of the rental arrangement. Here are the most important elements to include in such a lease:

1.     Parties to the Agreement: Clearly identify the landlord (or property management company) and all tenants. Include contact information for both parties.

2.     Property Description: Provide a full address and description of the rental property, including unit number if applicable.

3.     Lease Term: Specify the start and end date of the lease term, whether it’s fixed-term or month-to-month.

4.     Rent Details: Outline the amount of rent, due dates, acceptable payment methods, and any penalties for late payments. Also include details about security deposits, including the amount and terms for return.

5.     Utilities and Services: Clearly state which utilities and services are included in the rent and which are the responsibility of the tenant.

6.     Use of Property: Define how the property can be used, specifying any restrictions (e.g., no commercial activities if it’s a residential lease).

7.     Maintenance and Repairs: Clarify the responsibilities for property maintenance and repairs, including who handles what types of maintenance issues and emergency repairs.

8.     Rules and Regulations: Include any specific rules or policies, such as noise restrictions, pet policies, smoking rules, and guest policies.

9.     Renewal and Termination: Outline the conditions under which the lease may be renewed or terminated early, including notice periods and any penalties or fees.

10.  Security Deposit: Detail the amount, use, and return process of the security deposit, including conditions under which it may be retained.

11.  Inspection: Provide terms for property inspections by the landlord, ensuring proper notice is given to the tenant.

12.  Legal Clauses: Include clauses covering legal issues such as liability, insurance requirements, subletting policies, and conditions under which the lease may be voided.

13.  Signatures: Ensure the lease is signed and dated by all parties involved, making it legally binding.

14.  Additional Provisions: Consider any state-specific legal requirements, amenities included (parking, storage), and any other unique terms pertinent to the rental agreement.

Creating a comprehensive and detailed lease agreement is essential for minimizing potential disputes and ensuring a clear understanding between the landlord and tenant. It's often advisable to consult with a legal professional to ensure the lease complies with local laws and regulations and adequately protects your interests.

ME: What are additional issues for the lease if its being entered into in Iowa?

ChatGPT

When entering into a lease agreement in Iowa, there are specific considerations and legal requirements that both landlords and tenants should be aware of to ensure the lease complies with state laws. These considerations help protect the rights of both parties and provide clarity on various aspects of the landlord-tenant relationship. Here are some additional issues and requirements for leases in Iowa:

1.     Security Deposit Limit: In Iowa, a landlord can charge a security deposit up to two months' rent. This is higher than some other states, where only one month's rent is allowed.

2.     Security Deposit Return: Iowa law requires landlords to return the security deposit within 30 days after the lease ends and the tenant has vacated the property. The landlord must provide a written statement of any deductions made from the deposit.

3.     Notice for Rent Increases: For month-to-month tenancies, landlords must provide a 30-day written notice before increasing the rent.

4.     Late Fees: While Iowa law allows landlords to charge late fees, the amount and conditions under which they are charged should be clearly outlined in the lease agreement. Late fees must be considered reasonable.

5.     Landlord Entry: Landlords must provide a reasonable notice (at least 24 hours) before entering the rented premises for inspections, repairs, or showings. The lease should specify the conditions under which the landlord may enter.

6.     Disclosure of Lead-Based Paint: For properties built before 1978, landlords must disclose the presence of lead-based paint and provide tenants with an EPA-approved information pamphlet about lead hazards.

7.     Domestic Violence Protections: Iowa law offers protections for tenants who are victims of domestic violence, allowing them to terminate their leases early under certain conditions without penalty. The lease should acknowledge these rights.

8.     Eviction Notices: The lease should outline the eviction process and the notice period required for different reasons, such as non-payment of rent or violation of lease terms, in accordance with Iowa law.

9.     Repair and Deduct: Tenants in Iowa have the right to repair serious defects in the rental unit and deduct the cost from their rent, under certain conditions. The lease can outline how tenants must notify landlords of the need for repairs.

10.  Automatic Renewal Clauses: If the lease includes an automatic renewal clause, it must be clearly disclosed in the lease. Iowa law has specific requirements for how these clauses should be presented to ensure tenants are aware of them.

11.  Service Member Protections: The lease should acknowledge the rights of tenants who are members of the armed forces, including provisions for lease termination in case of deployment or permanent change of station.

When drafting a lease in Iowa, it's crucial to be mindful of these state-specific legal requirements and protections. Landlords often benefit from consulting with a legal professional to ensure their lease agreements are compliant with Iowa law and fully protect their rights while respecting those of their tenants.

ME: Regarding the elements of the high-quality lease for a residential property in Iowa, would you please draft a section of the lease for parties to the agreement, making sure to include any elements of a lease specific to Iowa.

ChatGPT

Certainly! Below is a detailed "Parties to the Agreement" section for a residential lease in Iowa, incorporating elements specific to Iowa lease agreements:

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PARTIES TO THE AGREEMENT

This Lease Agreement ("Agreement") is entered into by and between XYZ Properties LLC, a limited liability company organized and existing under the laws of the State of Iowa, with its principal office located at [Landlord's Address], herein referred to as "Landlord," and the following individual(s) as Tenant(s):

Name: [Tenant's Full Name] Date of Birth: [DOB] Phone Number: [Phone Number] Email Address: [Email Address] Driver's License/State ID Number: [ID Number]

(Additional Tenant(s) information as above)

each referred to individually as "Tenant" and collectively as "Tenants."

LEASED PREMISES: The Landlord agrees to lease to the Tenant, and the Tenant agrees to lease from the Landlord the residential property described as 101 NW 8th Street, Unit 105, Grimes, IA 50111, herein referred to as the "Property."

NOTICE INFORMATION: All notices to parties under this Agreement shall be sent to the addresses listed in this section. The Tenant agrees to inform the Landlord of any changes in their contact information within [X] days of such change.

IOWA-SPECIFIC PROVISIONS:

·       Contact Information: Pursuant to Iowa law, the Landlord must provide the Tenant with the name and address of the property owner or the person authorized to manage the property, along with an address where rent is to be paid.

·       Domestic Violence Protections: Recognizing the rights of victims of domestic violence under Iowa law, the Agreement includes provisions allowing for lease termination under certain circumstances related to domestic violence, stalking, sexual assault, or harassment.

·       Security Deposit: In accordance with Iowa law, the Landlord may charge a security deposit up to two months' rent. The Landlord is required to return the security deposit within 30 days after the Tenant vacates the Property, along with a written statement itemizing any deductions.

By signing this Agreement, the Landlord and Tenant acknowledge and agree to the terms and conditions outlined herein and affirm that the information provided is accurate and complete to the best of their knowledge.

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Remember, this "Parties to the Agreement" section is crafted to include specific elements relevant to Iowa lease agreements, but it's always recommended to consult with a legal professional to ensure compliance with current laws and regulations.

This was just the beginning of the iterative process between ChatGPT 4 and me. Depending on what tool you use, and various other factors, your process will almost certainly look different. The important thing is that at the end, you will have a useable legal document if you’ve gone through sufficient iterations, and verified every legal citation. You can then use that document in subsequent transactions, letting your AI tools customize it for you.

Check back for Part 3 of this Article.

As always, nothing in this Article is or should be considered as legal advice. Before using any AI in your legal practice be sure you understand and are familiar with it. If you have a legal question or legal issue, talk to a legal professional.

1. I am using “training” lightly. You aren’t technically training an AI model. According to a knowledgeable forum, your input is not being maintained or used to train their ChatGPT model. In other words, when you ask your AI tool to do something like always include an integration clause in your contracts, it will only keep that instruction in that chat or conversation. Anecdotally, however, changes I make in one chat, such as asking for an integration clause in all my contracts, has seemed to carry over from one conversation to another. But an AI model can even “forget” instructions given at the beginning of a very lengthy chat, so do not depend on this.