Lease agreements are the backbone to building a sound, professional relationship with your tenants. Create a bad one, and you’ll find yourself continually resolving disagreements. On the opposite end, by crafting one that’s clear, comprehensive and transparent, conflicts will likely be minimal.
If your leasing agreement leaves more questions than answers, then a tenant can find loopholes. It would be unfair to subject a tenant to strict prohibition when you don’t clearly state a condition in your agreement.
For example, a tenant brings in a pet in a rental property, and you disallow it. Upon checking the lease, there’s no pet policy mentioned. This leads to more discussions with the renter.
As a landlord who wants to be more thorough, learn to focus on details. Set out to include important clauses. Avoid leaving things open-ended and subject to misinterpretation. You can’t fault a tenant for committing actions that have not been tackled in the lease agreement.
Consider this as a guide to creating a useful lease agreement that will serve you and your renters. Below are items that can further solidify your contract:
Clauses
These are provisions in your lease agreement that a tenant can use as a reference when certain situations come up.
Tenant possessions
It’s expected that tenants move out. They may do so when their tenancy expires, or they’re forced to vacate, resulting from an eviction. In some cases, possessions may get left behind.
Different states have their own guidelines on what to do with abandoned belongings. It’s best to review this before disposing or selling the former renter’s items.
Pet policy
With the rising popularity of pet ownership, landlords must decide on a pet policy. If you choose the pet-friendly rental route, do specify the size and breed of the pet permitted.
Conditions must be set, especially if you’re renting out an apartment complex where several common areas exist. If you do decide to be closed off to accepting pets, you must clearly state a non-pet clause. You want to discourage your renters from sneaking in a pet or two.
Subletting
Subletting or subleasing refers to a tenant allowing another renter to share the rental unit. This can be a way to share the expenses of renting. Either the new tenant pays the entire rent or a portion of it to the original tenant.
If you decide to allow your original tenant to sublet the unit, you can require written permission beforehand. You must also conduct tenant screening to ensure your property remains damage-free.
Occupancy limits
This is related to subletting. Your lease agreement must specify the maximum number of occupants allowed to stay in your property. This is where you can emphasize that additional roommates or housemates require permission.
Check your local laws first since the limits can vary per city or state. Restricting the number of occupants means preventing overcrowding and hastening the possibility of wear and tear in your rental space.
Security deposit
Since landlords normally collect a month’s worth (or twice that) from a renter as a security deposit, this is a crucial clause. It’s a tenant’s right to know where and how you store the security deposit.
You need to inform the tenant if it’s in an interest-bearing account and the rate of interest. A renter should also be privy to the information about the types of deductions that can affect the security deposit. Further, the procedure for the refund should be part of the clause.
Late payments
When late payments occur, a landlord must provide conditions on how a tenant can best proceed. This is where rules about late payment charges, the fee structure and the grace period will be mentioned. With this clause, you can ensure that a tenant will be guided towards the right action to follow. Without this, a disagreement can occur, and an absence of consequences will be a breeding ground for a renter to pay beyond the due date.
Breaking of lease
As much as landlords want to have absolute control over a tenancy, this is impossible. Situations may surface when a tenant has left the property without notice. A tenant may also want to move for a variety of reasons.
Providing a clause when it comes to a tenancy breach help clarify the repercussions. For example, if domestic violence occurs, or a tenant is called to military duty, they can be exempted from being subjected to penalties.
Termination of lease
Another important clause that must be part of the rental agreement is the termination clause. This is where you can outline behaviors that will result in an eviction.
Usually, landlords evict tenants on the grounds of property damage violation and non-payment of the rent. The landlord can expand the list by providing more detailed conditions. Discussing the procedure for vacating, such as sending a notice, is also part of this clause.
Basic Terms
These are items that typically comprise a rental agreement:
Names
The landlord or agent’s complete name and the tenant’s name will be stated. Additionally, mention the property name as well.
Address
The landlord or agent’s full address, as well as the tenant’s address, will be stated. Moreover, mention the property’s complete address, from the unit number to the zip code.
Rent amount
State the full rent amount per month, with figures for clarity. Other fees such as security deposit and pet charges will be separately mentioned.
Rent due date
To encourage tenants to pay on time, a specific date must be stated. This should be the exact day, month and year.
Rental period
Exact dates for the rental period, from the start and end date, must be written down.
Signature
The leasing agreement will be legally binding through the signatures of the parties to the contract. The landlord and tenant will affix a signature with the date to signify their mutual agreement to the terms contained in the document.
Bottom Line
Building a solid lease agreement will protect both the landlord and the tenant. It will also cultivate a stronger relationship, create boundaries and define what is acceptable behavior.