Common Lease Provisions
Details should include instructions on how tenants must give you written notice of the intent to vacate. The lead time for tenants to notify you if they plan to vacate is up to you and should be chosen for best results in your market. Thirty days is typical, but it's not appropriate for every situation. If experience shows that it takes sixty days to find a tenant, you might want to increase the notification date.
Property Use
The lease should state how the property is to be used. Can the tenant operate a home-based business that requires walk-in customers? If the rental is in a development that bans such businesses, the decision isn't yours. In some cases, the decision is up to you. With more and more people working out of their homes, you should consider the types of businesses you will and will not allow.
Detailed Property Description
The lease should include information that describes any portion of the property in need of repairs when the tenant moves in. This is normally accomplished by using a checklist to help tenants inspect items and list problems, such as scuffed paint, cracked or burned countertops, or a hole in the carpet. If you fix the items, the tenant should acknowledge the repairs in writing.
The lease should also contain an inventory of personal property included with the rental, things like appliances, curtains and blinds, and furniture. The list should include specific information about the brands and age of items, including serial numbers when possible.
The preprinted leases available at office supply stores are a good starting point, but they rarely include the clauses necessary to protect your interests. Before using them, seek advice from a real-estate attorney or another investor who has experience managing similar properties.
You might wish to take photos of the property's condition before tenants move in, asking them to sign off that the condition depicted is accurate. When they move, you can compare the photos to the property's current condition to determine if changes are due to damage or normal wear and tear.
Rents, Late Fees, and Security Deposit
The lease should state how much rent is to be paid, when it is due, and to whom it must be given. You can insert clauses regarding late payments and associated fees for them and defining the charges the tenant must pay for a bounced check.
You must also determine how much security deposit to charge your tenants. To be competitive, call landlords with similar properties to see what the going rate is, then decide if it works for you. You'll have to decide when the deposit is due and whether or not tenants will earn interest on the amount. You should describe in writing what a tenant must do to be eligible for a deposit refund at the end of the lease, including details about the length of time you will take to make the refund.
Deposits must often be held in trust accounts during the time of the lease, and many states regulate maximum amounts that you can charge a tenant for a deposit. Check your state and local regulations to make sure your decisions comply with laws in your area.
Pet Provisions
It's up to you to decide whether pets should be allowed on the property. The only exception is that fair housing laws do not allow you to turn away people who live with service animals, such as seeing eye dogs for the blind.
Many landlords do not allow pets under any circumstances. If pet restrictions are typical in your area, allowing pets — with a nonrefundable pet fee — will give your units an additional set of tenants to draw from.
Restrictions and Laws
The lease should require tenants to abide by all deed restrictions for the property and to all federal, state, and local laws. That topic covers everything from assigned parking spaces to the use or sale of illegal drugs. Properties can be seized and sold if illegal drugs are found on the premises, even if the owners have no idea drugs are present.
Keeping It Clean
Do you provide a place for tenants to dispose of trash? Do you offer regular pest control treatments? How are repairs handled, and can tenants contact you quickly if a problem emerges? You want the tenants to keep the property clean and in good condition, and good tenants want a landlord who cares enough about the property to help them do it.
Make sure the lease contains wording that gives you and your agents a right to enter the dwelling at a reasonable time with reasonable notice. A twenty-four-hour notice is common.
On the other hand, the landlord should not have to pay for repairs to fixtures or the structure if they were caused by tenant abuse. Cover the what-ifs of repairs in your lease, stating who pays for what under different circumstances.
Eviction Provisions
A carefully worded lease that protects your rights is essential, but it isn't a guarantee that tenants will vacate when they should. It's important to become familiar with tenant rights in your area so that you can work to remove tenants as quickly as possible by lawful means if eviction becomes necessary.
A lease could include hefty per-day costs for tenants who stay in the residence without permission after the lease expires. The clause doesn't guarantee you'll ever collect the funds, but the threat of it is enough to discourage some tenants from staying.
