Building a comprehensive lease can be tough. It is important to protect your investment while still making it attractive enough to bring in tenants. As with most topics in real estate, state laws will allow or prevent different points, so make sure you check your laws before making any final decisions about creating your lease agreement. In this post, we will cover four clauses that we feel are important to include in every lease agreement to protect you and your rental property.
Pets are a divisive issue within the real estate business. Many landlords don’t want the trouble of dealing with pets, while others will allow furry friends for a price. According to this study, 82% of people with pets found it difficult to find a rental property or unit that would allow their pet. This being said, there is a huge market advantage if you choose to allow pets.
To start, you should decide whether or not you would like to have pets. Regardless of your decision,, it is important to make it clear in the lease agreement. If you would like to allow pets, it would be wise to add some additional clauses to protect yourself and your property. Also, ensure that their animal is a pet and not a service animal, because you cannot discriminate against a tenant for their service animal.
Consider the size of pets that you would like to allow. For example, you can set a size limit for dogs to be under 25 pounds. Collecting a pet deposit is a common practice that will protect your investment. Consider it a security deposit on behalf of the animal. Be clear about the tenant’s responsibility for cleaning up after their pet and not having it disturb other nearby residents. Also, if you have a Homeowners Association, make sure the pet doesn’t break any of their rules either.
If you don’t state it, then the tenant will assume it is your responsibility. If you want your tenant to be responsible for anything involving your property, then be clear about it. Here are some things we suggest you make your tenant responsible for:
- Specify that the yard should be their responsibility to take care of and what would happen if it is not taken care of.
- If it is a multi-family home or apartment where the yard space is shared, then the landlord may take up the responsibility or hire professionals and split the cost across the tenants’ rent.
- Ensure they are responsible for letting you know about any maintenance or repairs that need to be made, so you can take action as quickly as possible.
- Make your tenant responsible for paying their rent and utilities on time, otherwise you can penalize them with a late fee.
- Make sure they follow any HOA rules if this applies
As a landlord, how do you feel about smoking? Smoking-friendly rental properties are difficult to find, because once the property is deemed as a smoking-friendly property, it’s almost impossible to go back. Some smokers don’t always want to have to go outside to smoke, especially in bad weather. Many landlords not only forbid smoking inside, but even forbid it directly outside as well.
If you choose to allow smoking inside, the cleaning costs associated with it could be very high. The smoke itself can also get into the HVAC system or damage the filters for smoke detectors. Be sure that you are not violating any local ordinances or HOA rules (if this applies) if you allow smoking in the rental. For what it’s worth, despite its convenience, it is costly and expensive to clean. Not only is getting it out of a rental property difficult, it can also be extremely costly to allow too, with the estimated cost being about $8,000 to restore.
Be clear in your lease with your decision. If you allow it, set up ground rules and charge extra on their rent or add an additional security deposit (or perhaps both). If you don’t want it, then be clear on the lease that it is not allowed in or around the premises. This way if they do smoke then they are in violation of the lease and you can begin to search for new tenants.
It’s important that you specify in the lease agreement if subletting is allowed. Without the clarification, your tenant can do it without your knowledge, and there will be nothing you can do about it aside from not renewing the lease or breaking it yourself. Many landlords do not want to deal with the hassle of dealing with additional tenants, and therefore don’t sublease. However, it may be beneficial to consider depending on your feelings for it, because it could mean more money and consistent tenancy in your rental property.
It is possible to allow for subleasing. If you do decide to, then it would be a good idea to consent to it for a price. This can come as a one-time fee or a partial pay during the time of the stay of the tenant’s tenant. Having them apply and screened by you would be clever. It affords you the opportunity to be sure that they are up to your standards (it is your rental property after all). This is all important in order to protect your property from someone that your tenant chooses and is in charge of.
If your tenants travel for the summer or live in the area for only half of the year, then it can be nice to allow them to sublease in order for the property to remain filled and for you as the landlord to receive some more money. Tenants can increase the rent that they charge to offset any subletting fees that you give to them, so that way it is a win for you and your tenant.
We understand that building a perfect lease may seem like an impossible task. The four clauses we discussed are ones we feel are vital but that may get easily overlooked. Adding these clauses to a lease template for your individual state will help protect your business.