A lease or rental agreement protects landlords, tenants, and the property. Great care should be taken when crafting agreements to ensure that the rental property lease terms you are including are going to work well for your space. The final draft should be reviewed by your lawyer to make sure your agreement complies with local laws.
While some terms should be included in every agreement, others are specific to the type of property you are leasing. There are some rental property lease terms that need to be tweaked for single family or multi family dwellings. Whether the space is a commercial or residential property can affect your lease terms too.
Define the Renters
Every lease or rental agreement should include the names of each individual who is renting your unit. For residential properties this would include every adult who will be living there. In the case of commercial properties this includes all business partners.
It’s important to list every stakeholder on the rental agreement. Doing so allows you to seek the entire rent from any individual you have listed. That can be a useful option in the event that any of your renters skip out on the rent or become unable to pay.
In residential properties the agreement needs to specify that the unit is the residence of only those people who have signed the lease and their minor children. This gives you permission to evict friends and relatives who may have moved in without your permission. It also means that tenants need your consent to sublet the unit.
For residential properties one of the rental property lease terms you should consider including are occupancy restrictions which limit the number of people permitted to live on your property. This further protects you from unauthorized subletting and the addition of tenants not specified on the lease.
Occupancy restrictions are subject to local rental laws. As a broad standard, a reasonable restriction is two renters per bedroom. However there are other considerations to be made such as the number of bathrooms, size of bedrooms, and layout of the unit.
Length of Tenancy
Another important rental property lease term is a defined length of tenancy. If you’re looking for flexibility you may want to opt for a month to month rental agreement. This kind of arrangement is more suitable to short term rentals.
In many cases it makes more sense to have a fixed term lease which usually runs from year to year. Units need to be cleaned and freshened up between tenants. Since this costs time and money it is more efficient to have longer lease terms. This is especially true for commercial properties which often need extensive remodeling to fit the needs of the business.
Rent and Security Deposits
One of the most important items to include on any lease or rental agreement is a clear dollar amount of the rent you are charging and when it is due. Your rental property lease terms should also include payment methods that you accept. Make sure you specify if you’re willing to offer a grace period for late payments and if you will be including late fees or charge for bounced checks.
In order to avoid issues down the road, your rental property lease terms should clearly detail the acceptable use of security deposits. In most cases landlords may use security deposits to repair damages or cover unexpected cleaning costs. You should also state where the security deposit will be held and if it is collecting interest.
Maintenance and Repairs
Your lease or rental agreement should clearly specify who is responsible for different kinds of maintenance to the unit. It’s a good idea to state the tenants must keep the property clean and sanitary to avoid damage and pest infestations. Make it an official requirement that tenants alert you promptly to problems with the property that need your attention.
Specify all of your expectations to ensure that your property is looked after and cared for to your standards. Say that it is the tenant’s responsibility to pay for damages caused by abuse or neglect. Spelling it out in the lease will give you better grounds for using security deposits to cover your unforeseen costs and give you evidence in case you need to take matters to the next level.
Include your limits on alterations made to your unit. In a residential property you may include your expectations on items such as painting and wall hangings. In commercial properties a business may need to make major alterations. State your limits and include what you expect would be left behind when the premises are vacated.
Common Area Maintenance
Some types of properties have common areas that tenants share. For commercial spaces this may include parking lots, walkways, reception areas, and outdoor spaces. In the case of condominiums there may be the addition of swimming pools, rec rooms, and gyms.
Your agreement should clearly state who is responsible for maintenance fees and what is covered in those fees. Some examples might include snow removal, landscaping, and janitorial services. The lease should also specify what rights tenants have to the common areas and list limitations of use.
Landlord Entry to Rental Property
Every lease or rental agreement needs to clarify your legal right to access your property in order to avoid claims of illegal entry or the violation of tenant privacy rights. State what reasons justify entry to the unit, such as repairs and routine inspections, and stipulate how much notice will be provided to tenants. Include a clause for emergencies that clearly defines what constitutes an emergency and what will be done if the tenant can’t be reached.
It’s a good idea to include a few house rules, especially if you’ve had problems in that unit or area before. Noise complaints, raucous behavior, and illegal activities can pertain to both commercial and residential properties. Stipulate what actions will be taken if tenants break the rules and what happens after multiple infractions.
The details of your rental property lease terms can be as varied as the tenants who occupy them. Take care to craft your rental agreements to fit your properties. Don’t forget to go over your ideas with a lawyer to make sure they comply with the law.