Every landlord knows that a lease should cover the most basic information for tenants, but if you have a lease that’s only a page or two long, then you might be leaving out vital information and setting yourself up for potential problems down the line.
A lease should be the go-to document that outlines what to do in just about every possible scenario that might arise while a tenant is living on your property. Tenants should feel comfortable flipping through it for information, and you should know the general layout and information like you know your own social security number.
If your lease feels too short on length and information, here are 7 important clauses that all landlords should have in their rental agreements.
Late fees and allocations
We all want to believe that our tenants will never be late on the rent, especially when we’ve just worked so hard to find a tenant that we feel is responsible and likely to pay rent on time. But it does happen from time to time, and you need a clause in your lease to protect yourself so you have legal actions should your tenant continue to pay rent late every month.
The late fees and allocations clause states what fees will be charged if rent payment is late, how those fees will be applied and how the money will be allocated to pay off the fees and rent. Most landlords charge a late fee the day after the rent is due and for each additional day that it is not paid. The fee varies, but it’s usually about $20 per day.
The allocation defines how the money tenants pay for late fees and rent will be split between the two costs. Many landlords pay late fees first, so if your tenant gives you enough money to cover the rent but not the late fees, then the money is allocated to paying the late fees and then the rest goes to the rent. Landlords often have an easier time collecting for unpaid rent if they have to go through the court system, so dictating how this allocation works in the lease will cover you should you need to take your tenant to court.
A lot can change during the course of a lease agreement. Maybe your tenant receives an unexpected job offer in another city or a health crisis forces them to move elsewhere to help take care of family members.
In these scenarios, many tenants turn to subleasing as a way to keep their lease agreement while relieving themselves of the financial responsibility of paying rent. In general, subleasing isn’t always a bad thing, but you do need to protect yourself and your property to ensure that your new tenant is reliable and understands the rules of the property.
A subleasing clause lays out the process for tenants who want to sublease the property. It includes how to inform you, the landlord, and what needs to be done in order for the sublease to be legal. Some landlords have tenants pay a one-time fee for subleases, and the new tenants must also sign a sublease agreement.
You can also use this clause to prohibit subleasing entirely, but doing so may just encourage tenants to go behind your back and do it anyway. It’s better to have a process in place that discourages illegal subleases and keeps you informed.
As a landlord, it can be tough navigating local tenant laws and building codes, especially when they change and get updates every few years. What may have been acceptable and legal in your lease last year is no longer okay, and if you aren’t quick enough to catch it, then you may run into trouble if your tenant takes you to court over a clause that is no longer legal.
All leases should have a severability clause, which basically states that if one portion of your lease is found to be illegal, then the rest of the legal lease is still binding. If a tenant is trying to break the lease because of one clause that a judge rules is illegal, then you will still be protected because the rest of the legal clauses will still be in effect.
Use of premise
Like you, your tenants may also have multiple streams of income. They might sell jewelry on Etsy or have their own small catering business. These are mostly reasonable for most landlords, but you do want to outline the use of your property so that tenants know what is allowed and not allowed on your property.
You also want to make it clear in writing how many people are permitted to use the property as tenants or dwellers (kids who are obviously not liable for rent). This stops tenants from moving in friends or family members who aren’t on the lease and won’t be held liable for damage or rent.
The use-of-premise clause protects you from both possible scenarios. Your kitchen is not meant to handle a large-scale catering operation, and your building codes don’t allow for more than a certain number of people to live on the premise at once. This clause can help you stop tenants from running businesses out of your property and limit the number of people who can move in without being added to the lease.
Surrender of premise
Every landlord has expectations about how they want their property to look after a tenant has moved out, but tenants often fail to meet those expectations — and it’s partly the landlord’s fault if they don’t have a surrender-of-premise clause in the lease.
The surrender-of-premise clause describes exactly how the landlord expects to find the property after the tenant moves out if the tenant wants to get the full (or as much of the) security deposit. While you can’t expect tenants to repaint your walls (unless they painted them while living there) or repair leaks, you can expect them to:
Remove all personal property from the premise.
Take out all garbage and recycling to the appropriate bin.
Leave the property reasonably clean.
Moving out can be stressful on tenants, so it may not be wise to expect the most thorough cleaning job, but sweeping, vacuuming and sanitizing surfaces should be outlined in your surrender-of-premise clause. If a tenant leaves your property in good condition, then they’ll be entitled to most (if not all) of their security deposit back,
No landlord wants to terminate a lease while a tenant is still occupying the space, but there are times when a landlord may want to break the lease agreement before the time period is actually over. A tenant could be conducting illegal activities on your property or taking such poor care of the place that you now have several fire and building code violations.
Whatever the reason, the default clause protects the landlord from an unruly tenant. Most landlords use this clause to help them evict tenants that don’t pay rent on time or allow other people to live on the property who are not on the lease. When a tenant is in default, the clause allows the landlord to collect the remaining amount of rent and evict the tenant.
The default clause should outline how the process will work. Most clauses don’t consider tenants in default until at least five days after the rent was due. Your state and city may also have local tenant laws that dictate when a renter can be considered in default.
All landlords hope to find good tenants who will renew the lease for several years. No tenant will stay forever, but having one stay for three or even four years can keep marketing costs down and rent checks coming in. Whether your tenant stays or goes, the lease renewal clause should make it easy for him or her to notify you of a decision and follow the steps to resign or move out.
The most important factor is to tell your tenants whether the lease will renew automatically and, if not, when they need to make a decision about staying or going. Most landlords give tenants about 60 days from the end of their lease to make a decision. That gives you two months to find a new tenant.
To help your tenants along, reason out to them about 75 days before that 60-day mark. This will get them thinking about what they want to do. While you could wait and just hope your tenant acts, it will save you time if you contact them first. You won’t waste time trying to find a tenant that you don’t need, and you won’t need to schedule cleaning services.
Putting together a complete lease is no easy task for any landlord. If you’re new to property rentals or just looking to improve your own lease agreement, contact the professionals at Atlas Lane. Our experts can help you tighten your lease and ensure it complies with all local tenant laws in Washington, DC.