Most Important Clauses to Include in Your Lease
Building a lease can seem like an overwhelming task, as there is a lot of pressure to ensure you have sufficient information that protects you and your property throughout the renting term. The best way to write a lease that is suited to your property is to work with your property management company. At Utopia, we gladly work personally with our clients to help them craft a lease that covers all the bases of property rentals. However, for constructing a lease on your own, there are a variety of templates you can find online to help get you started. Here are some of the most essential lease clauses to include in your lease:
A severability clause is easily overlooked but plays an important role in the protection of the lease. Severability states that in the event that any clause within the lease is deemed to be illegal, the rest of the lease remains intact and legally binding. This protects you and your real estate property should there be a mistake in the lease or if your local laws change and part of your lease does not follow new guidelines or regulations.
Rent Amount and Process
Important details to disclose concerning rent include how often rent is payed and the term of the lease. You may choose to clarify the actual amount of the rent as well, or even a breakdown of the rent payment. Additionally, delineate the acceptable payment methods or preferred process for rent payment, whether it be direct check drop-off, mail-in, or an online software.
Joint and Several Liability
A liability clause is vital to protect you legally in the event of partially unpaid rent, especially if there are multiple tenants living on the property. It considers all tenants to be jointly and individually liable for the lease agreement, making all tenants responsible for the entire rent amount and other lease clauses. This incentivizes tenants to hold each other accountable and offers full protection in the event of unpaid rent.
Late Rent Payments
It is extremely important to specifically clarify the late rent policy. You can specify any late fees as well as the grace period, which is required under some state laws. Additionally, it is recommended that this clause states that any late rent payments made by the tenant are first allocated toward outstanding fees before unpaid rent. This offers some legal protection, as “unpaid rent” is more easily defended during legal action compared to “unpaid late fees.”
In this clause you can state the subleasing policy or prohibit subleasing altogether. Describe the proper subleasing process, which can involve the same screening process as original tenants for any potential sublets. An explicit subleasing policy helps you maintain control of who is living on the property. You can also charge a one-time fee which could cover any unexpected expenses or discourage tenants from subleasing.
The best process of lease renewal is different for every landlord. Some prefer automatic renewal, and others prefer renewing on a case-by-case basis. This can be clarified in this clause of the lease. If you choose automatic lease renewal, it is recommended to require tenants to offer notice of non-renewal, which could be up to 60 days, to allow you time to find new tenants.
There are typically standard terms and agreements that can constitute an early termination or default of the lease if violated by either the landlord or the tenants, depending on the local laws. It’s always a good idea to outline these standards in a default clause. You can also list the required notice period for an early termination and the rent liability in the event of a default. For example, if the tenant is in default, you can still collect rent for the remaining period of the lease term, or until you complete mitigation.
Use of Premises
This is a broad subject for a clause that can include all of the expectations for proper use of the property. Most landlords include a list of the approved occupants and prohibit long term guests without previous approval. A guest staying longer than 2 weeks typically qualifies as long term. You can also provide a description of prohibited activities on the premises, such as commercial business. The pet policy can also be included in this clause.
General Expectations and HOA
In this clause, describe conduct expectations such as waste management and noise levels. You can also disclose HOA community guidelines or requirements if applicable. This often includes lawn care standards or any other regulations enforced by the HOA.
Surrender of Premises
It’s helpful to have specific move-out instructions included in the lease to avoid unnecessary hassle and to hold tenants accountable for the state of the property. Common move-out details include cleaning expectations, the period of time for vacating the premises, and key delivery.