“5 Useful Tips In Making A Better Rental Lease”
When was the last time you updated your rental lease?
Maybe it’s time for you to do something about it. A rental lease is an important document between you and your renter. Therefore it’s important to make sure that it has you and the rental property covered, and clearly communicates expectations to the tenant.
That’s why today I’m going to share with you 5 useful tips that can help you in making your rental lease better.
Tips To Make Your Rental Lease Better
When running a successful property management company you need to have the best and most effective documents in place helping to control and manage your rental properties. In finding and producing the most professional and effective contracts you need to make sure that any document given to a tenant for rental is professional and in line with state and local laws and standards.
When you present a rental lease document that is professional to tenants this will relay confidence that you can give the quality of services that they are looking for.
Here are 5 ways where you can make your rental lease more professional and effective for the property you are renting…
1. Have A Customized Rental Lease
In most cases, rental leases begin as just a templated legal document. As an effective property manager you need to take that templated document and develop it and customize it so it can provide a stronger and better control and management over the properties you are using it when renting.
Developing a customized lease is a better option over a templated lease. However, it’s still important that the customized lease is based on state, federal, and local laws to avoid any misunderstandings or legal challenges to the document itself. ManyÃÂ states differ when it comes to rental laws so knowing these laws is a must and it should reflect in your customized lease.
Having a customized lease should be based on your specific terms and requirements and allows you to add any clauses that you think is necessary to manage the rental property. This may include clauses about pets, security deposits, or subletting. Additionally, a customized lease allows you to arrange the contents based on what you have agreed with the tenants.
2. Terms Should Always Be Specific
Terms that you set on your lease must be specific and be understandable to all parties of the contract. This will help avoid any misunderstanding between you and your renter. Having vague terms that were not discussed well to your renters may end up causing conflict between parties especially if it involves money like the rent and security deposits.
Terms involving responsibilities for the maintenance and repair of the rental unit as well as any rules, requirements, and regulations that were added in the lease must be thoroughly explained to the tenants to avoid any misunderstandings.
Here are some terms that you need to be specific and detailed in your customized lease.
- The rental term: 12-month, month-to-month, etc.
- The start and end date of the lease
- Names of the residents
- Cosigners names, contact information, and signatures
- Maximum occupancy
- Amount of the rent, due dates, and if there are fees for late payments
- Instructions regarding payment of rent
- Security deposits amount
- Any additional fees like pet rent, pet deposit, move-in fee
- If pets are allowed and what size
- Any utilities included in the rent and which of the utilities the tenant should pay
- Instructions for setting up utilities and any requirements like a certain gas or electric company
- Maintenance protocol, who and how will maintenance and repairs be handled
3. Include Additional Clauses
The lease agreement or contract should address anything that can happen at the rental property to avoid any misunderstandings with tenants. Having the right clauses can help mitigate any problems between you and your renters is the goal of adding additional clauses to the lease agreement. Being specific in the details of each additional clause will bring order between you and your tenants because it won’t lead to any confusions during the lease term.
Here are 9 clauses that you can add in your rental lease to make it more effective...
A) Severability Clause
This clause ensures that if any phrase, clause, or any part of your lease is deemed invalid, then the rest of your lease will still remain valid unless it’s proven otherwise. Having this will help the remain parts of the lease to be unaffected.
It’s important to include this clause as it will help you avoid your entire lease being deemed invalid which may put you at a higher risk of legal trouble.
B) Jointly and Severally Liable
Jointly and severally is a legal jargon that means both and equally. In this sense, every tenant who signed the lease has equal responsibility when it comes to paying the rent. They are also equally responsible when it comes to upholding all aspects of the rental lease. This also means that you can expect every tenant to be responsible in following every clause that are agreed in the rental lease.
C) Access to Premises
Being the property manager or the landlord of the property, you are allowed to have access to your property. Having said that, accessing your property can only be done as long as it’s during reasonable hours and with proper notice.
This clause will also help you in case any emergency arises like the renter is in need of immediate medical assistance. The ability to enter the rental unit is allowed even without the notice, but I like to include it to help ensure the tenant knows the law as well.
D) Lessee to Maintain
In this clause, the tenant has the responsibility to maintain the condition of your unit. If the tenant damages your unit, he or she is responsible for paying any damages of the unit.
If your tenant moves out and you found damages on your unit, this clause will help in upholding the tenant’s responsibility to pay for the damages. You can use their security deposit and subtract the amount of the damages incurred in your unit. Or you can also bill them for the payment of the damages.
A reasonable “wear and tear” is acceptable but having a serious damage on your unit is already your renter’s responsibility to fix.
E) Attorney’s Fees
This clause can help you if a lawsuit arises and you are the prevailing party. It will ensure you that legal fees will be rewarded to you by the court (if that is what you have in the contract).ÃÂ In my contract I have it that each side is responsible for their legal obligations. I do it because I believe it may help prevent some frivolous legal cases. Be sure to consult with a legal attorney before finalizing this section.
F) Sublet Rules
Having this clause means that your permission is required if your renter plans on subletting the unit he or she rented.
G) Disturbance Clause
This clause is customizable depending on your regulations. Your renter is required to behave in such a way that the said renter will not cause any disturbance to his or her neighbors. This should be observed by the tenants especially during specific hours.
H) Holding Over
The presence of this clause allows your lease to operate on a month-to-month basis if your renter hasn’t moved out by the time his or her lease is up. But this is only an assumption and legally speaking, the lease will be null once the end date passes. Having this clause will help you retain your legal rights if the tenant stays past the date his or her lease needed.
Although it would be better to just create a month-to-month lease so there will be no assumption, this clause can help you if you were not able to present a new lease in time.
This clause will assure you that the tenant still has to pay the rent. This clause can even have a double monthly rent statement whereas the tenant can stay but their rent payment is double their previous rent payment.
I) Rent Liability
The rent liability clause is very simple but it still needs to be included in your rental lease. It states an important responsibility of the tenant where he or she is legally responsible for paying the rent throughout the duration of the lease.
4. Always Update Your Rental Lease
If you want the best possible rental lease, then you should consider updating the terms and language of your lease for new (and existing) tenants on a regular basis. Updating your rental lease annually will help you to minimize or prevent any issues in the future.
Here are four ways where you can update your rental lease.
A) Update Rental Terms
Updating the rental terms to include all the tenant names, lease dates, cosigners, fees, etc.
B) Update Your Rent Price
Depending on the market changes, seasonality, and tenant demand, rent prices can frequently change. You should revisit and base your rent price on these factors.
C) Update Rules And Requirements
If a year ago you do not want pets in your property, then maybe this time you may want to reconsider. An updated rules and requirements can also be useful especially if new renters want to occupy your rental units.
D) Update To Reflect Ever-Changing Landlord-Tenant Laws
Make sure you stay informed when it comes to the laws in your state. Knowing the updated local and federal laws in your area are also important. This is to make sure you’re always complying with the governing laws.
5. Have An Online Rental Lease With Digital Signature
You may also want to consider having an online rental lease. Online rental lease offers digital signatures and you can also customize your lease easier online. This lease can be accessible anytime and information about your renters can be stored and backed up.
Signing a rental lease online is also easier and can be more very convenient for you. Digital signatures are also enforceable just like written signatures and they are secured as well.
Final Thoughts On How To Make Your Rental Lease Better
In this blog post we talked about updating your rental lease. The rental lease is an important document that should be kept up to date, and effectively “dot your I’s and cross your T’s”… or in other words you need to cover your bases (to use another metaphor).
If you have any questions about the five tips I gave on how to make the rental lease better, please comment below in the comment section.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.