A lease agreement is an essential document when you own real estate and rent it out. It should be comprehensive, outlining all aspects of the landlord-tenant relationship and anticipating any situations that may occur or arise during the life of the agreement.
But being comprehensive with a lease agreement is hard. So many things can happen during the life of a lease agreement, and to document them all would take hundreds of pages. Given your unique circumstances, there are certain things often overlooked in lease agreements that you should certainly consider adding.
Most new landlords simply search around the internet for a standard lease that allows them to fill in the blanks. That's not always a good idea, because a generic one can't possibly consider your specific area, your renter profile, your preferences and other factors. To help craft the right document for your needs, here’s a look at what to include in your lease agreement, including a number of oft-overlooked provisions.
Basics of a Lease for Renters
This is obvious, but your lease agreement should state the basic terms of the contract:
- How much is rent?
- When is it due each month?
- When does the lease begin?
- When does it end?
You’ll find these basics on most standard rental agreements. But the basics aren’t enough, which is why you should include each of the things listed below.
Conflict Resolution Approaches for Your Rental Property
Conflict is inevitable at your property. It can arise between landlord and tenant, or it can often emerge between or among tenants. While you can’t anticipate what specific conflicts will relate to, you can create a process for dealing with conflict. This process should state how you will first approach conflict, and then it should also provide steps for escalating the mediation should initial steps not work.
Let’s be honest. There’s nothing easy about dealing with conflict at your property. But lacking a process for dealing with it makes it so much harder. Make sure to lay this process out in your lease so each tenant knows what can be expected.
Whether You Allow Pets on Your Property
Does your property allow pets? This is a question you'll have to answer for yourself from the get-go. Perhaps you've had a bad experience in the past, or perhaps you want to avoid having a bad experience in the future — in which case banning pets might be your decision.
But so many prospective tenants have pets, and banning animals may make it harder to keep your property full. If you do allow pets, outline in the lease agreement all of the terms surrounding their presence on the property. You may choose to limit the weight of a pet or the number of pets. And you may also include an additional deposit or monthly rent because of the presence of a pet.
Subletting Your Property: Yay or Nay
This is another area where you’ll have to make a decision. Will you or won’t you allow subletting? No matter what you decide, outline in the clearest possible terms your decision. It’s important you stay in control of who lives at your property, whether you allow subletting or not, and your lease should be crafted to help you maintain as much control as possible.
Can Your Tenants Have Guests?
A good lease agreement outlines how many guests tenants can have, as well as how long those guests can stay. The number of allowed guests may vary depending on the situation. For example:
- Some properties only allow a tenant so many guests at the pool or in other common areas.
- Some properties allow unlimited guests but with a limit on how many can spend the night — and how many nights guests can spend.
If you are too lax on guest policies, a long-term guest can become a veritable tenant. You should allow guests, of course, but make sure you allow them in a way that's best for your property.
Outline Expectations for Utilities Usage
This important for both single-family and multi-family properties. You should outline in a lease agreement:
- What utilities a tenant is responsible for
- The deadline by which they should be placed in the tenant’s name
- The process and recourse for overuse or late payments
Some tenants must pay the landlord for utilities due to circumstances. Outline the process and deadlines for these payments just as you would the processes and deadlines for paying rent.
Explain Regulations for the Common Areas
Many properties have common spaces shared among residents. Outline any rules and regulations for using these common spaces in your lease agreement. This could mean rules and regulations for a fireplace, grill, pool, workout facility, backyard or similar area. As always, be comprehensive and try to anticipate challenges and conflicts that may emerge around one of these common areas.
Define “Wear and Tear” in the Lease Agreement
There’s a nefarious term in lease agreements — “wear and tear.” It’s used as if everyone understands and agrees on what it means, but it’s a very vague term in real estate. When you use this term, outline exactly what it means based on your unique property and situation. Being more specific can help alleviate conflict and disagreement in the future. It is illegal to withhold a renter’s security deposit for “normal wear and tear” – so be sure to outline what is “normal” and what is not, in order to protect your rights and ability to fix or update the property once the tenant moves out.
Who Is Responsible for Maintenance and Repairs?
As a landlord you are generally responsible for maintenance and repairs. But what happens when damage directly caused by the tenant results in the need for maintenance and repairs? For example, what if they break an appliance, shatter a window or clog a toilet?
Again, be specific about where your responsibility ends and where the tenant’s responsibility begins. This goes can even include who mows the lawn and who’s responsible for pest control. As with every part of the lease agreement, try to anticipate needs and situations that may arise in the future.
Need Help Figuring Out Your Lease Agreement?
At Harrisburg Property Management Group, we provide comprehensive management services to property owners who own and lease real estate of all kinds. We can connect you with legal support as you consider clauses to include in a lease agreement as a landlord. If you’re wondering what to include in a rental agreement, it’s a good sign you could use an experienced partner to help with management.
Contact us today about lease preparation and other management services.