How to Insulate Yourself from Expenses with a Great Lease

Owning a rental property can be expensive, and if you’re not careful, you can end up footing the bill for repairs or damages that should be the tenants' responsibilities.

One important way to insulate yourself from such expenses is to write a great lease that covers as many contingencies as possible and clearly specifies the financial responsibilities of all parties.

While regulations vary from state to state, there are some important items that should be included in any lease or rental agreement.

Names of All Tenants and Limits on Occupancy

Every adult living in the unit should be named and should sign the lease.

This way, each person becomes responsible for the rent and any other terms of the lease.

If one tenant leaves or can’t pay for some reason, you can legally collect the entire rent from any one of the tenants named in the lease.

You, as the landlord, have the right to screen and approve who and how many people live in your property.

So, the lease should clearly indicate that only the adults who signed the lease and their minor children can occupy the unit.

This way, you can evict a tenant who moves someone else in or sublets the unit without notifying you.

Rent and Deposits

The lease should clearly state the amount of rent, when it’s due and how you expect to receive it, such as by mail or delivered to you personally.

Make all details as clear as possible, including the following:

  • Acceptable forms of payment
  • Amount of late fees and whether there’s a grace period
  • Charges for bounced checks

The handling of security deposits causes a lot of conflict.

Avoid any misunderstandings by defining the following things:

  • The exact amount of the security deposit
  • How it can be used by you (to repair damages) and how the tenant can use it (to pay the last month’s rent)
  • When and how it will be returned to the tenant
  • Where the deposit will be held and whether the tenant is entitled to any interest earned

Repairs and Maintenance

Unless the specifics about your responsibilities and those of your tenant are unambiguously spelled out, you could find yourself paying for a lot of damage and repairs caused by a tenant’s abuse or neglect.

Specify things like:

  • Your expectation that tenants maintain a clean and sanitary unit and pay for any damages they cause
  • Their responsibility to notify you of any damages or defective conditions
  • Clearly explained procedures for submitting repair requests to you
  • Limitations on what kind of alterations they can make in the unit without your permission, such as painting or installing appliances.

Pets

If you allow pets, be specific about the size and number of pets allowed and what your expectations are for cleaning up waste in the yard.

Also, include requirements about repairing damage from pets in the repair and maintenance section of the lease.

Other Restrictions

Other terms that should be in the lease include:

  • It goes without saying that you don’t want your tenants doing anything illegal in your property, but to prevent property damage and avoid expensive legal problems, it’s still best to specify this in the lease.
  • Specify what, if any, businesses the tenant may run from the property.
  • Learn about all local laws and health and safety codes, and make sure your lease is in compliance.
  • Specify use of parking and common areas.

A lease is a legal document that is intended to protect you and your tenants.

Include these items in any of your leases to protect yourself from having to pay for something that should not be your responsibility.

Posted on Dec 01, 2014

Related

The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More


How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More


The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More


Landlord Obligations: The Responsibilities of a Landlord

Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More


The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More


The Best Landlord Forums

Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More


The Biggest Landlord Problems and How to Fix Them

Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More


Landlord Tenant Disputes

If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More


Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More


Section 8 Landlord Pros and Cons

If you have ever rented a living space and have had to move many times, you’d already know how difficult it is to find decent, affordable and secure living premises. A person has to deal with the same... More