Landlords, when is the last time you read your standard lease from start to finish? Should I dare say that some of you have never read it? Your lease is your contract with tenant. I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment property. Why are you now just coasting along with any old lease? Regardless of whether you buy your leases at an office supply store or you found one on the Internet and print it off your computer, here are some items to put in your leases and some to take out:
- Require at least 60 days written notice for the tenant to vacate the premises even at the end of the lease. The 60 days notice should start at the beginning of the next month; so you should get a minimum of 2 months notice.
- Rent is due on the 1st, but late on the 6th. Most tenants look at that as the rent is due on the 5th. Make sure they understand it is due on the 1st.
- Consider raising your late fee to a large enough amount to make it painful for the tenant to be late (check if your state has a legal limit-Minnesota it is a max of 8% of the rent amount).
- Put in a clause like the following: “All drains, waste pipes, and plumbing are accepted as clear by the tenant at the time of occupancy and any material blocking them after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the streets.” This should put a end to late night blocked toilet calls. I do recommend, however, supplying a $6 plunger to alleviate any potential problems!
- Remove any automatic 1 year renewal clauses in your lease. At first it may seem like a good idea, but this clause can backfire on you when the tenant simply refuses to return your calls and the renewal notification window expires, leaving you bound to re-rent to this tenant. Plus, it is illegal in some states.
- Include the following language: “Payment of rent may be made by personal check until first check is returned unpaid. Thereafter, tenant will be required to pay using certified funds or cash.”
- Confirm your lease has the following regulation: “Use of property for business is strictly prohibited”. What if your tenant opens an auto repair shop in the garage or is using the basement as his warehouse?
- Specify the number of adults, children, pets, and automobiles in the lease and set requirements for notification if the number of any increases.
- If you accept pets, make sure to have a pet deposit and some of it should be non-refundable for additional wear & tear on the house and/or carpet cleaning. Also include the type and/or size of the pet (I have seen a tenant start with 3 approved dogs (10 pounds each) and then after a year upgrade to three 50 pound dogs. They were still in compliance with the lease!
- Consider requiring the tenants to make any repairs under a certain dollar amount, depending upon the type of property you are renting. You may also make them responsible for some or all pest control costs (depending upon the building).
- Do not allow any move-outs during November to March as these are the most difficult times to lease properties.
Here are a few others that you should consider using in the right market and circumstance:
- Specify the apartment or entire building as smoke free. Have the tenants initial or sign a “smoke free addendum”. This will save you some repainting and cleaning costs.
- Require the tenants to call a locksmith at their expense if they get locked out or lose their keys. At least set a comparable price ($50-75) for you to unlock their apartment.
- Have all tenants sign a “Non-violence” and “Drug Free living” document with the threat of eviction if violated.
Making these easy changes will make your leases and your position stronger when working to aleviate problems with tenants. They should also save you money and frustration in the long run. (Confirm any of the above changes will work in your state and market.)