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Is Your Residential Lease Ironclad?

By Brian Kline | August 24, 2015

If you've been a residential landlord for much time at all, you probably know your lease inside out. But often, it's not what's in the lease that later causes you headaches, it's what you didn't put in the lease that causes problems.

In most every state, the tenant/landlord laws are strict. Before you start making changes to your standard lease, you probably want to review those laws. By the way, when was the last time you reviewed both the laws and your lease anyway? Law changes have probably been made that affect what is currently in your lease.

It's strongly recommended that you review your lease before another tenant signs on the bottom line.

Residential Lease Agreement

Residential Lease Agreement

Photo Credit: 4Tern via Compfight cc

Make Sure You Have a Severability Clause

A severability clause is one of the most over looked but important clauses to have in your lease. The severability clause says that should one or more clauses in the lease be found to be illegal or inapplicable, all of the other clauses remain in force. This is important because otherwise if you end up in litigation with a tenant, without a severability clause, if the judge finds one clause invalid, he or she can declare the entire lease invalid.

A clause that is sometimes to vaguely worded is the late fee clause. It might say something like "late fees apply after the date the rent is due". That is way too vague because it doesn't state what the late fee is or exactly what date it applies. You want something like "Rent is due on the 1st of each month. Beginning on the second day of the month, 3% of the monthly rent will be charged as a late fee for each day the rent is late." Even better if you change the percentage into a firm dollar amount. Again, check your state laws because there may be caps to how much you can charge for late fees and when they can be applied.

Be clear Who Is Responsible for Utilities

Does any portion of you tenant's rent go towards paying utilities such as water or electricity? If so, what portion of the tenant's rent goes towards each one and in what order are they paid if the tenant only pays part of the rent? If your name is on the master utility account, you might want to stipulate those be paid first so that you keep your account in good standing. That means any unpaid rent is due to you rather than a utility company if the issue ends up in court.

Another clause you should have is the number of people that reside at the residence. The more people living there the more damage will be done, even if it's normal wear and tear. This brings up the need to define your policy about overnight guests. Do you allow them, how many at one time, and for how long? Without this clause, the number of people living there is difficult to enforce because they simply become long term guests.

These are some other subjects you may want to include in your lease:

  • What types of activities are allowed regarding running a business, making car repairs, storing recreational vehicles, etc.?
  • What constitutes a breach of the lease that mandates the tenant must vacate?
  • How much notice must be given and under what circumstances must the tenant allow access to maintenance workers, exterminators, and other trades people?
  • Can the property be shown to prospective tenants after the current tenant has given notice they are vacating or do you have to wait until they move out?

If you have a history of a specific type of problem with tenants or clauses in your lease, you should include a new clause or reword the existing clause.

You are highly recommended to periodically review both your lease and your state tenant/landlord laws to be sure everything remains up to date.

Please leave a comment if this article was helpful or if you have a question.

BioAuthor bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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