A well-crafted rental lease sets a landlord up for success and ease. A good lease serves as a communication tool between you and your tenants, informing them of your requirements and expectations. It likewise serves as a guidebook in case problems arise. An even better lease mitigates problems before they occur.
Here are our 5 tips to an even better lease, so you save time, trouble, and legal headaches:
Customize Your Rental Lease
Leases are often templated legal documents that require customization. While it’s great to save time by using a pre-made template, it’s still important to customize your lease to make it as strong as possible. Your lease should be customized based on two things:
- Federal, state, and local laws
- Your specific rental terms and requirements
Your lease should be tailored to comply with federal, state, and local law. Different states have unique laws for security deposits, notice of entry, required disclosures, etc. Be sure to customize your lease to reflect these laws by adding the right disclosures and clauses. To know your most up-to-date local laws, visit your city’s government website and look for your Residential Landlord and Tenant Ordinance. Most cities even offer an updated summary of changes. For example, the city of Chicago published this RLT Ordinance Summary in March 2016.
Another great source is the American Legal Publishing Corporation. If you search your city in the top right corner and click on “Municipal Codes,” you’ll find a highly informative, recently updated list of local landlord-tenant laws. For Chicago’s local laws, click on title 5 and chapters 5–12 to see laws that are most pertinent to rental leases, including bed bugs, subleases, landlord right of access, and security deposits.
Here at Rentalutions, our software automatically reads your property address to provide you with a state-specific, lawyer-reviewed lease. No research or lawyer fees necessary.
Your lease should also be customized to reflect your specific rental terms and requirements. If you have additional rules for your tenants, like a pet deposit, an automatic renewal clause, or having tenants pay rent online, you should add these rules to your lease. The more specific your lease is the better- it helps solve problems before they arise and acts as a rule book when problems do arise.
Be Specific About Rental Terms
Your lease should be completely and accurately filled out:
- Rental term: 12-month, month-to-month, etc
- Lease start date and end date
- Residents’ names: Each resident needs to be listed
- Cosigners names, contact information, and signatures
- Maximum occupancy
- Rent amount, due date, and late fee rules
- Rent payment instruction
- Security deposits amount
- Additional fees: Pet rent, pet deposit, move-in fee
- Pet requirements: Are they allowed? What size?
- Utilities: Which utilities are included in the rent? Which utilities are the tenants expected to pay?
- Instructions for setting up utilities: Do you require a certain company for gas or electric?
- Maintenance protocol: How will you handle repairs?
These rental terms are often outlined on a lease template- you simply fill in the correct information. But notes about utilities, lifestyle requirements, and maintenance protocol are typically your responsibility to add. Be thorough and descriptive for any rules that you include.
Add Necessary Clauses
To make your lease even better, add the right clauses. Clauses are one of the most helpful ways to mitigate legal problems. They are written in proper legal jargon to protect you and your tenant from legal headaches, so take advantage of them! Clauses essentially make your lease an improved guidebook, telling you how to handle a situation. For instance, what should you do if you need to gain access to the unit? Well, in your Access to Premises Clause, you’ll see you are required to give a 24-hour notice (Note: different states have different rules). There should be clear answers written in your lease for these kinds of problems.
Here are nine important clauses. We included clear descriptions of each clause with decoded legal jargon.
- Severability Clause: This clause ensures that if one phrase, clause, or a portion of the lease is deemed invalid, the rest of the lease will still remain valid unless proven otherwise. In essence, the remainder of the lease will remain unaffected and its rules will be enforceable. This is important to include because it helps you avoid your entire lease being deemed invalid, putting you at higher risk of legal trouble.
- Jointly and Severally Liable: Every tenant who signs the lease is responsible for paying rent and upholding all aspects of the lease agreement. ‘Jointly and severally’ is legal jargon for ‘both and equally.’ In other words, all roommates are equally responsible for paying the full rent amount each month. If you want to decode other legal jargon, check out this free, comprehensive legal dictionary.
- Access to Premises: As a landlord, you are allowed to access your property, as long as it’s during reasonable hours and with proper notice. This clause also allows you to enter the property without notice in the case of an emergency.
- Lessee to Maintain: The tenant maintains the condition of your unit, including appliances, fixtures, and smoke/carbon monoxide detectors. If the tenant damages the unit, they are responsible for paying for any damages. If your tenant moves out and you discover damage, this clause continues to uphold their responsibility for damages. You can subtract the cost of damages from their security deposit or bill them. “Reasonable wear and tear” is okay, but serious damage is a tenant’s responsibility to fix.
- Attorney’s Fees: If a lawsuit should arise and you are the prevailing party, this clause ensures your legal fees will be rewarded to you by the court.
- Sublet Rules: Simply, this clause states that your permission is required if a tenant plans on subletting.
- Disturbance Clause: A tenant is required to behave in a way that does not disturb neighbors, especially before certain hours. You can customize this clause to state the hours that you prohibit loud music, etc.
- Holding Over: This clause makes the assumption that if a tenant hasn’t moved out by the time their lease is up, the lease operates on a month-to-month basis. Legally, the lease is null when the end date passes, but with this clause, you better retain your legal rights if the tenant stays. It’s better to create a new month-to-month lease, so there are no ‘assumptions,’ but this clause protects you in case you don’t come up with a new lease in time. Tenants are still required to pay rent if they stay in your unit past their move out date. A holding over clause can even have a double monthly rent statement, meaning the tenant can stay but their new rent will be double the previous rent price.
- Rent Liability: The tenant is legally responsible for paying rent throughout the duration of the lease. Although this clause is simple, it’s important to include so there is no confusion about who is liable.
Our lawyer-reviewed lease at Rentalutions already includes the above clauses. We’ve worked with excellent lawyers to select our template clauses. Our comprehensive lease and the ability to customize it provides you the best chances of mitigating risk.
Update Your Rental Lease Often
Every time you renew with a current tenant or sign with new tenants, you should consider updating the terms and language of your lease. The best rental leases are the most updated. Here are four ways to update your lease:
- Update rental terms: this includes tenant names, lease dates, cosigners, fees, etc.
- Update your rent price: Rent prices change frequently based on market changes, seasonality, and tenant demand. Not sure if you should change your rent price? Check out this blog on determining your rent price.
- Update rules and requirements: Want to start allowing pets so you can charge pet rent? Want to add an Automatic Renewal Clause so your lease renews automatically?
- Update to reflect ever-changing landlord-tenant laws: Stay informed to make sure you’re complying with the most up-to-date laws and update your clauses as necessary.
It’s easy to make these kinds of updates online in our lease builder. You can even add your own addendums by simply uploading an attachment. Each time you ask a tenant to sign a lease, you should fully review your lease before sending it to them. This ensures that your lease accurately reflects your current requirements and state laws.
Use an Online Lease with Digital Signatures
So far in this blog post, you’ve learned how to make your lease stronger and more thorough. But beyond the content of your lease, it’s important to consider how it’s built, presented, stored, and signed.
Online leases are the best leases. Here’s why:
- Customization is easier online. Instead of reviewing legal documents over and over again with a lawyer, you can easily add, subtract, and customize your own clauses online.
- Online leases are accessible at any time. This transparency is comforting to both you and your tenant.
- They are stored and backed up. No one can claim they lost their copy of the lease.
- Signing a lease is easier online: Instead of repetitively emailing and faxing your lease, you can simply send the lease, ready to be signed, directly to your tenant’s inbox.
- Digital signatures are just as secure and enforceable as written signatures.
To reap all the benefits of Rentalutions’ high-quality online lease, including easy customization and electronic signatures, sign up here.
Note: This post does not constitute legal advice.
