Renting out residential property creates substantial risk for any landlord. That’s why it’s always a good idea to sign a Lease Agreement outlining the details of the arrangement. When drafted properly, a lease should protect your interests as a landlord and limit your legal exposure, however—as with any other legal contract—it’s critical that you understand the terms before signing.
Below we’ve identified a few common lease clauses that every landlord should be aware of, and we’ve answered several questions you might have about signing. Lease Agreements may vary depending on the type of property and your state laws, among other factors, so if you have concerns about your specific contract, it is best to talk to a lawyer. If you’re using your own lease template with Rocket Sign™, you’ll have the opportunity to ask a lawyer about your uploaded contract directly.
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What are some of the most important lease clauses I should understand before signing?
As a landlord, it is crucial that you understand all parts of your Lease Agreement, however here are a few of the most important lease clauses to take note of:
Having a severability clause in your lease helps to ensure that the rest of the agreement will be upheld in the event one or more clauses are ruled invalid by the court.
Joint and several liability
This clause holds each tenant in a multi-person rental liable for rent and damages. If just one roommate fails to pay their share of the rent, all tenants are held liable for the deficit.
Use of premises
A use of premises clause will clearly state how the rental should and shouldn’t be used, such as any prohibitions on home-based businesses and requirements for pre-approval.
Access to premises
As the landlord, you may need to enter the premises for repairs, maintenance, or inspections. This clause will typically limit visits to reasonable hours and require prior notification.
Rent due date and late fees
You always want to specify the due date for rent, the exact amount of any late fees, and the definition of “late,” including any grace period. Without this clause, you may not be able to collect late fees.
If you don’t want your tenants to sublet your rental, then you need to expressly state that in the Lease Agreement. If you’re okay with sublets, then you’ll want to establish specific rules, procedures, and limitations.
Renewal and holding over
This clause requires the tenant to give you advanced notice (often 30-60 days) of their intention to move out or renew the lease. A holdover clause will usually state that the lease will transition to a month-to-month agreement if the tenant doesn’t renew for another fixed term.
If you have questions about the language used in your specific Lease Agreement, ask a lawyer.
What is the importance of including a severability clause?
Depending on state law, if your Lease Agreement does not contain a severability clause, the invalidation of one clause could invalidate the entire lease. A severability clause allows any unenforceable terms to be cancelled without affecting the other enforceable parts of the agreement.
For example, you may have required a security deposit that’s higher than what is allowed by state law, as an honest oversight. If it’s challenged and considered invalid—in the absence of a severability clause—your tenant may be released from their responsibilities within the lease.
How does a joint and several liability clause protect me?
A joint and several liability clause essentially treats all roommates as a collective unit, holding each one liable for the actions of the others. For example, this clause will allow you to hold all tenants responsible for paying the full amount of rent on time and for covering any damage done to your property. Without it, your tenants could deny any personal responsibility.
In addition to including this clause, you’ll also want to make sure that you get each adult tenant’s name and signature on the agreement. Outside of negligence and bad behavior, having all tenants sign the lease provides protection for you as a landlord in the event that one of the tenants becomes unemployed or if one roommate unexpectedly moves out.
Can I prevent my tenants from running a business?
While you may not be worried about tenants telecommuting during the day (as long as they don’t cause disruptions or violate other terms), a home-based business could generate unwanted traffic or commotion, or even violate zoning regulations. If you have specific guidelines regarding how the property may be used and any requirements for prior approval, it is best to record them in a use of premises clause. You’ll want to confirm with a local attorney that your restrictions are legal.
What other lease details should I be aware of?
Here are a few more aspects of the rental agreement that should be crystal clear to all signers:
- Number of occupants – Excessive guests or long-term visitors could strain resources, cause a disturbance, increase wear and tear, etc.
- Noise and disturbances – You may enforce reasonable quiet hours, ban excessively loud music, prohibit parties, or make other sensible restrictions.
- Surrender of premises – This is a list of tenant procedures and expectations prior to moving out (e.g., cleaning), as conditions for returning the security deposit.
- Security deposits – In addition to the amount, the lease should state how the deposit may be used to cover any necessary repairs, cleaning, or unpaid rent.
- Pets – Whether or not you allow pets (or charge an additional pet deposit), you’ll want to include this information in your lease.
- Smoking – You may prohibit smoking in your property or indicate designated smoking areas.
- Parking – You may have limited parking spaces, so you’ll want to either assign a spot to the tenant or state any restrictions on usage by guests.
- Maintenance – Make sure you indicate your responsibilities (and limits thereof) to maintain the premises and tenant procedures for requesting maintenance.
- Utilities – Some utilities, such as shared central heating, may be included in the rent. In any event, be clear about which party pays for which utilities.
If you are unsure about the policies that are included in your lease, ask a lawyer.
Can I change the Lease Agreement after it is signed?
Since a signed Lease Agreement is a legally enforceable contract, you may not unilaterally change any of the terms after the fact. However, you may present your tenant with a Lease Amendment that overrides some aspect of the original, or draft an entirely new contract.
How should I plan for unforeseen events?
The most common contractual clause that protects both parties from so-called “acts of God,” including events such as natural disasters and global pandemics, is referred to as force majeure. This clause may be invoked to release either party from performing their contractual duties (such as paying rent on a certain day or making timely repairs) if a triggering event occurs.
That said, the triggering event must be specifically mentioned in the clause. For instance, contractual obligations disrupted by the COVID-19 crisis might be excused by a force majeure clause only if the language indicates a “pandemic,” “global health crisis,” or other language that suggests a pandemic. Once the event is considered over (as declared by state or federal authorities), the parties resume their contractual obligations.
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Renting out property is a great way to earn income, but it also comes with its own legal risks. You don’t need to be a legal expert to make an enforceable contract, but you should understand all terms before agreeing to them. Explore Rocket Lawyer’s library of legal documents for landlords, or get started with Rocket Sign and add digital signatures to any agreement today.