What are some of the most important lease clauses to understand before signing?
As a landlord, it is crucial that you understand all parts of your Lease Agreement. Lease Agreements may vary depending on the type of property and your state laws, among other factors, so if you have concerns about your agreement, it is best to talk to a lawyer. If you are using your own lease template with Rocket Sign™, you can ask a Rocket Lawyer network attorney to review your uploaded contract directly. Here are a few of the most important lease clauses to take note of:
Rent due date and late fees
You always want to specify the due date for rent, and the exact amount of any late fees. It is important to define late, including how long you offer for a grace period, if any. Without this clause, you may not be able to collect late fees.
A severability clause makes contracts stronger. Having a severability clause in your lease allows the rest of the agreement to be upheld in the event one or more other parts are ruled invalid by the court.
Joint and several liability
This clause holds each tenant in a multi-person rental liable for all the rent and damages. If just one roommate fails to pay their share of the rent, all tenants are responsible for it.
Use of premises
A use of premises clause clearly states how the rental can be used, such as any prohibitions on home-based businesses, restrictions on smoking, and similar rules.
Access to premises
As the landlord, you may need to enter the premises for repairs, maintenance, or inspections. Typically, landlord visits for these purposes are limited to reasonable hours and require prior notification.
If you do not want your tenants to sublet your rental, then expressly state that in the Lease Agreement. If you are okay with sublets, then you'll want to establish specific rules, procedures, and limitations, or require your permission or approval.
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 usually states that the lease transitions to a month-to-month agreement if the tenant does not automatically renew for another fixed term.
If you have questions about the specific language used in your Lease Agreement, it can help to talk to 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, one clause or paragraph being declared unlawful by a court can make your entire lease unenforceable. A severability clause allows any unenforceable terms to be canceled without affecting the other enforceable parts of your 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 other responsibilities under 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. This clause allows you to hold any or all tenants responsible for paying the full amount of rent on time and for covering any damage done to your property. Without it, each tenant could deny responsibility.
In addition to including this clause, it is important to have 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?
Yes, but there may be limits. 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 may want to confirm with a local attorney that any restrictions you add 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 and require a Pet Application.
- 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 your tenant’s responsibilities to maintain the premises, as well as the process for requesting maintenance.
- Utilities: Some utilities, such as shared central heating, may be included in the rent. In any event, be clear about who 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 only change the terms after the fact with the agreement of everyone who signed the original. You may ask your tenants to sign a Lease Amendment that overrides some aspect of the original agreement, or draft an entirely new contract.
Many landlords wait until it is time to renew their lease to make changes, however, planning these changes well in advance is a good idea. Often, local and state laws require advance notice for changes in amenities or an increase in rent.
How can I plan for unforeseen events?
The most common contract 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 significant and 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.
Sign documents confidently
Renting out property is a great way to earn income, but it also comes with legal risks. You don't need to be a legal expert to make an enforceable contract, but you can understand the terms in your own agreements. Explore Rocket Lawyer's library of legal documents for landlords, ask questions to and get documents reviewed by a Rocket Lawyer network attorney, and get started with Rocket Sign™ to add electronic signatures to any agreement today.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.