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3 Overlooked Lease Items You Should Include

May 25, 2017

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3 Overlooked Lease Items That You Should Add To Your Lease Agreement

Any seasoned landlord knows the importance of an air-tight lease agreement.  For some, that means paragraph after paragraph detailing every imaginable scenario and conflict.  For others, it’s just a couple of pages.  Neither approach is necessarily better than the other.  In fact (and this shouldn’t be news to you), length has no effect on the legal validity of a lease.  But there are a few key pieces of information that do make a difference.  Here’s three often overlooked lease items you should consider adding to your rental agreements.

[Disclaimer: The materials and information provided by Innago are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.]

#1 Joint and Several Liability Clause

Of all the overlooked lease items, this is the king.  A Joint and Several Liability Clause is short, simple, and oh-so sweet for nearly any landlord signing a lease with multiple tenants.  It stipulates that every tenant is responsible for the entirety of the lease agreement.  In other words, in regard to the tenant-landlord relationship, the tenants are treated as a single entity.  Roommate Joe skips town and is entirely unreachable?  Too bad roommate Bob, your landlord can still require full payment of the rental rate.  Suzy has been paying her portion of rent on time but Bridget has not?  Both can be evicted – and because of this, it often turns Suzy into your debt collector.  This powerful clause grants you a great deal of flexibility and control.

And while some argue that the very act of signing multiple tenants to a lease agreement implies joint and several liability, why risk it?  In some housing courts, this argument holds up; in others, it doesn’t.  And removing any doubt requires so little effort. Here’s an example:

All tenants and co-signers shall be held jointly and severally liable for all terms and obligations under this Lease.

That’s it.  In 19 words, you’ve closed many of the loopholes and points of conflict that arise between a group of tenants and their landlord.

#2 Set your Subletting Ground Rules

Subletting is an instance in which it pays to be specific.  Each landlord may have a different subletting policy that’s informed by the clientele they rent to and the location of their property.  If you haven’t thought about this policy before, you’re one of the lucky ones who hasn’t yet been burned by an irresponsible or destructive subletter.  Without it, you can enter murky legal waters when trying to deal with the tenant of a tenant who punched a hole in a wall or suddenly stopped paying rent.  Things to consider include your right to screen the subletter, your right to refuse the subletter, the tenant’s continued responsibility after a subletter has moved in, and the way in which you’ll handle the security deposit.

Our recommendation?  Be assertive in all respects.  If you run screening reports, require that the subletter pay for their own before renting.  Reserve the right to deny any subletter at your own personal discretion (check state law for any restrictions on such a policy).  Stipulate that the original tenant continues to be joint and severally liable for any rent, damages, or other obligations.  And define clear assignments for the security deposit (is the original deposit returned and replaced?  Do you require an additional deposit?).

Ultimately, after weighing the pros and cons of subletting, you may decide to deny it all together (don’t forget to write this into your agreement).  But if you do permit your tenants to sublet, don’t let it be one of the overlooked lease items that bites you back.  Devote a few lines to the rules surrounding it.

#3 Renewal Clause

You might not be thinking about the end of a tenancy when you sign on a new renter, but you should be. What happens when the lease period expires?

Does the lease renew automatically, or do you assume the tenant is moving out? Does everyone need to sign a brand-new lease agreement? If the tenant retains possession without a new lease, does the tenancy switch to month-to-month?

Your renewal clause should include all the relevant details about renewing or terminating the lease at the end of the term. If the lease renews automatically, specify how many days’ notice both you and your tenant must give the other if you plan to terminate (a minimum of around 30 days is required by most states). If the lease doesn’t automatically renew, state the renewal process and how soon to start it.

Finally, be sure to include the penalties for the tenant’s failure to notify you that they’re leaving. Imagine what a headache it would be if you assume your tenant is staying only to discover that they plan to move out a few days before the lease expires. Be clear that communication is mandatory well in advance.

Overlooked Lease Items and Your State’s Laws

It’s important to address that the items you can and cannot add to your lease depend largely on the laws that apply in your area.  Every state has their own rules and regulations regarding the tenant-landlord relationship.  Typical items specific to each state include the rules surrounding security deposit return and the termination clause.  Even the two clauses above – joint and several and subletting – may be addressed by state statutes.  Take the time to understand your state’s rules to ensure your lease is in total compliance and that there’s no overlooked lease items you’re failing to take advantage of.

So, even if you’ve been leasing your properties for five, ten, or twenty years with nothing but sunshine and rainbows, there’s always one tenant who will show up and bring the rain clouds.  It’s best to prepare yourself with an airtight lease and avoid the headache before it even arises.

 

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