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Landlords: Have You Read Your Lease Lately?

Jul 15, 2008
If you are a landlord, you probably view your lease as just a piece of paper. I want to challenge you and ask: When is the last time you read your standard lease from start to finish? For most, it has probably been a long time. I bet that some of you have never read it. Your lease is not just a piece of paper. It is your legal contract with your tenants. Most investors will spend a considerable amount of time working on a purchase agreement (or other contract). Why are you now just cruising along with a lease you haven't looked at in possibly years?

Maybe you found your lease on the Internet and print it off your computer or maybe you buy your leases at an office supply store or maybe you buy them from your rental housing association, regardless of where you get them, here are some clauses to put in your leases to make them stronger and to protect yourself:

1. Confirm your lease reads that rent is due on the 1st, but late on the 6th. Most tenants look at that as the rent is due on the 5th. Make sure they understand it is due on the 1st.

2. Consider raising your late fee. A large enough amount may make a tenant think twice about being late (confirm your state's limits on late fees).

3. Even at the end of the lease, require at least 60 days written notice for the tenant to vacate the premises. Additionally, this 60 days notice should start at the beginning of the following month; so you should get a minimum of 2 months notice.

4. If you own investment property in colder climates, do not allow any move-outs during November to March as these are the most difficult times to lease properties.

5. To protect yourself from repeated NSF checks from a tenant you should include the following language: Payment of rent will be accepted by personal check until first check is returned unpaid. Thereafter, tenant will be required to pay using a money order, certified funds or cash.

6. Your lease must have the following restriction: Use of property for business is strictly prohibited. This is to prevent your tenant from using the house as a beauty salon, day care, or auto repair business.

7. Add the following clause: "All waste pipes, drains, and plumbing are accepted as working and clear by the resident at the time of occupancy. Any blockage after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the streets." Hopefully this puts an end to late night blocked toilet calls. Supplying a $6 plunger can be a cheap insurance policy to alleviate any potential problems!

8. When signing the lease, specify the number of adults, children, pets, and automobiles directly on the lease document and set requirements for notification if the number increases.

9. If you accept pets, make sure to have an extra pet deposit and some of it should be non-refundable for additional wear & tear on the house and/or carpet cleaning. Make sure to include on the lease the type and/or size of the pet (I have seen a tenant start with 3 approved dogs (10 pounds each) and then after a year upgrade to three 50 pound dogs. Yet, they were still in compliance with the lease!

10. Some landlords require the tenants to make any repairs under a certain dollar amount. You can also make them responsible for some or all pest control costs (depending upon the building type).

Here are some additional clauses that can be used in the right market and circumstance:

1. Require all tenants to sign a Non-violence and Drug Free living document with the possibility of eviction if violated.

2. Designate the apartment or entire building as smoke-free. Have the tenants sign a smoke free addendum.

3. If the tenants get locked out or lose their keys, require them to call a locksmith at their expense. If you chose to unlock the door for them, at least set a comparable price ($50-75) for your time.

Adding some or all of these clauses will make your leases and your position stronger when working to alleviate problems with tenants. They should also save you money and frustration in the long run.
About the Author
Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property. Find his website full of useful information atMinnesota Investment Real Estate or use it to search the Minnesota MLS for Investment Properties.
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