A well-drafted rental lease agreement is the foundation for a successful tenant-landlord relationship. While most template leases contain the basic minimum information and legal language, there are a few important lease clauses for landlords to include in addition.
The purpose of a lease agreement, in general, and these clauses, in particular, is to give you the legal power to protect you and your property in a variety of scenarios that may come up.
Having clear language around your renter’s ability to sublease the property, for example, can save you significant time and money if you need to put an end to it.
Knowing these clauses will come in very handy whether you create your own lease or hire an attorney to do it for you. We recommend consulting with an attorney if you are not sure about how your state’s laws treat these clauses.
The following are 8 of the most useful and practical lease clauses for landlords to include, in no particular order.
Starting with our example above, if you don’t include language prohibiting your renters from subleasing the property, there is really not much you can do to stop it other than trying to terminate the lease.
If you don’t want your renters subleasing under any circumstances, make it explicit in the lease.
If you are OK with subleasing, consider inserting certain conditions such as added fees, screening subleasing tenants, your required approval, and a signed subleasing agreement.
ASSIGNMENT AND SUBLEASING: Unless this box is checked [ ], Tenant may not assign the Lease or sublease all or any part of the Premises without first obtaining Landlord’s written approval and consent to the assignment or sublease.
If the above box is checked, or if subletting is permitted in writing by Landlord, Tenant may sublease the property, provided that (1) all subletting individuals submit a rental application to Landlord (2) Landlord provides written approval of subletting applicants and (3) subletting individuals sign a subleasing agreement with Landlord and Tenant.
This is a cover-your-backside clause is one of the most important lease clauses for landlords to include, as it states that if a part of your lease is found to be illegal, the rest of the lease is still valid and more importantly legally binding.
A severability clause protects your entire lease agreement from any potential mistakes that were made, and should be enforced as such in court.
With this clause, a judge will likely honor the legal aspects of your lease even if it contains illegal portions. Without this clause, your entire lease could be void.
SEVERABILITY: Should any provision of this agreement be deemed invalid or unenforceable, for any reason whatsoever, the remainder of this agreement and the application of the provision in question as it applies to other scenarios shall remain enforceable and intact.
Joint and Several Liability
This clause gives landlords the ability to treat all renters in a lease as one unit, while still holding them separately accountable.
What this means in practice is that any one renter is liable for the entire rent payment, or that instead of having to serve notice to all renters, you can do serve only one and it will bind everyone named in the lease.
The joint and several liability clause reduces the chance of bad tenants since roommates will be held responsible for damages. It also makes the tenant interaction process easier for landlords by consolidating it to any one tenant.
JOINT AND SEVERAL LIABILITY: Each Tenant(s) listed in this agreement is both jointly and individually liable for all obligations listed in this agreement, including but not limited to rent monies. If any one Tenant(s) violates this agreement, all Tenant(s) are considered to have violated this agreement. Landlord notices to any one Tenant(s) shall be considered notice to all Tenant(s).
Late fees are a great motivator for on-time payment (second only to collecting rent online) but if you don’t state late fee terms in your lease it will be impossible to charge and enforce them.
Including a clause for late fees and the grace period – the number of days past the due date after which late fees can be charged – will give you the legal power to collect late rent fees and even do so automatically.
For this clause to be fully enforceable, make sure to specify the late fee amount and grace period and to abide by your state’s late fee regulations.
LATE FEES: In the event rent is not paid in full by the start of the fifth (5th) day of each month, Tenant(s) shall pay to Landlord, in addition to such payment, a late fee in the amount of 4% of the monthly rent amount.
Default of Lease
Most standard leases have lease clauses for landlords or tenants that give either party the right to terminate the agreement, with proper notice, if either party fails to meet their obligations listed in the rental lease agreement.
Including a specific default clause, however, will reinforce this fact and give you as the landlord stronger backing in case you need to evict a tenant due to default.
For example, if you want to make it clear that failure to pay rent by the end of the grace period will result in eviction and collection of unpaid rent, you can state so in a dedicated default clause.
LEASE DEFAULT: Landlord may terminate this agreement within three (3) days of having provided Tenant(s) with written notice detailing the violation, should Tenant(s) fail to comply with any of the provisions of this agreement including non-payment of rent.
Tenant(s) will be considered to be in lease default if: (a) Tenant(s) does not pay rent or other fees owed; (b) Tenant(s) violate this lease agreement, violate criminal laws whether or not arrested or convicted, break rules or regulations, or jeopardize the health and safety of others; (c) Tenant(s) vacate the property; (d) Tenant(s) provide false information during the rental application process; (e) Tenant(s) is arrested or convicted for criminal offense (f) illegal drugs are found in property.
Use of Premises
Insert this clause into your lease if you want to limit the use of the property to a residence for the tenants named in the lease only. This clause typically specifies that the property cannot be used for commercial purposes, rented on a short-term basis, or house any other tenants.
USE OF PREMISES: No more than five (5) persons shall occupy the Premises as a private dwelling at any given time during the lease term. The Premises shall not be used for business purposes of any kind during the term of this agreement. Guests living in the property for more than 14 days in a 6 month period shall be considered Tenant(s) and shall be included in this agreement. Additional Tenant(s) may result in an increased rent at Landlord’s discretion.
A lease renewal clause dictates what happens at the end of the lease period. In some cases, you might want the lease to auto-renew, extending it for an additional 12-months. In addition, you can include a set rent increase as a dollar amount or percentage of the current rent price in the lease renewal clause.
If the lease is set to auto-renew, consider inserting language allowing you or your renters to back out with proper notice of 60-90 days before lease expiration. This will give you the flexibility to not renew in case you want to increase rent beyond the baked-in increase, or if you prefer finding new tenants.
Whether you set your lease to auto-renew or not, it’s a good idea to give your renters plenty of heads up, typically at least 60 days before the lease expiration date so that you can plan ahead.
LEASE RENEWAL: This agreement will automatically renew at the end of the term for an additional term of twelve (12) months. Either party can elect to terminate the lease renewal by providing written notice stating as such no later than sixty (60) days prior to this agreement’s term end date.
This clause is one of the lease clauses for landlords and tenants alike. Use an early termination clause if you would rather give your tenants the ability to terminate the lease in exchange for a pre-set payment penalty.
For example, some states, such as Florida, allow renters to exit a lease agreement by paying twice the rent amount as part of early termination.
If you would rather pursue tenants for the remainder of due rent in case of a termination (which you can only do until you find new tenants) include an early termination clause stating that early termination is prohibited.
Check your state’s laws regarding early termination prior to inserting such language.
EARLY TERMINATION: [ ] I agree, as provided in the rental agreement, to pay $ ______ as liquidated damages or an early termination fee if I elect to terminate the rental agreement and the landlord waives the right to seek additional rent beyond the month in which the landlord retakes possession.
[ ] I do not agree to liquidated damages or an early termination fee, and I acknowledge that the landlord may seek damages as provided by law.