Renting a residential property may involve some risks that all the parties involved should be aware of. Whenever a renting process is arranged, the most appropriate way to go is with a Lease Agreement. In this agreement, the landlord specifies all the terms for renting their property to the tenant; these terms should be written with the landlord's best interest in mind and in a way that they're easily understood.
One critical part of any lease agreement document is understanding each clause clearly. This way, landlords can avoid misunderstandings and any legal issues with the tenant. To make this process easier for you, we've compiled a list of all the landlord and tenant lease clause definitions that you should know before drafting a lease agreement document.
Keep in mind that lease clauses for landlords may vary depending on the different state laws, the area you live in, the type of property you're renting, and many other factors. If you have any specific doubts about drafting your lease agreement document, your best option is to talk to a trusted real estate lawyer.
What Makes a Valid Lease Agreement?
You should know your local state laws before you sign any lease document. This way, you ensure that the terms are valid and legal for all the parties in that specific state.
In most states, a valid lease document needs to have the following legal requirements:
- Type of property.
- Contact information of all the parties involved, including the information of each occupant.
- Beginning and expiration date of the lease.
- Rent amount, due date, and late fees.
- "Holding Over" conditions and penalties.
What Are Lease Clauses?
A lease clause is a specific part of a contract or rental agreement between the landlord and tenant. These clauses need to be compliant with local state laws and other agreements between the two parties.
What Types of Clauses Should Be Included?
There are many lease clauses for tenants and landlords that you can include in the final document, and they may vary depending on local state laws, type of property, and the area. However, there's a list of clauses that you should always consider including in the lease document.
1. Severability Clause
This is one of the most important clauses, and you must include it in your document to avoid future issues with your lease. A severability clause states that if any portion of your lease is ruled non-applicable by the court, the rest of the lease agreement is going to remain valid.
If you don't include a severability clause on your lease, you may be exposed to getting the entire contract invalidated by the court. Here's an example of how you can write it:
"Severability Clause. In case any provision in this lease shall be invalid, the validity of the remaining terms and conditions shall not be impaired in any way."
2. Joint and Several Liability
This is another important clause that you should get into the lease if you want to make sure that you get paid when you have to. A rent liability clause states that tenants are entirely responsible for paying full rent, even if one of the parties refuses to pay their share in a particular month.
For example: If the tenant is going to live with roommates, it's important that you hold that specific tenant liable for rent and possible damages. This way, if one roommate doesn't pay for their share of the full rent, the other tenants still need to pay for the missing amount for that month.
In essence, all the tenants need to pay rent equally, but it's better to make sure that you always get paid in full, regardless of the circumstances.
3. Access to Premises (Right to Entry)
Keep in mind that by leasing your property to a tenant, you're also giving them possession of your property. However, you may still need to enter into the place in cases of emergency (i.e. you see some leaking from the outside of the house).
In these cases, you need to write a clause that specifies under what circumstances you can enter, how much notification you're going to give before your visit, etc. Usually, you limit your visits to reasonable hours and set the notifications 24 hours before your visit.
These are some of the reasons you might specify the need for visiting your property:
- Property inspection
- Additional services
4. Use of Premises
This term states how the tenant may use your property. You should point out any regulations or prohibitions regarding in-home businesses. Normally, the premises should only be occupied by the people listed on the document; this also involves regular maintenance activities such as cleaning, mowing the lawn, etc.
The best way to ensure that tenants take care of your property is by specifying your terms on using the property.
5. Rent Due Date and Late Fees
You must specify the payment conditions as clearly as possible. In this clause, you have to point out the due date for rent, the grace period for late payments, and the "penalty" amount that you're going to charge your tenants for late payments.
Without this clause, you might have issues collecting late payments, so make sure that you go over all the details as thoroughly as possible.
If you're going to include this clause with a grace period, make sure that you make it as clear as possible in the lease document:
"Payment Grace Period. The tenant(s) shall have five (5) days of grace to pay any late fee under this agreement. After this grace period, a default interest rate of two percent (2%) shall apply to the amount due and owing under the agreement, which shall be payable upon demand."
6. Sublet Rules/No-Subletting Clause
You need to specify your terms for subleasing if you want to avoid issues with your tenants. If you don't want your tenants to sublet your property, you have to state that in the lease agreement. Otherwise, your tenants might sublet the premises without your permission. You could terminate the lease in this case, but you're not going to be able to penalize them for that.
On the other hand, if you want to allow your property to be subleased, you may state the rules and regulations for that process on the lease agreement document including:
- Who they are allowed to sublease to
- If they need to submit a formal application and be approved
- The minimum stay (i.e. 3 months minimum)
- If you will allow random visitors from sites like Airbnb
- Any security deposit you must collect from them
- A clause that they are liable for anyone else that leases under them
7. Renewal and Holding Over
Renewal clauses usually state that the tenant must give you advance written notice if they're planning to renew the lease or move out at a particular time. Tenants should specify their renewal intentions with 30-to-60 days notice.
This is especially important because, with that 30-60 days notice, you're going to have enough time to find a new tenant if they're planning to move out. In the case that the tenant doesn't provide that advanced notice, they're going to be held liable for those extra days of rent.
Remember that if you don't specify renewal/holding over conditions, the tenant only has to pay up until the end of the lease, releasing them from any extra days that they spend on your property before moving out.
On the other hand, these clauses help you to collect rent legally if the tenant doesn't move out past the end of the lease listed on the rental consensus.
For renewals, you can set a system to automatically renew the lease, or you can draft a new lease document. Most landlords go with the option to automatically renew the agreement, but you can choose the option you feel most comfortable with.
8. Early Termination
An early termination term states some cases in which you're allowed to terminate the rental consensus before the lease ends. Normally, these cases refer to breaches in the document's terms. This severs the relationship between the two parties, discontinuing the responsibilities stated in the agreement.
An example of an early termination clause may be the following:
"Early Termination Clause. This lease agreement may be terminated prior to its Maturity Date for the following reasons: ------"
9. Military Clause Lease Termination
This protects service members and their families from any penalties that might occur because of active duty orders. In essence, it states that if a service member receives an active duty order before the end of the lease, they can break the agreement without paying any penalties.
To properly break this lease, the service member has to show proof that they signed the lease document before engaging in active duty or permanently changing to another station. They must also prove that they intend to remain on active duty for at least 90 days.
Regardless of the circumstances, the person must provide the landlord with a written note with 30-to-60 days' notice.
10. Lease Termination Clause
In a termination clause, either party has the right to request a termination of the entire lease before its expiration. The difference between the early termination clause and the lease termination clause is that the latter shows mutual written consent between the landlords and the tenants. In contrast, the early termination clause states that the landlord may break the agreement if the tenants break any lease term.
In general words, the landlord releases the tenants from any future obligations, and the tenants surrender the premises. Keep in mind that the landlord may still be able to charge an extra rent amount or fee for early termination.
11. Lease Breakage Clause
This specifies the right for both the landlord and tenants to terminate the lease term agreement at an agreed point in time. This ensures more flexibility for both parties if they don't want to tie themselves to a fixed contract.
Even though you can use this to be more flexible with the agreement, some conditions may still be required to be met for the breakage terms to apply. The conditions may be the following:
- The tenant needs to be up-to-date with full rent amount payments. They may not have any pending late fees or additional requirements.
- The tenant needs to relinquish the property so that the landlord can use it.
- The property needs to be in good condition; otherwise, the tenant shall be responsible for repairing fees.
- The tenant needs to give the landlord a written notice about the breakage. This could be from six months up to one year of notice.
12. Cleaning Clause
When it comes to a rental property, it’s typically expected to be clean at the end of the agreement. Tenants usually need to return the unit in the exact same clean condition it was received in. A cleaning clause in a rental agreement refers to the tenant's responsibility for cleaning the outside of the property, common areas, and other areas. If the tenant fails to keep the property clean when the agreement ends, any cleaning costs may result in a deduction from the security deposit or charging an additional rent payment.
The cleaning clause may be written as follows:
"Cleaning Clause. The tenant(s) shall keep all the areas around the property address in a clean, habitable condition (Normal wear and tear excepted). When the end of the rental term arrives, the tenant shall submit the property to further inspection. The tenant agrees to: -----"
13. Security Deposit Clause
Security deposits are one of the most important things in any agreement for a rental unit. Both parties should agree upon the specified deposit amount before signing any documents.
First, you should specify the amount of the deposit, the person who is going to hold it, and when you're going to return it to the tenants. Additionally, you have to specify how the security deposits are going to be used to cover certain damage, necessary repairs, or uncollected rent.
Keep in mind that if you didn't include a security deposit on the first lease, you may still add a deposit clause to the renewal process. This is also known as a "Lease Renewal Security Deposit Clause."
14. CPI Rent Increase Clause
When it comes to any rental agreement, a CPI rent increase clause may have to be included to protect both parties. A CPI clause states that a landlord may tie the rent amount to the Consumer Price Index (CPI). This means that the rent may have to be escalated at the beginning of every lease year according to the percentage increase in the CPI over the last year.
This is done for two main reasons:
- To make sure that the premises' rent can keep up with inflation rates.
- To increase the premises' market value.
15. Painting Charges Clause
You should always have a painting charges clause in a rental agreement. Wear and tear are common in most premises, so you must specify a way to take care of these future damages.
In most cases, a landlord may deduct re-painting costs from the security deposit. The clause may be written as follows:
"Painting Charges Clause. The landlord reserves the right to determine when the premises may be painted unless any local laws state the contrary. Any painting of the premises may not be performed by the tenant(s) without written consent. Tenant(s) shall be held liable for re-painting costs to restore the premises to their good conditions."
16. Rent Abatement Clauses
These leases work as a provision, and they state that if the premises are damaged and rendered unhabitable, the tenants may be allowed to suspend rent payments until the premises are fully restored to their normal conditions.
This type of lease clause may be written according to what the landlord considers an unhabitable environment (i.e. Fires or other natural disasters), although a court may think otherwise if there is a legal dispute, or you’re trying to evict your tenant.
17. Indemnification of Landlord Clauses
With a landlord hold harmless clause, the tenant must hold the landlord harmless from any damage or loss to any property or person upon the leased premises. This is to protect the landlord from any damages that may have been caused by the tenants while they were occupying the premises.
Miscellaneous Lease Clauses
While the lease clauses stated above are the most important ones to ensure proper use of premises by the tenant, there are some additional personal or state-specific terms that you may want to use in your agreement document. Before you get started drafting your lease clauses agreement, consider the following terms.
18. Number of Occupants
Whether you only sign one tenant or several ones, you have to state limitations regarding the number of guests that can be at the property at a particular day or time. If there are many guests continually visiting the property, you might be exposed to recurring damage, wear and tear, disturbances, etc.
A particular state law might already state an occupancy standard for properties with residential purposes. However, it's always better that you state your occupancy standards alongside the state law standards.
Last but not least, you have to include liability clauses in the case that the tenant does some damage to the property; it can be pointed out as follows:
"Guest Clauses. The tenant is responsible for any specific actions that might damage the property, and they might be held with liability for those damages, even if their guests created them."
19. Noise and Disturbances
This requires the landlord to specify any restrictions or rules regarding excessive noise on their rental premises. These rules might include:
- Enforcing "quiet" hours at a certain point during the day.
- Prohibiting parties at a particular time of the month.
- Banning loud music coming from the rental premises.
20. Surrender of Premises
Aside from including a mutual agreement between the landlord and the tenant to relinquish the property at any given time, the surrender of premises clause has to state a list of moving out procedures, fees, and conditions that the tenant is responsible of.
On the other hand, this clause is also required to include the security deposit return conditions. Keep in mind that "Surrender of Premises" is not the same thing as an "Abandonment Act," which is when the tenant surrenders the property without mutual consent.
Property owners might or might not allow tenants to have a pet on their unit in exchange for a pet deposit or a small increase to the rent. Some landlords don't like letting their tenants keep a pet on the property because it can sometimes involve additional damages.
If you choose to allow a pet to stay on your premises, you can charge an additional pet fee each month. This fee is intended to cover any required damages that the property may suffer. If the tenant fails to pay that additional rental fee, you can legally ask them to move the pet out of your property. You can also choose to limit the pet amount to one small animal.
You should include this clause to avoid any misunderstandings between all the involved parties.
A smoking clause in a lease is as important as any other legal rules of the document. You can either completely prohibit smoking on your premises, or you can designate smoking areas for the tenant. If either the tenant or their guests don't follow these rules, you can use this clause to charge an additional fee or sue the tenant.
Regardless of the parking spaces that your premises have, you should assign a specific spot for the tenant; you can even state some restrictions for guest parking spots, depending on what you want.
If your building offers valet, also include provisions, for example:
- Your guests are responsible for paying all valet charges
- If your guests fail to pay, the charges will be added to your lease payments or taken out of the security deposit
Your rental unit may require frequent maintenance, for example changing the air condition HVAC filter monthly, so you have to point out these responsibilities on your leases. In some cases, the landlord may be responsible for ongoing maintenance like an exterminator, plumbing, gardening, etc.
Landlords should let their tenants know in writing how to submit maintenance requests. They can submit them by phone, email, or through their online tenant portal if the landlord uses a property management software.
It’s highly recommended to get every maintenance request in writing instead of over the phone, and through the exact same channel each time (like email) so nothing falls through the cracks.
Paying for utilities tends to be a confusing procedure for both parties. Utility responsibility implies clearing up who is going to pay for certain utilities on the premises.
The landlord is responsible for specifying the payment methods and conditions for a shared central heating unit, water, bills, etc. Keep in mind that there are some areas with a state-specific landlord-tenant law. This means that you have to check your local law leasing conditions to make sure that you can bill your tenant for shared utilities.
On the other hand, you can choose not to ask for utility payments, but if the tenant goes above a particular usage limit during the day, you can charge them the entire utility amount.
Last but not least, you should include clauses that involve utility malfunction. For example: If a particular utility stops working, you may render yourself not liable for that damage. This can protect you from having to spend additional money on fixing the issue.
26. Force Majeure Clause
According to general law, a force majeure legal clause protects all the parties involved from natural disasters that may prevent the tenant from engaging in their contractual duties, such as paying a late fee on a particular day.
Keep in mind that these natural disasters are required to be specified in the lease term document. When this event is over, the involved parties can resume their responsibilities.
27. Lease Amendment
Can You Change the Lease Term Document After It's Signed?
After both parties sign this legal document, you can only make a change to the lease if both parties agree to it in writing (referred to as a lease amendment clause). You can add this language to your agreement. After the lease has expired, you can draft a "Lease Amendment" or a new term document to change as many things as you consider appropriate.
Lease agreement templates
You have to make sure that all the legal terms, including miscellaneous "use of premises" conditions, are clearly specified throughout the document. After both parties sign these documents, they're legally bound until the contract expires or encounters a breach of its terms.
To have a clearer idea of how you can use particular lease terms to benefit all the parties involved, consult with a real estate lawyer or property manager.
The materials and information available at this website 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, question or problem.