What's Included in a Lease Agreement: Lease Clauses
As a landlord, you understand that there are some risks involved when it comes to renting out your residential property. As such, it’s important to always have a formal lease agreement in place to dictate the terms of renting your property out to your tenant.
There are multiple clauses that form lease agreement documents. It’s your responsibility to understand each of them clearly so you can avoid any potential misunderstandings with your tenant later down the line.
Thankfully, we’re here to help. We’ve compiled all there is to know about lease clauses and the different types out there so that you can have access to this information all in one place. Make sure to read through this article in its entirety before you begin drafting up your lease agreement.
What’s Included in a Lease Agreement?
Understanding local state laws is critical when it comes to creating your lease agreement. After all, the lease is a legally binding document, which means you want it to be able to uphold if needed in a court of law. Otherwise, there is no real purpose of having a lease agreement in the first place.
Generally speaking, lease agreements in most states must include the following information:
- Type of rental property
- Rent amount
- Date rent is due each month
- How late fees are handled
- Beginning and end date of the lease agreement
- Contact information for all parties involved
What Are Lease Clauses?
Within the lease agreement are lease clauses, which are arrangements made between the tenant and landlord.
While lease clauses allow for more flexibility, it is important that all aspects still remain legal according to local laws. Additionally, no clauses within your lease should contradict one another or the primary lease agreement document.
What Types of Clauses Should Be Included?
There is a near-endless list of the different types of lease clauses that can be included in an agreement. We’ve compiled a list of some of the clauses that you should be considering in your lease agreements.
One important factor to consider while reading through this comprehensive list is that the different types of lease clauses may vary depending on a few different aspects, including:
- The area you live in
- State laws
- Type of property
While we will cover the majority of the most common lease clauses, if you have any additional questions you should always seek out legal assistance from a trusted real estate lawyer.
Rent Liability
One of the first clauses you should always consider adding to your rental agreement is rent liability. This clause will ensure that you get paid the agreed-upon amount promptly. Rent liability guarantees you are paid the full rent amount, even if one tenant refuses to pay their portion.
Ideally, all tenants will pay for their portions of the agreed-upon rent, though this is not always the case for several different reasons. Thankfully, with the help of a rent liability clause, you can limit some of your involvement in the policing of their agreements. At the end of the day, they will be held responsible for paying you in full, regardless of their situation.
Access to Premises
The “access to premises” clause is also known as the right to entry, which will provide you with the ability to enter your property in emergencies.
Typically, access to premises clauses will explain to your tenant under what circumstances you will be allowed to enter the property and how much notice you will need to provide in advance. Usually, you will want to give your tenants a minimum of 24-hour notice and only visit during normal business hours.
Some of the situations in which you might need to access your property may include:
- Emergencies
- Repairs
- Property inspection
- Additional services
Use of Premise
It’s also important to explain to your tenants under what circumstances they can use your property. If there are any type of prohibitions or regulations surrounding in-home businesses, the use of the premise clause is where you should specify them.
Some of the items to consider for the use of premise clause may include:
- Tenants are responsible for regular maintenance activities
- The premise should only be occupied by the tenants as listed on the lease agreement
Rent Due Date and Late Fees
Earning income from your rental properties is the main priority as a landlord, which is why you should take your rent due dates and late fees very seriously. In the rent due date and late fees clause, you should explain the following:
- The due date for rent each month
- The grace period, if there is one, for late payments
- The penalty fee for late rent payments
While grace periods aren’t required, if you choose to provide one, make sure you detail it out as much as possible to avoid any confusion.
Sublet Rules
Whether you want to allow your tenant to sublet your property or not, you should explicitly say so in a sublet clause. Without this clause, your tenants may assume it is okay for them to sublet when that’s not the case. You may be able to terminate the lease under this circumstance, but the tenant can not be penalized without a clause stating so.
If you do choose to allow subletting in your rental property, here are a few of the details you should mention in your clause:
- Who is your tenant is allowed to sublease to
- If formal applications are required and must be approved by the landlord ahead of time
- The minimum and maximum amount of time for a sublet to stay
- Random visitors allowed or not, like Airbnb
- Security deposits required from subletters
- A clause stating that the tenant is responsible for a sublease
Guest Rules
Your tenant might want to have non-subletting guests over. To avoid any confusion between the two, you should include a guest rules clause that clearly defines how long a person can stay at the property before they are considered a sublet or additional leasee.
The guest rules clause should also explain that the tenant is held responsible for their guests.
Renewal
Providing ample notice of lease renewal is necessary to include in your agreement. Usually, you should state that your tenants must offer the intent to stay in the property from 30 to 60 days.
Having proper notice will help you to fill vacancies should your tenant decide not to renew the lease without giving you advanced notice. As per the renewal clause, they can be held responsible for any additional days of rent charges.
Should you not include renewal or holding over a clause in your lease agreement, your tenant will only be responsible for paying rent up until the end of the lease. If they decide to stay longer, you will not be able to hold them responsible for any additional fees.
Some renewal clauses will mention automatic renewals unless stated otherwise by the tenant. If you decide to go with automatic renewal, you’ll need to make sure that your tenant clearly understands the terms within this clause.
Lease Termination
A lease termination clause allows for both parties involved to request an early lease termination. In a lease termination, there will be written consent from both parties to end the lease before its agreed-upon expiration.
If both parties agree on a lease termination clause, the tenant agrees to give up the premises while the landlord agrees that the tenant is no longer obligated to the premises.
Lease Breakage
Similar to a lease termination clause, a lease breakage clause enables tenants and landlords to end the lease mutually at an agreed-upon time. The purpose of including a lease breakage clause is to allow a more flexible timeline for an agreement rather than a fixed contract.
Should you decide to include a lease breakage clause in your rental agreement, make sure you specify the following conditions that must apply in order for the breakage to occur:
- The landlord requires written notice from the tenant about the breakage
- The premise must be in good condition, otherwise, the tenant will be responsible for charges
- The tenant must hand over the premise back to the landlord
- The tenant must be up to date on all rent payments and any other fees incurred
Cleaning/Moving Out Responsibilities
Landlords always want tenants to return their rental property to them in the condition it was given over. To help enforce this process, we recommend adding a cleaning clause to your lease agreement.
The cleaning clause explains what the tenant will be responsible for in terms of maintaining and cleaning the property before the end of the lease agreement. You should also clarify that any cleaning not handled by the tenant will be taken out of the security deposit or be charged additionally.
Security Deposit
Speaking of security deposits, you should definitely add a security deposit clause to your lease agreement. The security deposit amount should always be agreed upon by both parties, as well as how the payment will be received, how it will be held, and how it will be returned.
As a landlord, it’s in your best interest to include details about what the security deposit funds can cover, in the absence of a tenant providing the necessary funds.
Rent Increase
Rent increases can be linked to the Consumer Price Index (CPI), which typically causes increases at the beginning of every year lease. Using the percentage increase of the CPI from the year prior, landlords can ensure that they can properly charge their tenants.
A rent increase may happen for one of two reasons:
- To increase the property’s market value
- To ensure the property’s rent is in line with inflation rates
Additional Charges
Any other charges that a tenant might incur should be listed out in an “additional charges clause.” Some of the more common additional charges may include painting or holes in the wall, both from decorating.
Smoking
Don’t assume that tenants will not smoke in your rental property. To avoid any mishaps, make sure to include a smoking clause in your lease agreement.
As a landlord, you have the option to prohibit smoking entirely, both inside and outside of your premises. Otherwise, you can designate specific smoking areas if you choose. Also, include what will happen if the tenant does not abide by the smoking clause. Penalties such as additional fees or legal lawsuits may follow, depending on the circumstances.
Pets
Pets are a hot topic when it comes to rental properties. Typically, you’ll include in your listing whether you allow pets in your unit or not. Many landlords opt not to allow pets because they usually incur more costs for potential damages.
If you decide to allow pets in your rental property, make sure you have a lease clause dictating the rules surrounding pets. If you are charging a pet deposit and pet fees, you can explain what fees are due and at what time. Explain to your tenant that the fees associated with pets cover any potential damages the pets may cause.
Detail how many and what types of pets will be allowed on your property. You never want to assume that just because your tenant is disclosing one pet upfront that there will not be others joining in later on. Be as clear as possible to avoid any miscommunication with your tenant.
Maintenance
It’s completely normal for rental properties to require maintenance throughout the duration of a lease agreement. Different types of maintenance should be detailed out in a lease clause to dictate which areas the tenant will be responsible for versus the landlord.
For example, if your HVAC filter needs to be changed on a monthly basis, you should mention this in the clause and state who is responsible for purchasing the filter as well as replacing it. In other rental situations, you may be responsible for covering other maintenance fees such as gardening, pool service, or pest control.
In your maintenance clause, clearly explain to your tenants how they should submit requests to you. Choose your preferred method of communication, including text, phone call, email, or via an online portal.
Whichever you prefer, it’s ideal to get maintenance requests in writing so that you have something to fall back on should legal issues arise.
Parking
Parking is another important aspect of a rental property. If there is assigned parking, your parking clause should clearly state which spots are meant for the rental property. In this clause, you can also explain the rules around guest parking if it’s allowed, the hours, and other rules that they will need to relay to any guests.
Some rental properties have valet parking, which should be detailed in a lease clause. Make sure your tenant knows who is responsible for the paying charges and what happens if they are not paid on time or at all.
Utilities
The burden of utility costs varies by rental property. To avoid any potential confusion, you can include a lease clause that specifies who will pay for which utilities for the property.
As a landlord, it is your responsibility to make sure your tenant clearly understands any shared utilities payment method and conditions on your property. Don’t forget, there may be state-specific laws regulating this clause as well.
In some circumstances, you might opt to include utility fees in the monthly rent. However, to keep yourself protected, it’s a good idea to have a clause stating that excess use, which should be clearly defined in the clause, will be charged directly to the tenant.
You’ll also want to add information in your utility clause about malfunctions and who will be responsible for the damage. While certain situations will fall under the landlord’s responsibilities, excessive use or failure to maintain the property as agreed upon should mean that your tenants should cover costs.
Final Thoughts
There are several considerations to keep in mind when determining the details of your lease agreements. It is your responsibility as a landlord to have a thorough understanding of your options and choose wisely. You’ll always want to go with the options that are both legal and right for the protection of you and your property.
Lease clauses allow you to specify details of the lease agreement between you and your tenants. If you decide to add clauses to your lease, make sure that they abide by the local law and do not contradict any other language within the document.
If your lease agreement is ready to go and you are prepared to list your property, the next step is to choose a platform you can trust to get the job done.
Your go-to platform for property listing should always be Apartment List. We’ll deliver prospective tenants eager to rent your unit, lease clauses and all. All prospects have been matched to your unit and have a higher chance of signing a lease agreement with you.
Are you interested in filling your apartment vacancies?
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