Your real estate investment property has proven to be a mini-gold mine. You bought at the right time, made not only the necessary improvements but added the popular amenities that command top dollar rent and you’ve got a copy of your rental agreement in your drawer and at your attorney’s office.

the right lease agreement language

Your lease agreement is a working contract between you and the tenants that lay out what is expected of both you and your tenants. Do you have these seven clauses in your lease agreement?

1: Clearly spell out the amount of deposits and how they will be returned. This is one of most contentious items when tenants move on so everything needs to be crystal clear. In addition to the dollar amount of the security deposit, spell out how and when the deposit will be returned. Make sure it’s clearly stated the deposit will be used to fix any needed repairs from actions caused by the tenants and not simply the “last month’s rent.”

2: Itemize in the lease agreement what the tenants are and are not responsible for. Your lease agreement should require the tenants keep the property clean and in good condition. If there are any needed maintenance items such as a garbage disposal not working or the sink is clogged, the tenants are to call you first.

3: Make sure the agreement prohibits and permanent alterations to the property without your permission.

4: All of the tenants who will occupy the property should be on the lease agreement and all vetted in the same manner. Having three occupants with all three on the lease means they are all equally responsible to uphold the terms of the lease agreement.

5: No commercial activity is to take place on the property. You don’t want your tenants running a business out of your garage. Besides any zoning violations, a “customer” could slip and fall and sue you as the property owner.

6: Spell out the options clearly when the lease expires. Don’t assume a “month to month” agreement when a lease expires at the end of the initial term.

7: Your lease agreement will have the date when rent is due but include specific language on what happens if the rent is not paid on the due date. If you intend to apply a late fee to your rent after the 10th of each month, itemize the fee and when the fee is due. You should also spell out payment methods and if the tenants pay by check and the check bounces, highlight the fact that you will charge a specific amount for a returned check charge.

Most lease agreements start out as “boilerplates” downloaded from the internet or copied from “How to Be a Landlord” book. Regardless of the source, take care of these often overlooked items in your next lease.