There’s a lot of information to be sure you include in your lease agreement. Today, we want to focus on six of the key lease clauses that you need. If you’re an independent rental owner or a do-it-yourself landlord, you want to make sure you address these six clauses in your lease.
Allocation of Rents
Allocation of rents really means how you allocate the payments you receive. You may have some additional expenses that the tenant is responsible for such as maintenance fees or processing fees or utilities. In your lease, you want to address how those expenses are charged to the tenant and who is responsible for paying them and in what order. That way, when you receive a payment from the tenant, you are able to allocate it to utilities, maintenance, etc. This is important because you don’t want the tenant just to pay rent and not pay for those other expenses.
Security Deposits
You should have a detailed paragraph in your lease stating how much the security deposit is, where it is being held, who is holding it, and under what timeline you will return it to the tenant. Most states have specific requirements that tell you how much time you have to return a security deposit to the tenant. In Colorado, we need to provide the tenant with their security deposit and an accounting of how any funds were used within 30 days of the end of the lease unless the lease specifies a longer timeline. In that case, you have up to 60 days to provide this money and information to the tenant.
Routine Maintenance Responsibilities
Your lease should address who is responsible for maintenance issues such as lawn care, landscaping, snow removal, etc. Your lease should also include specifics about filter replacements. Indicate who is responsible for replacing and purchasing these. Do the same with light bulbs. Specify if the tenant or landlord is responsible for replacing them. You also want to address broken windows and, of course, wear and tear. In most states, the tenant is not responsible for basic wear and tear on the property. However, dirt is never considered wear and tear. The tenant should be responsible for cleaning.
Late Fees and Penalties
Your lease is going to address the rent specifics such as amount and due date. It should also include information about when rent is considered late, when late fees begin to accrue, and how much those late fees are. Is there a one-time late fee or reoccurring daily fees? You want to specify all of that so the tenant is aware and expectations are understood.
Right to Entry
You own the property that the tenant is living in. However, by signing the lease, you are giving the tenant possession of the property. The tenant has the right to quiet enjoyment. You want to detail what notification is required prior to you coming into the property. If you need to check on the home, how much notification do you need to give the tenant prior to setting a time or date? Typically, you want your lease to state that you will provide reasonable notification when you want to enter the property. This is usually at least 24 hours. You also want to stress in this clause what to do in cases of emergency. If you are driving by the property and you see water flowing out of the front door, you want to be able to go into the property immediately to prevent further damage.
Severability Lease Clause
This last clause is probably the most important of them all. If any portion or clause in your lease is determined to be not legally enforceable or invalid, a severability clause will prevent the entire document from being determined invalid or not legally enforceable. A severability clause applies to many different types of contracts, so make sure you have this in your lease.
These are the six clauses we highly recommend you address in your lease. If you have any questions about what these things mean or anything about Colorado Springs property management, please contact us at Cornerstone Real Estate.