How to Build a Bulletproof Lease
Whether you have just recently purchased a rental property or if you have been a landlord for quite a bit of time, developing and implementing an effective lease process is an important way to protect your investment. While most tenants will maintain your property as if you were living in it, there are instances where additional oversight may be required. As such, here are some tips to make sure that you are covered in the event a tenancy issue happens to pop up.
Late Fees
As with car leases and credit card bills, if a payment for rent is late from your tenants, late fees might need to be applied. When developing a lease agreement, it is important to include a reference to the process that occurs if a tenant is late in making their rent payment. Some things to consider when developing a late fee process include not only the amount that will be applied, but also the number of days that fall under the grace period. Some landlords will allow tenants to pay a few days after the due date, while others may be stricter, especially in the event that rent is paid in person, rather than by mail. Make sure that you consult the regulations of your state to ensure that the amount you charge for the late fee is in line with the legal maximum amount allowable. You should include a reference to the amount of the rent due, when it is due, and the applicable late fees that may be applied in the event a tenant is late in paying their rent.
Subleasing
There are times in which a tenant is not able to keep their lease, which can result in a headache for you as a landlord. In such instances, it might be a good idea to work with your tenant on ways, such as subleasing, that can reduce any lapses in making your mortgage payment. Some landlords opt to allow for subleasing, with some only allowing this option with a one-time fee. To reduce any issues from popping up, including a clause in your lease that pertains specifically to the conditions in which a sublease is an option can help to put your mind at ease, as well as your tenant’s.
Lease Renewal
In the event a tenant wishes to renew their lease, if there is an increase in rent, landlords are required to provide a minimum of 10 days’ notice, with details provided to the tenant in writing. However, you, as a landlord, are not permitted to increase the rent while the current lease is still in effect.
Moving Out Process
Although you might pride yourself on the upkeep of your own home, a tenant may not have the same respect and care for your rental property. This can make the moving out process a headache, as some tenants may leave a mess, destroy your property, or leave items on the premises after the lease has been terminated. Some landlords have specific requirements and even cleaning companies that are approved to clean the carpets. Including this type of information in your lease can help to ensure that the premise is returned to the same or better condition than when they moved in.
Conclusion
There is a whole slew of rules and regulations when it comes to developing and implementing a bulletproof lease. As such, some of the rules may be a bit confusing, to both the tenant and the landlord. One way to reduce the risk of legal issues from popping up is to consult a professional in the business such as a property management company who can handle all of the intricacies that are associated with renting property. Placing your rental investment in the hands of an experienced and capable rental property management company can put your mind at ease, knowing that your lease abides by the laws of the state in which your property is located.
References
Bigger Pockets. (2014, November 20). Landlords: 9 key clauses to include in your leases. Retrieved from https://www.biggerpockets.com/renewsblog/2011/06/30/the-lease-a-landlords-best-friend/
Hall, L. (2015, August 4). 7 extraordinary lease clauses that I can’t live without. Retrieved from https://www.landlordology.com/7-extraordinary-lease-clauses/
Stewart, M. (n.d.). Colorado termination for nonpayment of rent and other rent rules. Retrieved from https://www.nolo.com/legal-encyclopedia/colorado-termination-nonpayment-rent-other-rent-rules.html
Zillow. (2016, October 6). 7 things to include in a rental lease agreement. Retrieved from https://www.zillow.com/rental-manager/resources/7-things-rental-lease-agreement/
