Learn
About 10 Things to Include in a Lease as a Landlord!
Having a lease in place as a property owner or
landlord is a necessary step in setting the ground rules in your rental building.
Whether you are an owner of apartment units for renters, or a lessor of commercial units for businesses, the terms you
set in your lease or rental agreement can have important implications down the
road if an accident or something unforeseen occurs in the building that you
own.
Most property owners know that it’s crucial to have a lease in place that at
least includes the names of the involved parties, the length of the lease, and
the amount of payments due. But what you may not know is that a lease is also a
great opportunity for you as a building owner to receive additional
protection by requiring certain things of your lessee in writing.
Continue reading to learn 10 things to include in a lease.
1. Names, addresses, and contact information of lessor and lessee
Starting with the basics, the first thing you
need to include in your lease are the names and contact information of your
lessee. Your lease should express the legal name of the tenant(s) renting your unit, your name and – if
applicable – the name of the business you are operating, as well as the address
of the unit you are renting. You should also ask a tenant to provide their best
methods of contact, including any phone numbers and email addresses.
2. Rent and security deposit
Clearly state the required amount of rent and
the dates payments are due in your lease. When you do this, you can also lay
out if the tenant is responsible for paying late fees in the event they are
late on their rent payment.
Determine the amount of the security deposit for the rental. A security
deposit is an amount of money – sometimes equaling one month’s rent – set aside
for the landlord to use in the event that the tenant damages the unit beyond everyday wear
and tear. If a tenant does not damage the apartment beyond everyday wear and
tear, they are entitled to receive this money back when they move out.
3. Term of tenancy
How long is the term of tenancy in your unit?
What happens when that term has expired? And what happens if the tenant asks to
move out before the lease ends? These are questions you should answer in your
lease to avoid confusion with your tenant.
The most popular terms of leases are often year-to-year, wherein a landlord and tenant revisit and renew their
lease once a year, but other options include six month leases or even
month-to-month terms. Consider what will work best for your situation and get
it in writing.
4. Included amenities and tenant expectations
State which utilities and amenities are included in your
lease versus those which are the tenant’s responsibility. Some examples include
gas and electric, water, internet, trash removal, property upkeep, and parking privileges. Let
your tenant know what services you will be providing versus what is expected of
them so that they are prepared and aware.
5. Policy on property modifications
In your lease, you should include your
expectations as to what kind of changes your tenant is allowed to make in the
unit, including for example putting holes in the wall to hang photos or whether
a tenant is allowed to paint a room. State if your tenant is allowed to make
modifications like these in your lease before they move in.
6. Policy on pets
Do you want to allow pets in your rental unit? While some landlords
prohibit pets due to the risk of property damage, others may collect a fee to
account for potential damages. If you are going to allow pets in your unit, you
should specify what types of animals are allowed and any other restrictions in
your lease.
7. Rules pertaining to smoking
Whether or not your unit is smoke-free is
entirely up to you as the property owner. Be sure to state in your lease what
your policy is regarding smoking in the unit. If your unit is smoke-free, be
sure to state whether there are any acceptable areas for smoking on your property
or if it is wholly prohibited.
8. Guidelines for right of entry
When it comes to residential units, the NYS Residential Tenants’ Rights Guide states
that, “Tenants have the right to privacy within their apartments. A landlord, however,
may enter a tenant’s apartment with reasonable prior notice, and at a
reasonable time, and with the tenant’s consent, either to provide routine or
agreed upon repairs or services, or in accordance with the lease.”
When it comes to an emergency such as a fire or water leak, the tenants’ right guide
notes that a landlord is allowed to enter the unit without prior notice. In any
case, make sure your lease reflects your needs as a property owner as it
relates to entering your unit so that you and your lessee are on the same page.
9. Required renters insurance
Requiring renters insurance of your tenants is one of the most important things you can include in your lease as a property owner. Renters insurance is a relatively inexpensive coverage available to renters that can offer your tenant worldwide coverage, liability insurance, and more. It can also offer your tenant coverage for the negligent destruction of your property, which can be invaluable in the event of a loss.
10. Indicate the building owner must be listed as additional insured
If you are requiring renters insurance from your tenant, you can also stipulate that they include you, the property owner, as an additional insured in their coverage. If you stipulate that a tenant must list you as an additional insured under their renters insurance in the lease, you can transfer some of the risk that is inherent in renting out your property. Extending that coverage to you as the property owner is often only a nominal charge for the tenant or may even be free of charge.
Property management can be a challenging line of work, but with the right research and preparations, you can set yourself up for success. Click below to learn to read six things you must know as a new landlord!
