6 Important Lease Terms Landlords Should Include in Every Rental Agreement
Protect your rental real estate investments by including these six lease terms in every tenant rental agreement.
Do your rental agreements include important lease terms needed to protect your rental real estate investments? Remember, each state has its own set of landlord and tenant laws that often use different lease terminology as well. It is important for landlords to have a sound understanding of these legal contracts to avoid costly legal issues. Below, you will find six important lease terms landlords should include in all rental agreements, no matter where their rental property is located.
Names of All Adult Tenants
Landlords should name all adults living in the rental property as tenants and have each named adult sign the rental lease agreement. This lease term best practice applies to both married and unmarried couples as well as adult children who will be living in the rental home. Why do landlords need each adult listed as a tenant?
By doing this, each tenant becomes fully responsible for all of the terms of the lease. If a scenario arises where one tenant is responsible for a lease violation, then the landlord can terminate the tenancy for all tenants on that lease. Also, let’s say three adults are on the lease and two vacate the rental property leaving the third behind. Because all were named on the agreement and signed the lease, the landlord can legally seek the entire rent payment from the tenant still residing in the property.
Lease’s Term of Tenancy
This important lease term states whether there is a fixed-term for the lease or if it is a month-to-month lease, which is often referred to as a rental agreement in some states. Fixed-term leases generally last for 12 months unless the landlord and tenant negotiate another time frame (6 months, three months, etc.). Month-to-month leases usually self-renew for another month unless the landlord or tenant terminates the lease.
Amount of Rent and Payment of Rent
Listing the amount of rent the tenant is to pay each month is obviously an important part of the lease agreement. Landlords should also include when the rent payment is due, what the grace period is before rent is considered late, how the late fee costs and when the landlord can begin eviction proceedings for non-payment. This section of the lease should also explain acceptable rent payment methods (e.g., check, online payment, etc.) and the charges for bounced checks.
Rental Lease Occupancy Limits
This important lease term limits the occupancy of your rental property to tenants you screened, approved and allowed to sign the lease. Basically, it states that your North Carolina rental home is the residence of only the adult tenants who signed the lease and their minor children. The occupancy limits clause gives a landlord the legal right to evict unauthorized tenants who move in or tenants who decide to sublet the rental unit.
Security deposits can be a problem if not handled correctly. In North Carolina, the Tenant Security Deposit Act spells out the legalities of security deposits for landlords and tenants. But remember, the laws for security deposits differ from state to state. Landlords should make sure their rental leases, at a minimum, spell out the limit, use, and return of a tenant’s security deposit.
Repairs and Maintenance
Your tenants should have a clear understanding of their responsibilities when it comes to rental property repairs and maintenance. Landlords should spell these out in the lease so that tenants are informed of their responsibility to keep the property clean, pay for any damage incurred to property, report any problems or emergencies and place restrictions on any property alterations. Along with these tenant responsibilities, repercussions for violating these lease terms should be written into the agreement as well.
The six important lease terms shared above are only the tip of the iceberg when it comes to rental property leases. Pet policies, restrictions on illegal tenant activity, landlord’s right of entry to the rental property, and termination of the lease are just a few more common lease terms to add to that list. Landlords who do not have a sound understanding of leases and federal, state and local laws risk losing money and violating the law.
To avoid costly missteps and minimize exposure to liability, we recommend landlords work with an experienced property management company in North Carolina. Red Door Company’s custom lease agreement and expert negotiating skills put you in the strongest possible position as a landlord. Contact us today to learn more about our services and how we can help you protect and grow your North Carolina real estate investments.