Lease Agreement Clauses to Look For
Of course, every lease needs to specify the parties, the property, the length, payments, and other basic terms. However, you want to be sure of several legal clauses in your lease (or at least know what you are deciding to leave out). It may be a free lease agreement form, but it can cost you plenty if it lacks the proper clauses, and some of these aren’t obvious to a layperson. Your property is valuable, and low-cost protection can be found in proper legal clauses put in your lease agreement form. There are additional clauses and addendums, such as lead paint disclosure, which may be required by law. If you don’t include them, you will be taking significant risks (lead paint disclosure applies to properties built before 1978, for example). Those clauses aren’t included in this list but may be just as essential depending on your circumstances. I’m not claiming this list is exhaustive, but if the lease you’re using doesn’t have these, I’d be concerned if I were you.
Main Lease Clauses to Include
Time is of the Essence – without this clause, you may well find that “due on the first” doesn’t mean due on the first at all. Lawyers thought this one up, for sure.
Notice Period – I see lots of landlords get tripped up on this one. Most states set the minimum notice period for residential properties by law. In my case, it is seven days for non-payment. However, that minimum has to be written into the lease, or the law will default to something else – often the payment period, which means that if you get paid monthly, then if they don’t pay, you have to give them a month’s notice rather than seven days notice.
Sublet or Assignment – A lease is an item that can typically be transferred, just like other property rights. However, you want to make sure that tenants can’t sublease (unless you want to end up with a serial killer, or at least someone you wouldn’t want to rent to, for a tenant) or assign the lease. On the other hand, you also want to clarify that your right to transfer (to heirs, someone you sell the property to, etc.) remains intact.
Right of Access – You usually can’t say you have the right of access at any time or even “during daylight hours” because, in most states, that’s probably not legal. It would be best to find out the minimum requirements for entry notice in your area and write those in. Otherwise, you could be committing forcible entry of some type.
Use – to make sure that the house you rented for people to live in isn’t used as a hair salon or something worse, and it should name who is allowed to occupy.
Indemnification – tenants can do all kinds of nasty, crazy things that might involve your property and may cause harm or incur costs. You will be the perceived deeper pocket that the harmed parties (which can be anyone, including your local government) may prefer to go after. Protect yourself from your tenant’s stupidity as much as you can by holding them responsible.
Non-Waiver – another one only a lawyer could have thought up. If you accept a partial payment and don’t have a non-waiver clause, in some cases, the tenant can argue successfully in court that you waived the rest of the payment.
Remedies Cumulative – don’t limit yourself to one method of recovering damages from a tenant.
Joint and Several – be sure that all tenants are responsible for all the rent, so you can say you don’t care about whatever “arrangements” they had among themselves. You can laugh when a roommate says they only owe you their “half.”
Notice Method – don’t give a tenant an opening to say they gave you oral notice or tweeted you or some nonsense. You must specify a proper method (in writing, etc.) or prepare to waste time arguing later.
Choice of Law – decide ahead of time where you want to duke it out in court, one most convenient for you. At a minimum, you want to keep it in your state’s courts (not federal).
Entire Agreement – head them off at the pass when they start lying that someone “told” them something.
Severability – Keeps the rest of your lease intact if part of it is found invalid by a court.
Repair responsibilities – in most cases, you can make tenants responsible for minor repairs, but on “warranty of habitability” issues like heat, water, and electricity, you cannot make the tenant responsible in most cases. In any case, you want it clear what you are and aren’t responsible for (within legal limits like habitability). Otherwise, a court may find you responsible for things you didn’t imagine you could be. It is hard for the creator of a free lease agreement form to know your intentions in this area, and you may need to look at several samples and draft your own for this section. If you leave this out, then statutory or common law will likely have a default, and you may not like it.
Pets – surely so obvious it hardly needs mentioning, but if you don’t specify “no pets allowed” or the conditions (additional fees, deposits, limits) for pets, tenants could have a hundred cats, and you could not evict them for breach. Maybe health code violations or something, but not breach.
Utilities – of course. Unless you want to pay all the utilities.
I would never use any free lease agreement form for residential renting that did not include all those above clauses worded satisfactorily. Sadly, almost no free rental contract forms that we’ve seen do so. Check our reviews to see what we chose as the best free lease agreement.
Secondary Lease Clauses to Consider
Take a look at some other very important clauses that, in most cases, should be in every residential lease but are sometimes less essential.
Failure to deliver possession – describes what will happen, including holding you harmless, if for some reason you can’t deliver possession or the old tenants don’t move out like agreed, etc.
Collection/court costs – not always essential, but it helps to clarify that the tenant will be paying enforcement costs if they breach.
Deposit return conditions – make sure everything that must happen for you (keys returned, no damage, 30-day notice, whatever) is spelled out clearly.
Abandonment – a tricky issue; in most cases, the only safe method to repossess is to go through court eviction (forcible detainer in some states). However, you can attempt to create an agreement that if it is clear the premises are abandoned, you can simply take possession. Also, you want to cover the tricky area of “stuff” they leave behind, basically saying you aren’t responsible for it.
Courts are tricky on this, but if you don’t put something in the lease, a court may be more likely to hold you responsible for all the worthless junk (“valuable possessions,” the tenant will say) the tenant leaves behind. If this area is a big concern to you, a free lease form may not be enough. You may need to have a lawyer advise you on your state’s bailment laws, at least for this section.
Comprehensive Damage Listing – an addendum that is required in URLTA areas. Why not just incorporate it into the lease? So far, we’ve got no problem doing this, but we haven’t got many free forms to pick up on this.
Renewal – specify ahead of time what happens at the end of the lease.
Fair Housing Notice – many states require some sort of Fair Housing procedure, like giving the prospects a pamphlet about that state’s fair housing laws. Not only do we give them the pamphlet with the application, but we also incorporate it in the lease with a clause acknowledging they have received it.
FCRA Notice – You need to give this notice if you might report payment performance to a credit bureau, for instance. We don’t usually report to credit bureaus, but including this clause makes it clear we might, which might make your tenant think twice before cheating you.
Authorized to Manage/receive notices and service – some states require your lease include language identifying the person who is explicitly authorized to manage the properties, receive notices, and service.
Receipt of Copy – some states require an acknowledgment that the tenant has gotten a copy of the lease document. Even where not required, that is not a bad idea.
Deposit Account Information – many locations require you to give the account information (bank, account number, etc.) of the account to keep the tenant deposits. Almost no free forms include this clause.
Your free lease agreement form won’t likely have all the clauses from this second group, but it should have most of them and may need all of them, depending on your specifics.