One of the best tips for new investors we can provide is to have a strong lease agreement. Your lease will protect your investment property, your rights as a landlord, and your tenant’s rights as well. It also sets forth all the expectations you have for the tenancy and the responsibilities that fall to both you and your resident.
Lease agreements should be customized to reflect the needs of your property, however there are a few key inclusions that must be part of any legally compliant and enforceable lease agreement.
First things first, you’ll want to have your tenant’s name as well as the address of the property they’re renting. All adult tenants should be listed on the lease agreement after being screened. Minors who are under 18 years of age are not necessarily financially responsible for the rent, but they should be identified in the lease agreement as well.
You’ll want to put your name and contact information as the owner of the property as well. If you’re working with a Kansas City property management company, share that contact information in the lease.
Identify All Tenants and Occupants
List the names and the contact information for every adult who will occupy the property. This makes all of those residents responsible for paying the rent and taking care of the home. If you have to evict or terminate the tenancy, you’ll be able to remove all the tenants listed, which is why it’s so important to have them identified in the lease agreement. Children and minors who are not financially responsible for the lease can simply be listed by name and age.
Lease Term and Renewal Instructions
The lease must include a specific start date and end date. Include instructions on what will happen at the end of the lease period. Some agreements will immediately become month-to-month leases. Others will require a renewal or a notice to vacate 30 or 60 days in advance of the lease ending.
Security Deposit and Move-In Funds
Your lease agreement should reflect how much of a security deposit was collected. You can also include information about what the tenant will be expected to do at the end of the lease term in order to receive a full refund of that deposit. Make sure you also account for any additional deposits or fees that were collected, such as a pet fee or a deposit for mail keys, garage door openers, etc.
Rent Collection Policy
It’s very important that your lease agreement clearly states and reinforces your rent collection policy. You cannot be too detailed here. Include language that reflects how much rent is due, when it should be paid, and how it should be paid. If you have a grace period, include that. Make sure you list the consequences of missing or late rent. You’ll want to list your late fees and explain how they’re collected.
Tenant Maintenance Reporting Policies
Instructions on how to request maintenance and repairs should be included in the lease. Be specific about what tenants are responsible for, such as air filter changes. Explain how to report an emergency versus a routine repair. Make sure the lease is clear about what constitutes an emergency. You don’t want tenants calling in the middle of the night because a closet door is stuck.
If your tenants are moving in with pets, you’ll want to have a specific and detailed pet policy included in the lease. It should reference whether a pet fee or a pet deposit is collected, and explain the amount of pet rent that may be charged. Mention the tenant’s responsibilities in terms of cleaning up after the pet, keeping dogs on leashes, and monitoring the animal’s behavior. You should also reference penalties for violating the pet policy.
Rules and Requirements
Include a section in the lease agreement that discusses what is permitted and what is prohibited. If you don’t want tenants smoking inside the property, for example, that needs to be in the rules section of the lease. You should also reference noise, quiet hours, parking, overnight guests, and criminal activity. Rules about your own conduct should have a section, too. Indicate how much notice you’ll give before entering the property for an inspection, for example.
If your rental property is in an HOA, be certain that those rules and regulations are included as an addendum.
These are just a few of the important terms you need in your lease agreement. If you’d like help getting started or you’d be interested in hearing additional tips for new investors, please contact us at Action Properties.