7 Extraordinary Lease Clauses That I Can’t Live Without
Most standard leases will include basic information about the agreement, such as property address, dates, names of tenants, rent amount, security deposits, etc. However, the Devil is in the details.
Most experienced landlords will tell you that the Devil is in the details.
The real headaches come when a situation arises that is not addressed in the lease. By that point, the landlord is emotionally involved in the issue, and can’t truly be objective in his/her decision on how to handle it.
To help you prevent some headaches, I’ve listed seven of my favorite (and useful) lease clauses in the section below.
These clauses have saved me dozens of hours of correspondence, and thousands of dollars in legal drama, simply because I put them in the lease.
With that said, I am not a lawyer so you should consult with a licensed local attorney before using these in your own leases. You are responsible for performing your own research and complying with all applicable laws in regards to your unique situation.
Though a legal precaution, this is perhaps one of the most important clauses in a lease. This clause states that if one aspect of the lease is found to be illegal, the rest of the agreement will still be legally binding.
SEVERABILITY. If any provision of this Agreement or the application thereof shall, for any reason and to any extent, be invalid or unenforceable, neither the remainder of this Agreement nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforced to the maximum extent permitted by law.
Without this clause, a judge who has found one small clause to be illegal, even if accidentally so, might consider the entire lease to be void. No matter how rock-solid your lease is, you should include this clause in your lease.
2. Late Fees and Allocations
Though I’ve never had a late rent payment since I started using Cozy to collect rent, I always include this clause – just in case my tenant turns rebellious.
Further, if you don’t specify a late fee in your lease, it will be nearly impossible to charge a late fee after-the-fact.
Please check your state laws because some have statutes that require a specific “grace period” and limit the amount you can charge.
Regardless, this clause should specify the exact amount of the fee, the time at which it will be assigned, and if there are any additional, daily late fees for nonpayment.
LATE FEE AND ALLOCATION OF PAYMENTS. In the event that any rent payment required to be paid by Tenant(s) hereunder is not paid IN FULL by the start of the SECOND (2nd) DAY OF EACH MONTH, Tenant(s) shall pay to Landlord, in addition to such payment or other charges due hereunder, an initial late fee as additional rent in the amount of 5% OF THE MONTHLY RENT AMOUNT. Further, a subsequent late fee of TWENTY DOLLARS ($20.00) PER DAY will be incurred by the Tenant(s) for every day payment is delayed after the 2nd day of the month.
All future payments will be allocated first to any outstanding balances other than rent. Any remaining monies will be allocated lastly to any rent balance.
The last sentence in this clauses ensures that all fees are paid first with whatever money the tenants choose to give me. The reason I allocate payments first to fees is because it’s much easier to sue a tenant for “unpaid rent” than it is for an “unpaid late fee.”
If you don’t outlaw subleasing, your tenants will do it when you’re not looking. Worse, you can’t penalize them for it.
You might be able to terminate the lease, but that’s not always preferable because then you have to find new tenants.
I always prefer to allow subleasing, for a price. I give my tenants the option to sublease, but they have to pay a one-time fee. Further, the sublessee has to submit an application and is subject to my normal screening process and subsequent approval, only to eventually sign a subleasing agreement.
ASSIGNMENT AND SUBLEASING. Tenant(s) shall not assign this Agreement, or sublet or grant any license to use the Premises or any part thereof without the prior written consent of Landlord. Consent by Landlord to one such assignment, subletting or license shall not be deemed to be a consent to any subsequent assignment, subletting or license. An assignment, subletting or license without the prior written consent of Landlord or an assignment or subletting by operation of law shall be absolutely null and void and shall, at Landlord’s option, terminate this Agreement and start the eviction process of all Tenant(s) and occupants.
If subletting is approved by the Landlord, a one-time fee ofTHREE HUNDRED DOLLARS ($300.00) PER SUBLET, is assigned to the lease. All subletting individuals are required to submit an application to the Landlord for evaluation and screening. Landlord reserves the right to reject any sublessee that does qualify. If any sublets are initiated by Tenant(s) without the prior written consent of the Landlord, for each individual sublet, Tenant(s) will be assigned and responsible for the subletting fee, for each sublet, spanning the entire term of this Agreement.
Subleasing is common with my group houses. Many times, three of the five tenants will travel home for the summer and ask to sublet their room.
The answer is always “yes” and then almost instantly, my wallet feels $900 heavier. To help with the subleasing fee, many of the tenants increase the cost of their room, thereby offsetting the fee (which I’m fine with).
4. Joint and Several Liability
In respect to a residential lease, joint and several liability means that each tenant is jointly AND individually responsible for the entire rent amount and for any damages.
It allows you to consider all tenants as a single entity, for the purposes of giving notice, serving court documents, collecting rent or suing for damages.
MULTIPLE TENANTS OR OCCUPANTS. Each Tenant(s) is jointly and individually liable for all Lease Agreement obligations, including but not limited to rent monies. If any Tenant(s), guests, or occupant violates the Lease Agreement, all Tenant(s) are considered to have violated the Lease Agreement. Landlord’s requests and notices to any one Tenant(s) constitute notice to all Tenant(s) and occupants. Notices and requests from any one Tenant(s) or occupant (including repair requests and entry permissions) constitute notice from all Tenant(s). In eviction suits, each Tenant(s) is considered the agent of all other Tenants in the Premise for service of process.
Many states have a set list of landlord and tenant obligations, in which either party can terminate the agreement if the other doesn’t fulfill his or her duties – with proper notice.
I go a step further and actually list the triggers for default in the lease, so that the tenant is aware of them. The logic is that if I ever have to terminate the lease for a violation, the lease should back me up.
DEFAULT AND COMPILING OF RENT. If Tenant(s) fails to comply with any of the financial or material provisions of this Agreement, or of any present rules and regulations or any that may be hereafter prescribed by Landlord, or materially fails to comply with any duties imposed on Tenant(s) by statute, within five (5) days after delivery of written notice by Landlord specifying the non-compliance and indicating the intention of Landlord to terminate the Agreement by reason thereof, Landlord may terminate this Agreement. If Tenant(s) fails to pay rent when due and the default continues for five (5) days thereafter, Landlord may, at Landlord’s option, declare the entire balance (compiling all months applicable to this Agreement) of rent payable hereunder to be immediately due and payable and may exercise any and all rights and remedies available to Landlord at law or in equity and may immediately terminate this Agreement.
Tenant(s) will be in default if: (a) Tenant(s) does not pay rent or other amounts that are owed; (b) Tenant(s), guests, or occupants violate this Agreement, rules, or fire, safety, health, or criminal laws, regardless of whether arrest or conviction occurs; (c) Tenant(s) abandons the Premises; (d) Tenant(s) gives incorrect or false information in the rental application; (e) Tenant(s), or any occupant is arrested, convicted, or given deferred adjudication for a criminal offense involving actual or potential physical harm to a person, or involving possession, manufacture, or delivery of a controlled substance, marijuana, or drug paraphernalia under state statute; (f) any illegal drugs or paraphernalia are found in the Premises or on the person of Tenants(s), guests, or occupants while on the Premises and/or; (g) as otherwise allowed by law.
As you may have noticed, upon default, I force the compiling of rent for the remainder of the lease term. Meaning, if my tenants start selling drugs from my rental in month three of a 12-month lease, I can still hold them responsible for the other nine months of rent (or until I find a replacement if I’m forced to mitigate damages).
Related: Landlord-Tenant State Laws and Regulations. Your state will have their own rules about how many days are required before you can terminate the lease after nonpayment or a lease violation.
Lease renewal is a tricky thing. Some landlords prefer an automatic renewal approach, however, I prefer not to be tied down like that.
All of my fixed-term leases don’t automatically renew, however I still require a tenant to give me 60 days notice of their intent to move out at the end of the lease. Meaning, the assumption is that they will be renewing (assuming the rent doesn’t go up too much), even though the lease doesn’t automatically renew.
It just means that we need to sign a new lease if they want to stay.
The reason for this clause is that it guarantees that I have 60 days notice to try to find a new tenant. If they fail to provide 60 days notice of non-renewal, they are still held responsible for 60 days of rent, unless I can find a replacement sooner.
I usually set a Google calendar reminder, and I try to notify my tenants of their responsibility at 70-75 days from the end of the lease – so that they can start thinking about their options.
RENEWAL. This lease agreement is not constructed to be automatically renewed at the end of the term for which drawn, however the intent to renew this agreement by the Tenant(s) will be assumed. All parties will need to sign a new agreement in order to activate a renewal term. If Tenant(s) intends to vacate the Premises at the end of the lease term, Tenant(s) must give at least sixty (60) days written notice prior to the end of this lease. If sixty (60) days’ notice of non-renewal is not given prior to lease term, Tenant(s) are responsible for the equivalent rent amount due for the sixty (60) days after notice is given, even though this lease does not automatically renew.
7. Use of Premises
Though I can’t discriminate based on familial status, I can restrict the number of people based on the number of people in the initial group of tenants. Meaning, if a family of four moves in, the lease should restrict usage to only those four people.
This clause keeps existing tenants from moving in unapproved “family” (yeah right), and keeps unemployed boyfriends or girlfriends from becoming rogue tenants.
USE OF PREMISES. The Premises shall be used and occupied by Tenant(s), for no more than FOUR (4) persons exclusively, as a private individual dwelling, and no part of the Premises shall be used at any time during the term of this Agreement by Tenant(s) for the purpose of carrying on any business, profession, or trade of any kind, or for any purpose other than private dwelling. Tenant(s) shall not allow any other person, other than Tenant’s immediate family or transient relatives and friends who are guests of Tenant(s), to use or occupy the Premises without first obtaining Landlord’s written consent to such use. Any guest staying in the property more than 2 weeks in any 6 month period will be considered a tenant, rather than a guest, and must be added to the lease agreement. Landlord may also increase the rent at any such time that a new tenant is added to the lease premise. Tenant(s) and guest(s) shall comply with any and all laws, ordinances, rules and orders of any and all governmental or quasi-governmental authorities affecting the cleanliness, use, occupancy and preservation of the Premises.
BONUS: Surrender of Premises
Last but not least, this clause saves the day every time I have a tenant moving out.
A few weeks before they plan to move out, I simply remind them of this lease clause and send them the “move-out cleaning instructions,” which details my expectations and suggestions to ensure they get their full deposit back.
SURRENDER OF PREMISES. Tenant(s) have surrendered the Premises when (a) the move-out date has passed and no one is living in the Premise within Landlord’s reasonable judgment; or (b) all Premise keys and access devices have been turned in to Landlord – whichever comes first. Upon the expiration of the term hereof, Tenant(s) shall surrender the Premise in better or equal condition as it were at the commencement of this Agreement, reasonable use, wear and tear thereof, and damages by the elements excepted. Tenants are responsible for hiring, coordinating, and paying for a professional cleaning of all carpets prior to lease end.
Where can I get a Full Lease?
Though I think these clauses are helpful, they are not a complete lease.
There only four websites that I recommend for premium, state-specific leases.
I, nor Cozy, are NOT affiliated with any of these companies. I just think they have excellent state-specific residential lease templates. You can read more about them on the Landlord Directory page.
Pay it Forward
Congratulations on reading the whole article! At 2,472 words, it’s about 4 times longer than my normal.
I’m curious to hear your stories. What are your personal or favorite lease clauses and how have they helped you with your rentals?
Let me know in the comments section below.