Renting apartments and leasing homes can be tricky business, especially when it comes to legal issues.  Lease Agreements are legally binding contracts and the backbone of our business.  Owners and landlords need to be absolutely certain that their leases are meeting both the required legal standards, but also working hard to protect their investment.

Below are a few terms and clauses that should be included in EVERY lease.  These clauses will help protect you, your tenants, and your rental home.  We always recommend having an attorney look over your final lease template to ensure that you are compliant with all state and local laws.


Right to Entry

As the owner or owner’s agent, you’ll want to be sure that your leases include a clause allowing you or your agent to enter the property with reasonable notice.  Your state laws may vary on this, but in Wisconsin, we must give a tenant 12-hours’ notice prior to entry.  Here’s how we write it, but you may need to tweak it to fit both your personal preferences and your legal requirements:

The Landlord may enter the Premises occupied Tenant, at reasonable times with at least 12-hours’ advance notice, to inspect the Premises, make repairs, show the Premises to prospective tenants or purchasers, or comply with applicable laws or regulations.  The Landlord may enter without advance notice upon consent of Tenant, when a health or safety emergency exists, or if Tenant is absent and the Landlord believes entry is necessary to protect the Premises or building in which they are located from damage.

Maintenance

No matter how new your property is, you are bound to have maintenance calls.  In fact, we often find that our new construction will have more service calls initially than an older home will have all year.  Your lease should include any items that the tenant is specifically responsible for, such as: changing furnace filters, checking smoke & carbon monoxide detectors, and keeping the premises clean & sanitary.

You will also want to include a requirement that tenants notify you immediately of any defective or dangerous conditions, as well as any maintenance or repair issues.  Be sure to include a statement that holds tenants liable for abuse or neglect as a result of their actions or inaction.

Last on maintenance, include an additional caveat that when maintenance issues are reported, the tenant is automatically giving you or your agents the right to enter the property.  This clause will give you the legal right to enter without additional notice; however, it is always best practice to communicate with your tenants with a courtesy call to let them know you’re coming.

Indemnity

This is a big one that a lot of owners and landlords fail to include.  Lawsuits can quickly and easily drain your business financially and harm your reputation.  Including an indemnity clause is essential to protecting the interests of your rental agency.  Our indemnity clause reads as follows:

Tenant agrees to indemnify and hold Landlord harmless from and against any and all claims for damage to property or personal injury costs, including, but not limited to, attorney and legal fees arising from use the rented unit. 

Landlord, Landlord’s agents and/or employees, shall not be liable for any loss of or damage to any personal property in or about the premises arising from any cause, even if such loss or damage is caused by the active or passive acts or omissions or negligence of the Landlord, Landlord’s agents and/or employees.  

Landlord, Landlord’s agents and/or employees, shall not be liable to Tenant for injury or death as a result of Tenant’s use of the premises, even if such injury is caused by the active or passive acts or omissions or negligence of the Landlord, Landlord’s agents and/or employees.  

Pet Policy

If you do not allow pets, be sure that your lease agreement is clear on the subject.  While we do allow pets in specific units, our general lease includes the following language:

Tenant acknowledges that pets (including mammals, reptiles, birds, fish, and insects) are not allowed upon the premises under any circumstances; this includes no visiting pets and no pet sitting.  In the event a pet enters the premises at any time, for any length of time during the tenancy, Tenant is responsible for the following charges, which are considered damages beyond normal wear and tear as defined in Wisconsin Administrative Code ATCP 134.06(3) and may be deducted from the security deposit:

  1. Tenant is in violation of the lease agreement and subject to eviction and all lease breaking costs.
  2. Tenant shall pay for all costs to repair/replace soiled carpets (removal of urine and feces stains and odor).
  3. Pest extermination.   

Tenant agrees to pay all costs of said carpet repair; damage to flooring; exterminating costs; damages to property, and any outdoor lawn care/landscaping damages and specifically authorizes Landlord to deduct any charges from the security deposit if not sooner paid.  Nothing herein shall be construed as an authorization for Tenant to keep a pet on the premises under any circumstances.

For units where pets are allowed, compose a separate pet agreement that specifically outlines what pet(s) are authorized on the property (“Sally,” Chocolate Lab, 10 years, 50 lbs.), charges for pet rent and/or additional pet deposit, and rules related to the pet(s).  Be sure that your rules address licensing, vaccinations, damages for both in the home and the lawn, leash requirements, and animal safety/abuse.

You’ll want to check with your local municipality about any pet-specific laws they may have that you’re not aware of.  Some local laws will restrict breeds, have leash requirements, and other conditions to pet ownership that you’ll need to be absolutely certain that you’ve covered in your lease.

Limits on Occupancy

Your lease agreement should include a clear statement that restricts occupancy of the unit to those on the lease and their minor children or dependents only.  This allows you to determine who lives in your rental property, ideally only those who you have met and screened prior to signing a lease, and gives you the right to evict tenants who sublet or add roommates without authorization.

We use the following verbiage to outline who is authorized to live on the property:

This Lease of the Premises identified below is entered into by and between the Landlord and Tenant (referred in the singular whether one or more) on the following terms and conditions:

Tenant(s):

Tenants (Financially Responsible)

Landlord:

Company Name

Premises: 

Unit Address

for use as a private residence only. 

The apartment will be occupied exclusively by the resident(s) listed above and their dependents. The Owner/Agent must approve unauthorized occupants living in the premises for longer than 7 consecutive days.

 Length of Tenancy

Whether you have a fixed term lease or a month-to-month arrangement, be sure to specifically outline the length of tenancy in your lease agreement.  You’ll also need to include what happens at the end of the term.  Does it automatically roll into a month-to-month agreement or do they need to renew for another full term?  Be clear on this and communicate with your tenants on their plans for the future.

Here are two examples of how we handle this topic in our leases:

The terms of this tenancy shall commence on Lease Start Date and end on Lease End Date.  This Lease is only for the stated term and is NOT automatically renewable.  Landlord and Tenant must agree in writing if tenancy is to continue beyond the last day of the rental term. 

The Lease Agreement begins on Lease Start Date and will continue as a month-to-month tenancy.  Tenant is required to give notice of intent to end the Lease Agreement no less than 60 days prior to the last day of the month the Tenant wishes to reside in the residence.  

 

Financial Terms

Clearly state the monthly rent amount, as well as when / where / how to pay it.  You’ll also want to include your late fee information.  Do you have a grace period?  What is the penalty for paying late?

Here’s how we handle this part of our standard lease:

ALL TENANTS, IF MORE THAN ONE, SHALL BE JOINTLY AND SEVERALLY LIABLE FOR THE FULL AMOUNT OF ALL PAYMENTS DUE UNDER THIS LEASE.

Rent amount of Monthly Rent due on or before the 1st day of each month.  Rent shall be paid electronically. The first month’s rent and/or prorated rent amount of Prorated Rent shall be due prior to move-in. 

Every month thereafter, Tenant(s) must pay your rent on or before the 1st day of each month with Grace Period Days of grace period. The following late fees will apply for payments made after the grace period:

Late fee rule: $45.00
Daily late fee: $5.00

Payments must be made electronically through use of the Tenant Online Portal.  Tenant(s) will be provided with login information and must set up automatically recurring payments to be deducted from Tenant(s)’ bank account or credit account on or before the 1st day of each month.  

Also include what you charge for returned payments:

A charge of $50 will apply for every returned check or rejected electronic payment plus the amount of any fees charged to the Owner/Agent by any financial institution as a result of the check not being honored, plus any applicable late fee charges. 

Clearly state the security deposit amount and when it must be paid.  You’d be dumbfounded at how many tenants are surprised that they have to pay the deposit immediately.  Also outline what the deposit can and cannot be used for and when it will be returned to them.  Some states require landlords to pay tenants for interest earned on security deposits, so be sure to find out if your state is one of them.

Here’s our excerpt, based on Wisconsin requirements:

Upon execution of this Lease, Tenant agrees to pay a security deposit in the amount of Security Deposit Charges, to be held by the Landlord’s Agent.  In the event that interest is earned on the security deposit amount held in trust, the Landlord’s Agent alone will retain any potential interest earnings.  

When Tenant vacates the Premises or if evicted, Tenant’s security deposit, less any amounts legally withheld, will be delivered or mailed to Tenant’s last known address within 21 days after the date established in Wis. Stat. 704.28(4).  Tenant is solely responsible for giving the Landlord his/her new address.  

Under no circumstances is the security deposit to be used for the last month’s rent.  

Addenda

After you’ve finished fine-tuning your standard lease agreement, turn your attention to your addenda.  Here is your opportunity to really hone in on your specific rules and policies for each property.

Legally Required Documents

In Wisconsin, we are required to include a document called “Non-Standard Rental Provisions,” which deals with anything a tenant could be charged for, landlord right of entry, and any other items that may take rights away from the tenant.  We also must provide information about smoke and carbon monoxide detectors.

Many states also require you to outline what utilities are included and those that the tenants are responsible for.

Your state may have documentation that you are required to give tenants, so be sure to do your research.  NOLO has some great legal resources for landlords and offers summary pages for each state’s requirements on landlord/tenant laws.  Check it out here.

All landlords are required to provide a lead paint disclosure and the pamphlet from the EPA to anyone renting or selling a home built prior to 1978.

Specific Policies

You can include as many addendum items as you need and tailor them to individual properties.  For example, we have two subdivisions with restrictive neighborhood covenants.  Therefore, we have an addendum specific to those rentals.

Below are a few examples of addenda that you may wish to include in your lease package:

  • Lease Breaking Policy & Fees – Outline your policy on breaking a lease as well as any fees that you will be charging.  Be very clear as to what your minimum charge is for breaking a lease.  If you allow tenants the option to show their own unit and procure their own subleaser, include that information as well as the caveat that the new tenant must be approved by the landlord.  
  • Pet Agreement – If you have units that allow pets, create a separate addendum to outline your pet policy.  Treat it like a separate lease agreement for their pet, including the pet’s name and description, pet rent amount, pet deposit amount, and any pet-related rules. 
  • Rules & Regulations – This addendum will allow you to input all the rules and policies that you don’t want to include in your basic lease agreement.  Ours is around 50 items and covers things like requiring a plunger next to every toilet, bathroom fan use during and after every shower, recycling requirements, details on tenant maintenance responsibilities and requests, renter’s insurance, etc.   Don’t be afraid to make a long list of items — it is in everyone’s best interest to cover all of these issues at the start of a lease.  

Your lease is the most important document that you will ever create.  It is absolutely crucial that you build it in such a way that you are protecting both your investment and yourself as an owner/landlord.  These simple clauses can make all the difference in the event of litigation.  They also may prevent a few headaches when working with tenant issues, making it easy to point back to a signed lease agreement on any disputed terms.


We again remind you that legal compliance is paramount and you must ensure that you are meeting all laws and requirements specific to your state and local municipalities.  Best practice is to always have your lease and addenda templates proofed by a specialized attorney to ensure legal compliance.  

Posted by: Ali on September 8, 2016
Posted in: Uncategorized