The lease form that you use needs to comply with your State’s landlord/tenant law. Some states, such as Georgia and Texas, have form leases prepared by the State Realtor Associations which comply with the law and are widely used within the State. One of the benefits of using a lease form that is widely used is that your local judge is more likely to be familiar with that form and less likely to dispute specific clauses. They will apply their judgments more toward how the blanks were filled in and the merits of the individual case. If you use a specific lease form that is very landlord friendly, then you are at risk for a judge that determines the lease itself doesn’t comply with the law so now the issues will be resolved as if there is no lease and the tenant is a tenant at will. It might also influence the judge to think that this rich landlord (you) is trying to take advantage of this poor tenant. You will not enjoy how the rest of that hearing goes.
With whatever lease form you use there are several lease clauses that can make your arrangement with the tenant easier to administer and enforce. Remember that the lease is a civil contract and enforced in a civil court. If your lease permits the landlord to show the property to prospective tenants and buyers during the last ___ days of the lease, but the current tenant refuses to grant you access to the property for showings, then your current tenant is in violation of the lease. This doesn’t give the landlord the right to come to the property with the lease in hand and force their way in to show the property. This is called “criminal trespass” and the landlord is likely to find themselves in handcuffs. When the tenant failed to comply with the lease, the landlord now has the right to terminate the lease and evict the tenant. But the tenant is already moving in a few weeks. So there is not a practical way to solve the problem – unless you make sure that you add a clause like the “Failure to Grant Access” clause which would read something like “ Tenant agrees to pay $________________ for each incident where Tenant denies Landlord access to the Premises (“Denial of Access Fee”) as described elsewhere herein.” In order to make this enforceable our lease form includes a general clause to cover that certain lease violations financially harm the landlord and so there are “damages” to which the landlord is entitled.
“Liquidated Damages. It is acknowledged by Landlord and Tenant with respect to any reference in the Lease to liquidated damages, that the actual damages of the party being paid such damages are hard to calculate and that the liquidated damages referenced in the Lease are a reasonable pre-estimate of the party’s actual damages and not a penalty.”
Other helpful clauses include “Early Termination by Tenant” and “Early Termination by Landlord”. In the case of a tenant terminating early, it is going to happen. People get job transfers and divorces. If you have a good credit tenant, and they want to maintain their credit and comply with the lease, your clause could compel them to 1) Give ___ days notice 2) Pay penalties of $_____ (to landlord) and $____ (to property manager if applicable) to cover the costs of re-renting the property and 3) otherwise comply with all of the requirements in the lease for a departing tenant. If your tenant moves before the lease has expired, then they have “skipped” and you would process their charges and deposit accordingly. The “Early Termination by Owner” clause will provide the landlord with an option to force a tenant to move with ___ days notice and a payment of $___ in the event you want to sell the house.
Other helpful clauses includes:
Notice Not to Renew – make clear that even on month to month agreements the tenant must provide at least ___ days notice to vacate.
Re-Key fee – if the tenant does not return all the keys, garage remotes, HOA pool access cards, etc. when they vacate.
Smoking – no smoking within the premises or a $___ fee will be charged to remove the odor.
Holdover Rate – the daily rate you will charge if a tenant is not out by the required date. Make sure this amount is higher than it would cost the tenant for a motel room and truck rental. Otherwise if your tenant’s next home delivery is delayed, such as a delayed closing for a purchase or the next rental house is not ready yet, they may stay in the property knowing it will take you many weeks to evict them and it is cheaper to stay than move to a motel. This could ruin your sale or next lease. So make sure that the motel option is cheaper to your departing tenant.
Unauthorized Pet Charge.
Lease Renewal Clause – if you are a “buy and hold” investor, consider a lease renewal clause that calls for an automatic one year lease renewal if notice to vacate has not been provided. A common problem that many landlords experience is the non-responsive tenant. Make sure your lease is set up to automatically do certain things even when the tenant does not respond. And a great way to keep your turnkey expenses down is to renew the lease in annual increments automatically.
We use several other clauses and addendums to make the management more effective for us and more profitable for our clients. As you identify your “pain points” you can modify your lease form to address and minimize those problems. Just make sure your clauses comply with your State law.
Excalibur Homes is not just another property management company. We are an investment real estate firm that specializes in helping investors with buying, renovating,, leasing, managing, and selling single-family rental homes throughout Metro Atlanta.
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