Four Must-Have Lease Terms for Residential Landlords

A well written and thorough lease is worth its weight in gold to residential property owners.  And let’s face it, landlords rent their property for one reason: to make money.  To ensure you turn a profit on your residential rental property, here are four terms you should consider including in your lease.

A Forfeiture Clause

Every state has different laws governing lease agreements, but some state requirements can be avoided completely through careful drafting of lease language.  If a tenant violates the lease terms for any reason, most states require landlords to send the tenant a certified letter with a demand that the tenant remedy the situation.  A majority of states also require landlords to wait a specific amount of time after sending this letter, which gives the tenant ample time to respond.  Only after these actions are taken will a court determine that the tenant forfeited his right 

But landlords who use a well-crafted forfeiture clause in their lease can often eliminate these two requirements.  Not only does the clause save time by not making the landlord wait to start eviction proceedings, it completely eliminates the common argument by tenants that they did not receive notice from the landlord about their breach of the lease.  

A Partial Rent Acceptance Clause

Under most state laws, a landlord attempting to evict a tenant should not accept partial rent payments from the tenant.  Many states consider the continued taking of a tenant’s money as an unwritten acceptance of the tenant’s continued occupancy of the home.  This typically halts all pending eviction actions, putting the landlord in a difficult position. 

But in some states, a carefully drafted lease can avoid this treatment.  By including language in the lease that states accepting rent from a tenant who has breached the lease is not considered approval of the tenant’s continued occupancy, the landlord can retain the right to eject the tenant from the home while still protecting his financial interests. 

A Repairs & Maintenance Clause

Most states require a residential landlord to maintain all portions of the home that affect health and safety.  This typically includes the air conditioning and heating unit, the plumbing system, the electrical system, appliances supplied by the landlord, and other similar items.  But the brunt of all other repair and maintenance costs—absent a specific lease clause—may be placed on the landlord’s shoulders.  

A carefully written lease can ensure a tenant keeps the home clean and sanitary, and in the event they don’t, the landlord will be able to remove the offending tenant.  At minimum, the lease should include a clause stating what types of repair and maintenance the landlord is responsible for and what types the tenant is responsible for.  To increase protection, it is smart to include a clause requiring the tenant to notify the landlord immediately of any defective or dangerous conditions in the rental property, with specific procedures for handling the response to such complaints. 

An Attorney Fee Clause

Although all states have differing laws regarding payment of attorney fees, it is always smart to include a clause in a residential lease agreement requiring the tenant to pay for the landlord’s attorney fees and costs in the event of an eviction.  Using an attorney fee and costs clause will shift the cost of litigation from the landlord to the tenant, allowing the landlord to recoup some or all of his legal expenses. 

But be mindful of certain limitations and legal quirks in various states.  For example, attorney fee provisions in California leases are always considered reciprocal, regardless of their wording.  This means not only can a landlord recover attorney fees from a tenant if an eviction is required, but the tenant can recover attorney fees from the landlord if the tenant successfully staves off eviction.  And in North Carolina and other states, attorney fees are capped at 15% of the outstanding balance owed by the tenant on the lease.

Whether you are preparing a new lease, facing a conflict with a current tenant, or you have already suffered a breach, hiring aggressive and confident counsel is the best way to protect your rights.