Landlords: What You Need to Know to Draw Up a Lease

For those planing to become landlords, what you need to know to draw up a lease could fill a book. Fortunately, you can usually find a decent lease template that contains all the necessary legal terms to protect your interests, and condense it into a document easy to understand by your tenants.

First, make sure you get full information on all the people who will be living in the residence. You have the right in most states to ask for a criminal, credit and rental history for each person over the age of 18. Put a clause in the lease that any additional tenants must be approved before they can move in, and that an additional fee will apply.

Next, demand that the tenant carry renters insurance, or charge enough to cover a policy (these policies are typically around $25 a month for $20,000 worth of coverage - not a huge investment.)

Clearly state any rules and regulations of the local homeowners association, as the association will go after you and not the tenant if the home is not in compliance. Make it clear that if the grass is not kept cut, you will cut it and a fee will apply, or simply roll lawn care into the rental cost.

List what is covered by you as the landlord and what the tenant must cover in the way of utilities; include electric, gas, water, trash collection, phone, cable and internet.

The rent amount should be stated as well as the firm due date, any grace period applicable, and relevant late fees. You can also direct what form of payment is acceptable, and offer an incentive if your tenant pays the rent prior to the due date.

Set rules regarding routine maintenance; for example, changing a light bulb is the tenant's job, but they should call you or a designated maintenance man for major problems such as a broken air conditioner or a plumbing problem.

Announce whether or not the lease is renewable, and what the rent increase will be if the tenant decides to exercise that option. Also make clear what type of notice must be given - most states allow you to demand a 30 day notice in writing, but this information must be in bold face and underlined in the lease to be enforceable.

State under what terms a security deposit will not be returned, and what the specific fees are which can be retained - such as $100 per room to re-carpet, or $20 per hole in the drywall that must be repaired. this will discourage tenants from being careless with your property. Also note if there are any nonrefundable deposits, such as for pets.

Finally, describe the eviction process in accordance with local law. Make two copies, sign each and have the tenant sign, and each of you should retain a copy, along with a walk-through inspection list before you hand over the keys.

These landlord tips for drawing up a lease should help you protect yourself and your property, and secure good tenants who will pay on time and take good care of your property.

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