I'm about to begin the annual update on my lease for my student rental properties. What started out as 4 pages in 2006 is currently 17 pages long. And I expect it to fill 1/2 of the Library of Congress by the time I retire.
It is extremely rare that students aren't willing to sign a lease because of a clause or section they disagree with. They either want the house or they don't. So I continue to add items in an addendum every single year. These may only be applicable to student rentals, but here are the 3 favorites from my lease:
- -The deposit on the property is 1/2 refundable and 1/2 non-refundable
I use the 1/2 non-refundable portion to pay for the lawn care as students aren't going to maintain the lawn. This system has worked well because the tenants see the value on why I'm doing it AND it doesn't affect the monthly cost of their rent. I've gotten close to zero pushback on this since I started doing it and it has been a huge home run.
- -Tenants must "opt in" and pay if they want pest control
Almost all of the tenants decide against opting in and paying for pest control and that's exactly what I want. We provide quarterly pest control to all properties regardless. If the tenants do happen to opt-in and pay for pest control, we will take the money and provide it monthly instead of quarterly. The purpose of this is not to increase revenue, but to dismiss the complaint that the landlord is responsible for any insect that ever comes in the house. "You had the chance to pay for pest control and you chose not to" is our stock response with pest complaints.
- -"As-Is" Addendum
This particular addendum has been invaluable for students, especially as most of them have never lived outside of a dorm. It specifically states the house is rented in "As-Is" condition and that landlord will make mechanical/safety repairs only and has discretion on any and all other repairs or improvements. It very clearly spells out: "What you see is what you get." This is probably the most important item I've added to my original lease.
It's been my experience that the lease is the most powerful management tool a landlord has and I'm looking for additional suggestions so that I can add to it.
What are some of your favorite lease clauses?
@Colleen F. Have you ever used that to raise the rent? If so, how did that go?
Not a problem I have but I see a lot of people making posts about applying late fees. Have a clause in your lease that clearly states that rent is applied LAST, after all late fees, insufficient funds fees, municipal fines paid by landlord, utility bills paid/incurred by landlord, etc.
For student rentals, I like this one:
7. NO ASSIGNMENT OR SUBLEASE.
The Tenant may not sublease the Apartment or assign this Lease.
Back in my college days (2 years ago, haha) it was very common for Sally to "rent" her apartment during the summer to students that were coming in for just the summer semester as Sally was away for summer break.
That’s a great one Filipe Pereira. I have the same thing in mine. Simplifies things do much.
@Filipe Pereira and @Will Gaston - I'm in a little different situation with my first student rental, as one of the occupants is my own son (and co-owner). But a question about assignment -- my boy's probably not going to be there all summer, and at least one of his roommates won't be either. My lease stipulates no subletting without prior approval (lots of my son's friends are theatre students who desperately need a place to stay for the required summer stock show).
Do you have experience with subletting on approval? How'd it go?
I do have a clause that says tenants pay for first $150 of wear-&-tear repairs or service calls -- and specifically tell them at signing that a clogged toilet is not my problem. "Eat more fruits and vegetables." In 12 years of landlording (not students), I've never had that mythical 2 am call for anything.
As a note, I wish somebody would show me a 17-page lease. I've never lived in a corporate apartment complex and have heard about them but never seen one. I know how all those clauses get in there, but I can't imagine what they all are!
In the event you decide to allow sub lease make sure you continue to collect rent directly from your primary tenant. The sub lease tenant is your tenants tenant.
@Anna Watkins the best advice I can give you is not allow a sublease but rather add the new tenant to the lease and list the new tenant as the occupant. This puts BOTH parties, the new and old tenant, responsible for anything that occurs. Passing the buck is national pastime of college students. Get everybody on board and every responsible.
My absolute favorite is offering rent at a discount if paid by the first. People go from being relaxed, to making sure it's paid by the first to get the discount... yes, it's slightly cheaper, but even habitually late tenants have been converted to paying by the first! I tell everyone-- structure it so everyone wins!!!
@Linda D. What kind of discount do you offer? Percentage or flat rate?
Depends on the property, but it can be anywhere from $25-$75 off. We do all of our leases that way, and love it!
@Will Gaston Make sure that your lease and all the suggested clauses comply with your local landlord/tenant laws. In Oregon for example, you can't make half deposit refundable and half non-refundable. It's against the law in Oregon to charge tenants certain fees. In fact, the law stipulates fees that landlords are allowed to charge. And, you can't apply rent to late fees in Oregon. So, I'd say, study the law in your state and make sure your lease is compliant. This may not directly answer your question but may be helpful to you when you need it most.
That’s awesome @Linda D. I may have to consider doing that as well. We typically have 90-95% of our payments made on time but that’s probably because we are uber strict with late fees. I think a carrot and stick approach would work nice though.
All great points Rob S., that’s definitely the utmost priority. Sounds like South Carolina is much more landlord friendly than Oregon. Do you have a late fee cap in Oregon?
Yes we have a late fee cap. Flat rate late fees must be reasonable and customary to what other landlords in the market charge. And late fees calculated in percentages are capped by law.
Having a minimum repair amount required, especially for a house, can be a good idea. It stops them from calling you or your manager for frivolous maintenance.
Depends on the landlord, but some people like to put in a specific amount of notice required before they move.
Probably the biggest one is making sure the tenants responsible for tenant insurance in the lease. That can help eliminate a lot of lawsuits or potential lawsuits.
Hmm......what else? Oh, no waterbeds! Or large aquariums. Trust me. I've had both blow up in the past and collapse the ceiling below, buckle hardwood floors, etc.
@Dave Van Horn I too have the minimum repair amount in my lease ($50 deductible for a weekday call and $100 for weekend call) and also the renters insurance clause for the same reason. It's also very helpful for the tenant if/when something gets stolen from the property.
1. "Landlord does not change light bulbs." Initially, I did not have it in my lease and quickly put it in when someone called me to have it done!
Here is a news story on this with a Denver landlord:
2. $500 fine if tenant has a pet without notifying landlord.
3. I just recently put in a fine if tenant calls/texts me (per instance) about their security deposit less than 35 days after moving out. I have 30 days to return it in my state. I put this clause in because several tenants harassed me to no end before the 30 days were up. I am talking 10+ calls/texts per tenant. In one case, I was out of the country on a family vacation! Now they pay me every time they call/text about it. I have always showed tenants respect and I expect the same in kind.
4. Fine for refusing access for me and repair people---yes people call to have things repaired, then refuse access to the repair man, costing a worthless service charge. Some tenants refuse to allow you to show an apartment when they are moving, causing one month in lost rent.
5. If tenant causes damage, they must pay within 5 days or be evicted.
6. Landlord has the right to hire a cleaning service and bill tenant if premises are not clean. This is for the really disgusting cases. I am not the clean police!
7. No running a business.
8. No unlawful activities.
9. Rent pick up fee. I don't pick up rent. I explain this from the beginning and repeat it when signing a lease. This is to discourage this request.
10. Tenant must test smoke alarms every 6 months and notify landlord of non-function. I put ten year sealed battery smoke alarms (and CO if there is gas) now. However, upon inspecting smoke alarms in the past, I found a large number disabled by the tenant. When I still had the removable battery type, most would never change the battery or simply removed it because it would go off when they burned their food. The very first thing the fire marshal will check after a fire is if the smoke alarm worked at the time of the fire.
I have many other clauses, but this is a good start.....
@David S. have you ever used and/or charged for the cleaning provision?
I believe this is from the Chicago suburban lease, but I add it to my CAR lease:
Any appliances contained in the Premises are provided for the Tenant’s convenience. Landlord does not warrant the fitness or uninterrupted use or enjoyment of such appliances by Tenant. Any interruption of Tenant’s use and enjoyment of such appliances shall not constitute “constructive eviction,” nor form the basis for any defense, set-off or counter claim by Tenant.
The Santa Clause :)
On one occasion, I threatened to use it and the tenant started to clean up. They were initially going to hire a maid service for a 1000 square foot apartment and were quoted $550. That was about 8 years ago. That will tell you how bad it was.
More recently, I did, in fact, hire a maid to clean an apartment and charged it back to the tenant. I had given the tenant numerous warnings with no result.
This is a very important clause. Unkempt apartments/houses will destroy your property value, cause damage, and may cause a severe pest infestation. It may affect adjacent units with smells and pests. You may even get served with a health code violation.
@Will Gaston really great post. I’ve been doing this for some time, and you pointed out some things that I never even considered. 👍🏼
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