It can be exciting when a new tenant signs a lease. You have spent the last few weeks advertising the property, showing the property, cleaning the property and now is the time to put all of that hard work to use. This is a very critical time in the life cycle of the tenancy because it sets the tone for the entire rental.
The main thing you want is clarity. If all of the terms and expectations are clear, there will be fewer problems down the road. You want to make sure you and the tenant are on the same page with the following terms.
Is the lease 1 year, month to month? With a lease that is for a set period (3 months, 6 months) it is important to note what happens after that period. Does it become a month-to-month lease?
Leases protect both parties. If you sign a month-to-month lease with a tenant, you can give them one months notice to leave. They are not guaranteed the property for any set period. You could (although I would never, as this would probably upset the tenant which I try to avoid doing) advertise the rental at a higher rate and once you get it tell the current tenant their time is up. This of course would be fine if the tenant knows about this before they sign the lease.
If you have a 1-year lease but really want to sell the property now, you can. The new owners must adhere to the terms of the lease. They cannot make the tenant move until the lease is up. The property may actually be more desirable to some because it has a tenant already in the property.
Is the tenant allowed to get roommates? If so, how many? If they cannot have roommates, are they allowed to have guests? If so how long can the guests stay overnight? These may seem like silly questions, but they can save you a lot of trouble if the tenant decides to rent the apartment out to 10 other people and you get complaints from the police or the HOA.
What utilities does the tenant pay for? Be very specific. If they pay for garbage, make sure to list it.
Late Payment Fees
It is standard to give tenants three business days to pay their rent after the first of the month. Make sure to clearly state your policy, and any fees charged due to late payment. I have always waived the late fee if the tenant calls and is obviously upset that for some reason they have to pay a little late. I never let the tenants know ahead of time I will waive the fee for them. It is a favor, and I let them know that when I grant it to them.
The address and description of the property. Mention parking, even if it is just on street parking. You may want to say ‘park at your own risk’.
Notice of Renters Insurance
Notify the tenants that renters insurance is their responsibility and you are not responsible for damaged personal belongings. You may want to have them initial next to this disclaimer. Many of my friends are shocked to find out that the apartment complexes are not responsible for their items in the case of floods, fire, etc…
Make a Checklist
Give the tenant a list of everything in the property – carpet, refrigerator, etc. Have them write down any damage to the property. Walk thru the property with the tenant to ensure nothing is broken and to state the condition of each item. The detailed list will come in handy if they try to say there was a large scratch in the refrigerator when they got there. The courts love documentation, and good documentation will make it less likely you will end up in court at all.
Have a clear pet policy. If you allow pets, do you charge pet rent or pet deposits? What type of pets do you allow? Keep in mind there are some dog breeds that will be restricted by law in your city.
I hope these tips help. The landlord tenant relationship should not be based on assumptions. Everything should be clear and in writing.