CategoriesRental Property

Rental Contract Dos and Don’ts

Rental contract

Many people have recently begun investing in real estate. You can buy distressed property to fix and flip, or invest in homes to rent out to tenants and earn a passive income. 

Many homeowners hold onto their properties when they move into new homes for this reason. By keeping their old house, they can rent it out to other families and profit from their property. 

However, being a landlord isn’t easy. Additionally, there are some things you need to know about the terms and policies of your rental contract.

Your lease agreement should serve to outline the rules and policies your tenants are required to follow. It should also dictate your role as a landlord and more.

Is your rental contact legitimate and legally sound? Keep reading for a list of dos and don’ts you should be following for your lease agreements. 

Don’t Forget About Pet Clauses

Did you know that 60% of Americans own some kind of pet? Animals bring value to our lives in many ways that other people can’t. They’re always there for cuddles and companionship. 

However, cats and dogs have a tendency to be a little rough on homes. Their hair gets everywhere, they chew on things, they scratch things, and more. And let’s not forget about potty accidents. 

As such, you will want to include a pet clause in your rental contract. Will you allow pets? If so, what kinds of pets will you allow?

Assuming you allow pets, will you require tenants with animals to pay a higher deposit or monthly rent?

Do Include Late Payment and Eviction Policies

Next, among your terms and policies, it’s important to provide crystal clear information on late payments, missed payments, and potential evictions based on these types of financial issues. 

Some landlords let one or two late payments slide, as long as they are made within a week of the regular due date. However, if late payments become a habit, you need to have a policy in place to discourage that kind of tenant behavior. This can be late payment fees or eviction notices. 

The same goes for missed payments. We all fall on hard times and have financial emergencies.

However, as nearly 54% of Americans live paycheck to paycheck, this means that your rent check is not always guaranteed by your tenants. How many missed payments will you allow before you evict a tenant? Do they have to be consecutive or will you count the total number of missed payments?

Don’t Exclude Policies On Repairs and Maintenance

Next, remember to note which party is responsible for making repairs and conducting maintenance. In most rental contracts, the landlord handles these types of issues. They generally have a repair person on call for any issues that arise. 

However, in some rental situations (such as a homeowner renting their home out to another family), the tenant is responsible for repairs and maintenance. This includes plumbing issues, lawn maintenance, broken windows, etc. 

However, the landlord or property owner will always be responsible for major conditions with the home, such as roof repairs, pest control, water damage, and foundation issues.  

Do Keep Things Clear About Tenant Rules and Requirements

Your rental contract should include terms and policies regarding other rules and requirements you expect your tenants to abide by. For example, what utilities and amenities will you cover? Which utilities and amenities are you tenants required to provide for themselves? 

Additionally, are you going to set in place rules about noise levels? What about having guests or roommates?

These are important things to consider. After all, you don’t want to find out suddenly that there are extra people you haven’t screened living in your unit. However, you should include a guest clause so your tenants can have friends and family over without worrying about breaking any rules.

Furthermore, some rental units need specific guidelines about parking to avoid issues with neighbors. This is particularly true if the unit only has street parking. Your rental contract might need to limit the number of vehicles allowed for each unit. 

Don’t Forget About Renewal and Termination Policies

Some of the most important terms and policies in your rental contract will revolve around lease renewals and terminations. These are important things to outline clearly to ensure there is no confusion among your tenants about what they’re bound to.

Length of Contract

First, how long do you want to set up your rental contract?

Many landlords have mandatory six-month contracts. Other contracts extend to two, three, and sometimes five years. 

After the tenant has met the original lease agreement, will you allow them to switch to month-to-month contracts? Or maybe you can drop a two-year agreement down to six months. 

While longer lease agreements provide more security for you, it’ might make it more difficult to find tenants. Most people who rent rather than buy their homes are looking for something with less commitment. 

You also need to think about rent raises. Will you raise the rent for tenants who renew their lease? 


Finally, let’s talk about the terms and policies in your rental contract regarding lease terminations. Obviously, once a tenant has fulfilled their mandatory lease cycle, they are free to go or renew their lease without consequence. 

However, what if a tenant needs to terminate their lease before their term is up? To some degree, you should have compassion as life often takes unexpected terms. However, for the sake of your business, you must also hold people accountable for the legally binding contracts they’ve signed. 

Will the tenant forfeit their security deposit? Will you hold them accountable for the months of rent they would have otherwise continued to pay? Make sure this policy is outlined in your lease agreement so future tenants are clear on early terminations.

Do You Have a Solid Rental Contract?

As you can see, a lot of thought needs to go into your rental contract. It’s just as important for you as it is for your tenants. You have duties and responsibilities as a landlord, but you also have inherent rights.

If you need help creating your lease agreement or managing any of your properties, we’re here for you. Contact us today to learn more about our property management services. We can assist you with everything from repairs and maintenance to eviction notices and rent collection.