Congratulations on becoming a landlord! The journey has certainly been anything but easy, especially if it’s the first time you’re doing it.
Now, being a landlord comes with a slew of responsibilities, and key among these is having a lease agreement in place. As a landlord, it’s paramount that you create a lease that not only protects you and your investment but your tenant as well.
It should be comprehensive and include important lease terms to avoid misunderstandings or confusion during a tenancy.
The following are terms every lease agreement should contain:
1. Length of the Lease
A lease doesn’t run for eternity; it must come to an end at some point. However, failure to be specific about the length of the lease can lead to holdover tenants. A holdover tenant is a tenant that continues to live in their rental premises even after their lease has expired.
So, to avoid a holdover tenant, make sure to mention the term of the lease. Short-term leases usually run for a couple of months, while long-term leases can go for at least 6 months.
Generally, short-term leases offer more flexibility and freedom. Long-term leases, on the other hand, offer income consistency and less administrative hassle. Your choice of either should be dependent on your goals.
2. Limits of Occupancy
Only allow tenants that have signed the lease to occupy the home. If you don’t, you may find yourself dealing with strangers that you may not be able to hold accountable should something happen at the rental premises.
Will you allow subletting of your property? If you will consider it, then make sure to set some rules. For example, let the tenant seek your approval before inviting someone else to live with them.
Also, state that any prospective sublet must meet your qualifying standards, like being creditworthy and having a good rental history.
But, if you choose not to allow it, then make sure your lease is clear on that. Include a clause that highlights the potential consequences a tenant may face should they fail to adhere to it.
3. Rules on Rent
This is something you will not want your lease to overlook. Don’t just mention the price of rent and stop there. Offer more details such as:
- When will the rent be due?
- Where will tenants need to pay the rent due?
- What will happen if the rent becomes late? Will you charge any late fees? If so, how much?
- Will you offer any grace periods? For how long?
- What would happen if the rent check bounces?
- What options will your tenants have when it comes to paying rent?
4. Security Deposit
Other than rent, the security deposit is also another move-in cost you’ll want to define in your lease agreement. Besides stating the amount, you’ll also want to state other important details, such as what conditions the tenant must fulfill in order to get a full refund of their deposit.
Be careful that you adhere to Nevada’s security deposit laws when it comes to matters to do with security deposits. For instance, make sure to charge your tenants the proper limit. According to the state’s statutes, you cannot charge your tenants a security deposit that exceeds three months’ rent for private housing.
5. Names of Tenants
A solid lease agreement is also one that lists all the names of adult tenants living in the property. This will ensure that you’re able to hold each person accountable to the terms of the lease agreement.
If you do not name all the tenants in the lease, should legal issues arise, the law may swing in the favor of the unnamed tenants.
6. Tenant Rights & Responsibilities
You’ll also want to list the rights and responsibilities your tenant will have once they sign the lease agreement. The following are some of the common rights tenants have. Under the NRS 118A, Nevada's landlord-tenant law, they have a right to:
- Live in privacy
- Live in a property that abides by Nevada’s implied warranty of habitability
- Have repairs done within a reasonable period of time
- Remain in the unit until the landlord has followed the proper eviction process
- Be notified before a landlord can enter
As for the responsibilities, here are some of them for tenants. They must:
- Allow entry to a landlord for them to carry out their responsibilities
- Abide by all terms of the lease agreement, such as subletting
- Treat the home respectfully and keep it in a clean and sanitary state at all times
- Notify the landlord when maintenance issues crop up
- Keep noise levels within reasonable limits
7. Landlord Rights & Responsibilities
Similarly, your lease should also state the rights and responsibilities you have as a landlord. Here are some common rights you may want to mention. Under the landlord-tenant law in Nevada, you have the right to:
- Enter the tenant’s rented premises
- Receive proper notice before a tenant moves out
- Be notified when a tenant will be away for an extended period of time
- Make changes to the lease agreement with the approval of the tenant
As for the responsibilities, here are some of them. A landlord must:
- Provide tenant sufficient notice before entry
- Abide by all terms of the lease agreement
- Make requested or needed repairs promptly
- Comply with the state’s health, safety, and building codes
- Maintain peace and quiet
8. Required Disclosures
You must disclose certain information to your tenants prior to lease signing. In Nevada, you must let your tenants know of:
- The presence of lead-based paint
- A pending foreclosure of the property during the lease period
- The right of the tenant to display the American flag
A solid lease agreement is imperative to running a successful rental investment. It avoids both confusion and legal conflicts. If you are just starting out, consider hiring expert help.
Evolve Nevada can help you draft a lease agreement that has your best interests at heart. Contact us today and we’d be happy to speak to you about our professional property management services!