You wouldn't give someone the keys to your own home unless you greatly trusted them, so why would you turn over the keys to one of your biggest investments without the same trust? While you won't have the same kind of personal trust with a tenant, a well-drafted lease agreement can leave you assured that you're covered if anything goes wrong. Below are some of the areas where landlords have blind faith that everything will work and could do with tightening up their leases.
Fees and Costs for Nonpayment
Pretty much everyone goes into a rental agreement understanding it's a pay or you're out arrangement. Unfortunately, if a tenant stops paying, it's rarely that simple. If the rent doesn't arrive on the first, you can't just instantly boot the tenant out. You have to go to court, serve papers, and then have the sheriff enforce the eviction order. Or maybe you want to give them a few days before doing all that but want there to be some sort of penalty so they don't make a habit of it.
If you don't specify these fees and costs in your lease, you might not be able to collect anything more than the regular rent no matter how much you spend getting a tenant out. To be sure you recover your full costs, clearly include any late fees, court costs, and other possible expenses in your lease agreement.
Ending the Lease
A lease might have an end date, but it doesn't automatically end. Without proper notice, either the landlord or the tenant may be able to extend the lease for another full term or on a month-to-month basis. This extension may also be at the current rent when you might want to increase it.
To be safe, you want two deadlines in your lease. One is a deadline to give notice of intent to vacate at the end of the lease after which the lease is automatically assumed to be extended. The other is a deadline to renew or extend the lease to give you time to market the rental if the tenant decides to leave.
Also include how much the rent will be if the tenant stays in the property beyond the lease term without a new formal, written agreement. Often, this will be double the previous rent to encourage the tenant to either properly renew or give adequate notice that they'll be moving out.
If the tenant does move out, when does the lease end? Midnight? Close of business? Be sure to specify this. Do you expect them to have the carpets professionally cleaned? Include that as well. As with anything else in life, having a clear understanding up front will prevent future mishaps and misunderstandings.
Some rules are necessary -- like nighttime quiet hours in an apartment complex. However, the more you try to micromanage your tenants lives out of fear they'll mess up your rental property, the more they'll run away out of fear you'll be constantly invading their privacy and keeping them from enjoying their home. Set minimum guidelines to keep tenants from driving each other mad, but remember that with or without pages and pages of rules, they'll be responsible for any damage they do to your property.
Provisions That Go Against the Law
Sometimes, the law requires the landlord to provide basic amenities like heat and hot water or to take care of certain repairs. Some landlords try to get around this by putting the responsibility on the tenant in the lease, or they don't know about the law and don't want to take on the responsibility. A lease simply can't override the law. Be aware of the provisions set by your state and local laws because if you aren't, you could end up making the repair and paying the tenant damages no matter what your lease says.
To make sure your lease covers everything it needs to, have a local landlord-tenant attorney draft it or at least review the form you intend to use.