Property Management Education

Top 5 Lease Agreement Clauses

Key Points:

  • Be sure to include specific clauses in your lease to protect yourself against month-to-month situations, pets, marijuana, appliance wear and tear and subrogation of Insurance

Whether you self-manage your rental property portfolio or rely on a third-party property manager to take on the task for you, there are a few critical clauses that should be included in your lease agreements. Below we detail what we’ve deemed the top five clauses that should be written into your leases to ensure your own protection as well as clearly define your role and relationship with your tenants.  

Month-to-month lease terms: 
If you own Colorado rental property, it’s important to note that by law, an expired lease will default to a month-to-month status with tenants. In states like Colorado, with its extreme seasonal weather, landlords want to avoid month-to-month leases that may leave them with a vacancy in the winter months. We suggest adding a clause that establishes a large percent increase in your lease agreement to avoid this scenario if the lease does default to a month-to-month situation. 

For example: “If we have not received a signed written notice of intent to vacate from you, and your lease term has expired, you will be on a month-to-month lease term. Your rent will increase by __% per month on a month-to-month term.” 

If you decide not to allow pets in your rental property, be sure to include a clause stating the ramifications for tenants who break your stated agreement. We encourage landlords to allow pets in their rental properties (with the inclusion of a pet addendum in your lease). However, if you decide against this, be sure to include a clause to ensure clarity of expectations. 

For example: “No pets of any kind are allowed (even temporarily) anywhere on the premises, unless we’ve so authorized in writing. If we discover a pet on the property you will pay us $__ per day until the pet is removed plus an inspection fee of $__.”

Scenario: A tenant brings a prohibited animal onto your property. Be sure to have a clause that states a per-day cost. This will serve to discourage prohibited animals as well as encourage swift removal of prohibited animals. This per-day cost serves to cover the full inspection required after a prohibited pet is removed.

Marijuana: Even though marijuana is legal in Colorado, landlords have the right to prohibit it as long as it is clearly stated in the lease. We recommend including a clause prohibiting the usage, possession, and growing of marijuana in your rental property. Growing, in particular, can cause mold, humidity, and other issues. 

For Example: “Recreational marijuana use is legal in Colorado. However, both Colorado law and federal law give us the right to prohibit it. Marijuana use, possession, and/or growing is prohibited on the property and violators will be evicted.”

Appliances: Colorado law states that if you provide something in your rental property, you are responsible for maintaining it. However, if a tenant is abusing an appliance, you are not required to replace it. Include a clause in your lease agreement to mitigate future issues with tenant negligence of your property.

For Example: “If any appliances cease to function we may or may not repair or replace the appliance at our discretion.”

Subrogation of Insurance: Subrogation in the case of rental properties is when a tenant elects their insurance to sue the landlord. Our attorneys recommend adding a clause prohibiting subrogation in your lease agreement. 

For Example: “Unless prohibited by law, Resident waives any insurance subrogation rights or claims against Landlord, Owner, and their insurers.”

As always, our team is here to serve as a resource for you. We have these clauses and many important others already prepared and written into our lease agreements. If you have questions about rental property leases or anything else related to the management of your investment property, give our team a call. 303-255-1990

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