4 Addendums for Lease Agreements: Ensuring Clarity & Compliance

When it comes to your rental property, there’s nothing more important than a strong lease agreement. This document sets the expectations of both the lessor and the lessee. It also ensures that prospective tenants know what to expect from their tenancy.

With this in mind, it’s worth re-examining your simple lease agreement to help ensure everyone is on the same page about expectations for the property and any potential issues that could arise during occupancy. Are there clauses you missed the first time that would strengthen your document?

Today, we’re sharing four lease addendums that could be helpful add-ons to your existing lease agreement. If they’re legal in your area (i.e., if they align with your local landlord-tenant and federal laws), then adding these addendums into the mix can help protect your residential property investment.

Rent Payment Expectations

Collecting monthly rent on time and in full is one of the most important aspects of running a successful property management business. But what happens if you have a tenant who makes it a habit of paying late? Or worse, what happens if they just don’t pay at all?

This addendum addresses the issue of repeat late rent or unpaid rent before the problem starts. It can be included in a standard residential lease agreement to cover different grounds, including:

• The amount of rent due and how to make payments
• The due date and the period of time (or number of days) to be given grace before their payment is considered late
• The consequences of late or missed payments
• What happens if there is a dispute over the amount owed

In other words, this addendum clearly explains that rent is due on a certain day of the month and provides clear consequences for late or missed payments. Maybe there’s an interest penalty, you’ll negotiate to change the fixed-term lease agreement into a month-to-month lease, or perhaps the tenant will be charged late fees. Either way, this addendum lets everyone know what’s expected in advance, so there aren’t any surprises down the line.

Pro Tip:

Having rent payment expectations in place is fantastic, but running a comprehensive background check upon receiving your lead’s rental application can help you hone in on a tenant who values paying rent on time.

Tenant Assumes Responsibility for Maintenance

If you want to promote greater accountability in your tenants and avoid squabbling about the security deposit post-move-out, consider adding an addendum to your simple lease agreement that states the lessee assumes responsibility for specific aspects* of the property’s maintenance.

That said, property owners should still expect to spend time and money on maintenance each year, and it can be hard to know how much exactly. Luckily, here’s a few real estate rules of thumb for property managers when it comes to maintenance costs:

• 50% Rule: Each month, set aside at least half of your rental income for maintenance, repairs, insurance, taxes, attorney’s fees, and other expenses related to your property.
• Square Footage Rule: Estimate that you’ll need to set aside $1 per square foot each year for maintenance. For instance, if your property is 1,000 square feet, you’ll need to budget $1,000 for maintenance.
• 1% Rule: Maintenance costs should be about 1% of the value of your property each year. For example, if your property is worth $350,000, you should expect to spend about $3,500 annually on maintenance. However, you don’t have to carry that burden alone!

Whether you want to stipulate a deductible that tenants have to pay for repairs first, such as the first $100 of each repair, or entirely place the responsibility with the tenant, this strategy is likely to lead to your renters being more careful and trying common solutions for maintenance issues before reaching out to you.

It’s also important to note that this strategy could backfire if your tenant takes repairs into their own hands and lacks experience. Be sure to discuss this addendum with them, so they understand what they’re agreeing to before signing. Generally, this addendum helps to set up a system where both parties are responsible for maintenance and can work together to keep things running smoothly.

Note: In some states, your tenant can withhold rent if major repairs aren’t completed. That’s why it’s crucial for you to understand your local landlord-tenant laws and consult a real estate attorney as needed before implementing any of these suggested addendums.

Also, bear in mind that some tenants, such as elderly and disabled folks, may not be able to manage repairs on their own nor have the budget to pay a deductible. Check in with your tenant to facilitate a smooth adoption (or avoidance) of this particular addendum.

Play Structures, Trampoline, Pools, and Other Large Outdoor Equipment

Another addendum that can strengthen your simple lease agreement defines how your unit’s outdoor spaces should be used and when you want to be notified beforehand about any new play equipment, pools, or trampolines before they’re installed.

You can also request that the tenant either regularly inspect and repair play structures (particularly if such structures weren’t provided with the property upon move-in) to keep everything as safe as possible. If you pursue this route, your tenant should look for:

• Rusting metal
• Rotting wood
• Weakening equipment

Any defects should be repaired immediately, and you can outline who’s responsible for funding those updates in this addendum. If this equipment will be kept in a common area, be sure that all who use it have their parents sign a lease addendum or safety notice clearing you of any liability.

Though requiring renter insurance is a great move for all landlords, it becomes particularly important when you’re allowing your tenant(s) to have something like a trampoline on the property. To further protect yourself, ensure that you hold comprehensive landlord insurance along with posting a notice of risk near the outdoor play equipment (and within this addendum!).

Pro Tip:

If you didn’t provide the outdoor equipment, it will be considered the personal property of whichever tenant supplied it – even if other renters use it, too. When in doubt, check with your local attorney to ensure you won’t be liable should anything happen.

Break Lease Options

Ideally, you want your tenant to stay until the rental lease agreement expires. But life happens, and your tenant may need to move out before the lease’s end date. To prepare for this otherwise unexpected event, we recommend adding a break lease option to your agreement.

Generally, this addendum should include details about how much money each party will be responsible for in order to terminate the lease early and what steps they must take when terminating the agreement.

There are a few ways to go about breaking a lease, including:

• Cash for keys is one of the most common methods of breaking a rental contract. With this option, you’ll give your tenants money to move out early and either leave the property in good condition or pay for any damage incurred during their stay. This can be an excellent option for both parties because it allows you to avoid the cost and complication of an eviction.
• Subletting or subleasing allow your tenant to break the original lease with minimal consequences. Subletting means you would be responsible for finding a new tenant and signing your own lease agreement with them; subleasing puts more of the work on the original tenant by requiring them to find a new renter, from whom they would be ultimately responsible.
• A termination agreement is a great way to break a commercial lease agreement. This option works best if you have a good relationship with your tenant and they’re willing to work out an agreement that benefits both parties. Such benefits could include giving them a greater amount of time to pay rent or the opportunity to lower their monthly payment amount.
• Forcible detainer suit: If you want to avoid giving your tenants money and want them out, say, for breaking the terms of the lease, this is one of your best options. It’s a legal process that involves filing papers with the court and asking for an eviction hearing. After both parties have given their sides of the story, the court will decide whether or not to grant your request based on the terms of the agreement.

Conclusion

With these four addendums, you can customize your agreement based on local laws and regulations to protect yourself from any unforeseen problems that may come up during your renters’ tenancy.

Speaking of, our lease agreement template is a great starting point for your business, and you can take it to the next level by personalizing it through addendums. Just follow your local, federal, and state laws, and you’ll have a battle-ready lease in no time.

To learn more about lease agreement details, check out our detailed guide on a Standard Lease Agreement.