Rental Agreement Clauses You Should be Using

Updated 10/7/21

One of the most important business assets you will ever have while being a landlord is a sold rental agreement and it’s clauses. There are many things to consider while you develop the perfect rental agreement such as local and state landlord-tenant laws, liability issues, possible discrimination issues and more.

This is why it’s so important to go over important rental agreement clauses you should be using in 2021. We’d like to take this opportunity to remind you that the contents of this article should not be considered legal advice. Please contact us if you have questions.

What are rental agreement clauses?

A “clause” is just a legal term to refer to a specific part or a section of a contract. In this case, since we’re specifically talking about rental agreement clauses, it means that it is a specific section of an agreement between a landlord and a tenant.

Rental agreement clauses are typically used to ensure both parties comply with landlord-tenant local and state laws. They can, however, also include sections on landlord specific requests. For the most part, rental agreements are written with the landlord’s best interest to protect themselves from lawsuits and damage liability.

Important Rental Agreement Clauses you should be using today

There are many rental agreements out there. Some you would pay for. Some are free. But the best rental agreement is one that works for your specific business. It is highly recommended that you have a real estate lawyer look over your rental agreement and it’s addendums.

Rent Liability Clause

Your business runs on the backbone of being able to collect rent on time. Using a rent liability clause in your agreement can ensure your tenants understand that every adult would be responsible for the full monthly rent amount.

In other words, in case your tenant decides to have a roommate, both would be 100% responsible for paying the full month’s rent. Even if one of the tenants refuses to pay their half of the rent, the rent still needs to be paid in full.

Severability Clause

In case you and any one of your tenants end up in eviction court, you want to make sure your agreement has a severability clause. This ensures that the rest of your agreement can still be used in court against your tenant in case any part, or clauses, of the agreement are disallowed by the judge. 

This can happen if, let’s say part of your agreement was made invalid by new legislation after the original agreement was signed.

Right to Entry Clause

A right to entry clause included in your rental agreement will ensure your tenants are aware that you, the landlord, have a legal right to enter your property. The landlord must follow California landlord-tenant laws and provide their tenant with at least 24 hour notice, plan to enter the property during normal business hours and for one of the following reasons:

• To inspect the rental property
• To make necessary repairs by either the landlord or a service provider.
• To make agreed upon upgrades or services.

The landlord doesn’t need to provide notice in case of an emergency such as fire, extreme water leaks, etc.

Use of Premises Clause

You want to ensure your tenants understand that the property should only be used for residential purposes. In other words, no business should be conducted on your premises.

This important rental agreement clause can help avoid strangers constantly on your property, higher than usual utility bills, crammed parking lots and disturbance to your other tenants.

This clause is also used to mention that only the people listed on the lease should live on the premises.

Tenants should also be made aware that they are responsible for maintaining their property clean and free of debris and clutter. They are responsible for providing adequate notice to the landlord for any habitability issue that may arise so that the landlord can take care of it immediately.

Holdover/Renewal Clause

What will happen if the tenant doesn’t move out on time? What happens when your tenant doesn’t want to renew their lease? How will you handle YOU not wanting to renew the lease to a specific tenant?

You want to ensure your tenant gives you at least a 30 day notice if they don’t plan to renew their lease to provide you with plenty of time to prepare for a turnover. You should also provide your tenant with an adequate 30 or 60 day depending on their length of tenancy.

By using this clause in your rental agreement, you will also be able to legally charge your tenant rent if they don’t move out on time. Instead of the agreement becoming void, it will automatically switch to a month-to-month agreement.

Your renewal clause can provide information on what could happen if neither landlord or tenant provide notice to either renew the agreement or not. In most cases, landlords opt for converting the agreement to a month-to-month lease.

Early Termination Clause

Life happens. Your tenants may need to abruptly move on little to zero notice. Sometimes things just don’t work out. It’s a good idea to provide a rental agreement clause that allows either party to back out of the agreement without major penalties.

Most of these clauses ensure that either party provides at least 60 days notice to the other party and outlines what the penalties are, usually financial compensation.

There are exceptions, such as a tenant being called to military service, that landlords must know and understand before using this clause in their rental agreement.

Disturbance Clause

The landlord should worry about the overall enjoyment of their property. You can include a “quiet hours” clause which explains that tenants should keep noise levels down between 9pm and 7am.

Subletting Clause

Do you allow your tenants to sublet your rental agreement? If you do, you should ensure your tenant understands the terms for subletting.

A good place to start is by making sure your tenants know that you (the landlord) must fully screen every subletting tenant.

• All tenants must pay a security deposit
• All tenants are responsible for the full rental amount
• Provide details on fixed term length (if any).
• etc.

If you are not to allow subletting, you should explicitly state that on your rental agreement.

Security Deposit Clause

There’s a reason why security deposit dispositions are the most common landlord-tenant dispute and it all starts with the rental agreement clause. Make sure it is easy to understand for your tenants AND that you do your part to follow California state law on holding security deposits. In your clause, you should include information such as how much money was collected and what you could use it for once the tenant has moved out.

Make sure you and your tenant understand the difference between damages vs normal wear and tear.

There are many other rental agreement clauses you can add to help you make a solid, but fair agreement between you and your tenant. As mentioned above, it’s a good idea to consult a real estate lawyer to review your rental agreement before using it to ensure you have all the legal bases covered.