Discussing lease terms with a tenant can require a landlord to consider numerous legal issues. Depending on the complexity of a lease agreement, a property owner might overlook a key term. However, specific lease terms can best protect a landlord’s legal and financial interests under real estate law. Here are some of the most critical lease clauses that Sherburne County landlords should focus on when negotiating with prospective tenants.
Rent and Payment Terms
A lease should specify the rent amount owed by the tenant, including any additional charges such as utilities, property taxes, and incidentals (e.g., association fees or parking fees). The lease should also specify the due date for rent payments and acceptable payment methods. Finally, the lease should also clearly describe any late fees that the landlord may charge for late rent payments, including when the fees take effect (e.g., seven days after the due date) and how they accrue (e.g., daily, weekly, or monthly).
Security Deposits
Under Minnesota law, landlords may collect security deposits from residential tenants and hold those deposits for the tenant. Held security deposits must accrue simple, non-compounded interest at a rate of one percent per year. Landlords must return security deposits within three weeks of the termination of the tenancy, or five days after the date the tenant vacates the property for reasons not due to the tenant’s willful, malicious, or irresponsible conduct.
A lease should clearly describe the tenant’s and landlord’s rights and responsibilities regarding security deposits under state law, including the tenant’s right to return of the deposit and how the landlord may deduct damages from the deposit.
Maintenance and Repair Responsibilities
Leases should specifically list a tenant’s maintenance and repair obligations and explain that all other commitments remain the landlord’s responsibility, or conversely, specifically describe the landlord’s obligations and make all other obligations the tenant’s responsibility. However, landlords should also familiarize themselves with the maintenance or repair obligations that local ordinances or state laws make their responsibility, including maintenance and repairs related to preserving the property’s habitability and safety. The lease should also require tenants to report maintenance issues promptly to avoid further property damage.
Rules on Property Use
A lease should clearly outline the permissible uses of the property for tenants. For example, in residential tenancies, leases can include unit occupancy limits, pet policies, smoking restrictions, and other prohibited activities, such as operating a commercial business (except for a remote work-from-home office) on the property. For commercial tenancies, the lease should describe the applicable commercial uses permissible on the property under local zoning codes or other restrictions on commercial use, especially if the landlord has exclusivity obligations to other tenants on the property.
Entry and Inspection Rights
Leases can also establish the landlord’s right to enter or inspect the property, including circumstances under which the landlord may enter the property (e.g., showing the unit to prospective tenants, showing the property to potential buyers, conducting routine maintenance, etc.), the notice that the landlord must provide before entering the property (i.e., 24 hours’ notice), and circumstances under which the landlord may enter the property without notice (i.e., emergency repairs like water leaks).
Lease Renewal and Termination Clauses
Finally, a lease should discuss how the lease may renew (e.g., automatic renewal or renewal upon the tenant’s request by a specific deadline before the lease’s expiration) or the circumstances under which either party can force an early termination, including whether parties may owe fees or penalties for early termination.
Contact a Real Estate Attorney Today
When negotiating a lease with a prospective tenant, understanding which provisions to include in the agreement can help you create a comprehensive and tailored agreement. Contact Two Rivers Law P.A. today for a free, no-obligation consultation with a real estate lawyer to discuss the critical clauses you should include in lease agreements to protect your rights and interests.