Lease Clauses That Prevent Income Loss

by Chris on October 19, 2020

A lease agreement should include provisions that help landlords avoid income loss — including these:

Joint and Several Liability

“Tenants shall be jointly and severally liable for all obligations under this lease.”

Few tenants understand the legal ramifications of renting with roommates. These relationships are tricky and tenants need to understand the commitment they are making to stick together during the term of the lease agreement.

The joint and several liability clause can deter a tenant from moving mid-lease, leaving the remaining tenants scrambling to come up with rent. It also helps landlords avoid mistakes — like returning a portion of the deposit before the final walk-through.

Because a lease is all about prevention, go over this clause with roommates prior to signing the lease. Also, be sure to name each tenant in the lease and provide enough lines for all to sign.

Property Inspections

“Landlord may enter the Premises to conduct routine property inspections.”

Never underestimate the power of deterrence when it comes to preventing costly property damage. By informing tenants upfront about the practice of routine property inspections, you discourage tenants from violating the lease — everything from crime to unauthorized guests to property modifications.

Renters Insurance

“Tenant is required to maintain a renters insurance policy.”

Or,

“Tenant is encouraged to maintain a renters insurance policy.”

The role of renters insurance is to cover losses the tenant could experience if there is a disaster at the property. The landlord’s policy typically only covers damage to the structure, while renters insurance covers their possessions inside the unit. Landlords are less likely to be roped into legal claims if the tenant maintains a renters insurance policy. The coverage helps tenants recover faster and continue to pay rent.

With a special rider, the tenant also can gain liability coverage in the event they hurt someone through their own negligence. This could be helpful in the case of the pet, for instance.

Report Rent Payments

By adding a Notice to Tenant that the landlord reports rent payments in the lease agreement, the landlord sets the stage for on-time rent payments.

One of the best ways to protect against income loss is to report tenant payment history to a credit bureau, the same way other creditors do. A tenant is less likely to pay late or default if they know the information will appear on their credit report. An added bonus: tenants who pay on time build better credit — another great incentive to pay on time each month.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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