If you are renting to a self-employed tenant, you may feel that the situation is different from any other tenant. However, you will find that the main differences are in the application process, as well as the lease. As always, when building your lease it is important to be mindful of state and local laws. Sometimes local laws will be very specific with regard to these issues. You may want to include the following addenda and additions to protect your lease for your self-employed tenant.
Break Lease Fee – This lease allows you to assign a fee for a tenant breaking a lease.
Subleasing – If the self-employed tenant experiences a fluctuation of income that causes them to bring a different individual into the unit, whether they will stay and live with them as a roommate or not, you do not want to lose control of the situation. Spell out whether subleasing will be allowed, and under what circumstances, to ensure that someone who does not meet your criteria for a tenant will not be able to live in your rental.
Business Activity – Be sure to outline whether you will allow the tenant to operate a home-based business. Check your insurance policy to if it restricts home businesses before you spell out this lease provision.
Security Deposit – You may want to maximize the allowable security deposit, or at least double your typical deposit, if you have concerns about the tenant’s income stream. If you perceive that there is a risk in taking on a particular tenant, increasing the security deposit will give you an additional cushion to protect yourself.
Lease Length – A shorter lease term will allow you greater flexibility to make changes to the terms or to choose to not renew the tenant for an additional term. Longer leases will lock you in to certain situations.
If your tenant will be operating their own business out of your rental, there are additional considerations that you must make, such as these:
Your House – Think about your house, your neighborhood, and the particulars of your area. Consider the daily operation of the business as well as one-time events. If your neighborhood has an HOA, are there rules governing a home-based business that must be considered? Put all of those restrictions in your lease agreement.
Parking – Be sure to specify where patrons of the home-based business may and may not park. Is there a limit to how many cars can park there at a time? Will large trucks be required to make deliveries or pick up products? Think about parking and street traffic and detail what is allowable.
Housing Business Equipment – If your self-employed tenant has a business involving large equipment, be sure to detail whether it is okay for them to park trucks or trailers at your rental property.
At ezLandlordForms, our goal is to help you be successful as a landlord, and anticipate problems before they happen. These tips will help your lease for your self-employed tenant be as comprehensive as possible.