It doesn’t take much to turn an ordinary homeowner into a landlord. While many people would love to have an extra house to worry about, owning even one rental property can be a headache.

While residential use limitations do not need to be as detailed as those applicable to commercial leases, there are still significant considerations that must be made.

While the intended use of the property has undoubtedly been considered in advance of the signing of the lease agreement, it is necessary that an owner include limitations on the tenant’s rights to use the premises. Due to assumptions, prior informal conversations and failure to consider potential implication, an owner may fail to notice this important portion of any lease.

Commercial Lease

1. Spell out the sole permitted use of the property by tenant.

The lease should state simply what the property is to be used for (ex: retail clothing and apparel store, fast-food restaurant, general non-retail office space). Regardless of oral understandings, prior use or anticipated current use, the lease should bind the tenant to the designated use.

2. Detail specific limitations to the use.

The lease should spell out specific disallowed uses, which the owner wants to avoid on the property, that may typically arise in connection with the intended use (ex: no retail activity, limitations on signage or window usage, limitation on number of employees in office, prohibition on style of restaurant service, specifications regarding delivery hours, procedure and location, etc.)

3. List Specific Prohibited Uses.

The lease should explicitly prohibit any business or activity that is illegal or not permitted by zoning ordinances, any use of hazardous materials, any use not permitted due to an exclusive use of another tenant and other desired limitations such as prohibiting adult-oriented services and retail.

4. Require Certain Obligations of Tenant.

Tenant should be required to maintain the property in good and clean condition, operate during desired business hours, operate without substantial periods of closure and should be obligated to notify landlord in writing in the event of any changed or additional use of the premises.

Residential Lease

1. Specify Residential Use.

A residential lease should indicate that the property is to be used solely for residential purposes and for no business, retail or other commercial uses.

2. Limit the Number / Type of Occupants.

An owner should consider what limitations should be placed on the number of occupants, the relationship between occupants and the permissibility of overnight and/or long-term guests. Limitations on group gatherings may also be desirable depending on circumstances.

3. Require Certain Obligations of Tenant.

A residential lease should obligate the tenant to maintain the property in good and clean condition and may limit period in which the property can be left vacant during the term of the tenancy.