BRRRR Legal Tip: Tenant Not Paying Their Utilities

Legal Tip For Fellow BRRRR Investors 

Include this language in your lease agreements to deal with the situation where you have a tenant that is required to pay utilities and either does not or does not change the utilities over to their name with the utility company.

This is the language I use

“In the case where Landlord makes any payment to maintain any utilities or service for which Tenant is responsible under this Lease, Landlord shall automatically be entitled to the repayment of such amount plus a penalty amount equal to 10% of each payment made.” 

Impact to my monthly cash flow 

This language can have a strong impact on your monthly cash flow.  Multiply any amounts you are paying that your tenants agreed to pay by 10% or the number you choose to include in your leases to see the bump in income including this provision in your lease agreements would provide on a monthly basis. This is in addition to recouping all out-of-pocket expenses you incur from the tenant or from their security deposit.

Excited about BRRRR investing and want to include this same language in your next lease agreement? Get a free trial and lifetime access to our Deal Analysis and Legal Solution to do more BRRRRs than ever before.  Learn more.