Renting out a residential property requires clear communication and understanding between the landlord and the tenant, but sometimes its hard for new landlords to know what to include in a residential lease agreement. An ironclad lease is essential in setting the terms and expectations for both parties, minimizing misunderstandings, and providing legal protection. From the definition of the lease terms to the rights and responsibilities of both parties, a well-drafted lease agreement is the cornerstone of a successful landlord-tenant relationship.
In this post, we’ll explore the critical components of a residential lease agreement, helping landlords and tenants alike navigate this vital document.
The Integral Pieces of Residential Lease Agreement
- Parties to the Lease: Define the landlord and tenant(s), including names and contact information.
- Property Description: Include the address and description of the rental property.
- Lease Term: State start and end dates, and type of lease (e.g., fixed-term, month-to-month).
- Rent: Specify rent amount, due dates, payment methods, and late fees.
- Security Deposit: State amount and terms, including conditions for withholding and returning.
- Maintenance and Repairs: Outline responsibilities and procedures for reporting issues.
- Utilities: Define responsibility for utilities and services.
- Pets: Include pet policies, such as restrictions or additional deposits.
- Insurance Requirements: Specify required renter’s insurance or other policies.
- Rules and Regulations: Detail rules regarding noise, guests, smoking, etc.
- Alterations: Outline restrictions or permissions for alterations or improvements.
- Right of Entry: Define landlord’s right to enter, including reasons and notice.
- Termination: Include provisions for terminating the lease, including notice requirements.
- Dispute Resolution: Provide a clause for resolving disputes, like mediation or arbitration.
- Compliance with Law: State that the lease follows all applicable laws and regulations.
- Additional Provisions: Include provisions specific to your property (e.g., communal areas, parking, appliances).
- Signatures: Sign and date the lease, and consider witnessing or notarizing as local laws require.
Clauses Worth Adding
I’ve come to recognize a good lease isn’t complete without its finer notes. Here are some classic clauses that might just save you money in the long run!
- Quiet Enjoyment Clause: This is especially important in multifamily units or apartments.
- Subletting Clause: Charge an admin fee for the hassle because, believe me, it really can be. Also, require a full background check and approval by the owner.
- Wear and Tear Clause: Let’s face it, living is messy. But there’s a difference between a lived-in look and a wrecking ball. It should be made clear that anything beyond minimal wear and tear is unacceptable.
- Right of First Refusal Clause: Giving tenants a chance to buy before selling? That can be intriguing to some tenants. I like to require an appraised price plus 10% or a specific number, whichever is higher.
- Abandonment Clause: In case your tenants decide to go on a world tour without notice.
- Joint and Several Liability Clause: This can be a good idea, but have it drafted professionally.
- Renewal Clause: Spell out the terms of renewal clearly and what happens if the lease goes month to month. Perhaps an increase in rent?
- Holdover Tenant Clause: This can also be used to describe the rent increases if they do not move out at the end of the lease and never provide notice or sign a renewal.
- Alterations Clause: Allow improvements, but make tenants get approval first. I’ve had tenants paint all the walls neon green before, that is not fun.
- Insurance Requirement Clause: Force the tenant to carry a certain amount of rental insurance for their possessions and liability.
Addendums to Consider Adding to the Lease
As a seasoned real estate investor with years of property management under my belt, I’ve seen some unbelievable interpretations of the lease by tenants that can cause major issues. Many times this can be avoided with the following addendums:
- Pet Addendum: Outlines the rules for keeping pets on the property, ensuring all guidelines are followed to maintain cleanliness and order.
- Smoke-Free Addendum: Stipulates the prohibition of smoking within the apartment or specified areas to maintain a healthy living environment.
- Pest Control Addendum: Details the responsibilities of both landlord and tenant in keeping the premises free from pests. If it isn’t a multi-family, I typically make this a tenant expense after the first month.
- Parking Addendum: Provides rules and regulations for parking so everyone knows where vehicles belong.
- Maintenance Addendum: Clarifies the procedures for maintenance requests and what tenants can and cannot repair themselves.
- Yard Maintenance Addendum: Outlines the expectations for maintaining the lawn or garden areas, ensuring that the exterior appearance is kept neat and orderly.
- Waterbed Addendum: Set restrictions or guidelines for waterbeds within the rental unit to prevent possible damage. These aren’t as popular these days, but I’ve had one burst, and its not fun.
- Home Business Addendum: Details any restrictions or permissions for running a home-based business from the rental property so the line between home and work is clear. This is different from working at home, which isn’t a problem.
- Early Termination Addendum: Outlines the process for terminating the lease early, protecting both parties interests.
- Renovation Addendum: Specifies what alterations or improvements a tenant can or cannot make so everyone’s on the same page about decorating versus demolishing.
- These addendums are essential to a comprehensive lease agreement, setting clear guidelines and expectations for both landlord and tenant.
Work With a Professional
If you don’t have an attorney you trust, consider working with an online firm that specializes in real estate and business related documents. This can cost a fraction of the price while providing extremely high-quality documents. It can also save a lot of money in the long run, by both adding protection and limiting your up front cost.
Our #1 Pick for Landlords
Legal Templates is a website that provides access to a wide array of customizable legal documents, including those related to lease agreements. Designed for both legal professionals and laypersons, the platform offers templates that adhere to legal standards across various jurisdictions.
Here’s why someone may consider using Legal Templates to draft their lease documents:
- Ease of Use: With user-friendly interfaces and step-by-step guidance, drafting a lease document becomes a simplified process.
- Cost-Effective: Legal Templates can be a more budget-friendly option for standard lease agreements than hiring an attorney to draft documents.
- Compliance: The templates provided are typically crafted to align with current legal regulations, minimizing the risk of non-compliance with local laws.
- Customization: Many templates can be tailored to suit specific needs, providing flexibility while maintaining legal soundness.
- Time-Saving: Creating a document from scratch can be time-consuming for those unfamiliar with legal jargon. Legal Templates provides a quick solution by offering templates ready to be customized and used.
- Professional Appearance: The documents generated have a professional look and feel, instilling confidence in both parties involved in the lease.
- Access to Other Legal Documents: Users can find templates for various legal needs beyond lease agreements, making it a one-stop shop for many legal document requirements.
Legal Templates offers a convenient, cost-effective, and legally compliant way to draft lease documents and other legal paperwork. It caters to individuals and businesses looking to navigate legal processes without needing extensive legal knowledge or hefty legal fees.