When renting out your property, you need to have a rental agreement or lease. While agreements shorter than 12-months do not need to be written to be binding, oral agreements are difficult to defend in court should your tenant not fulfill the terms of the lease. Here are the essential parts of a written lease every landlord should include.
The names of the tenants and landlord – The full legal name of each tenant should be listed on the rental agreement or lease as well as the name of the landlord. This includes the name of the corporation, partnership, or LLC if the landlord is not an individual.
The physical address of the property - The address also includes any specific unit number.
The contact information for the owner or property manager – Tenants need a way to correspond with their landlord. This contact information should include the mailing address and phone number where the landlord can be reached.
The length of the tenancy – Rental terms can range from weekly, monthly or yearly rentals. Be sure to specify if your tenants will be living in your rental on a month-to-month basis or for a set period of time.
The amount and nature of any security deposit – You must include how much your tenants paid as a security deposit and if any of these monies are nonrefundable. Not all states allow for nonrefundable deposits so be sure to check with your state.
The rent amount - The amount due for rent should be listed in a weekly or monthly amount depending on how your lease agreement is set up.
The amount of late fees and how they are calculated – Late fees are assessed when tenants have not paid their rent by the due date or by the end of the grace period. The grace period should be spelled out and is usually 3-5 days after the due date. Late fees are often a flat fee or an accrued amount where a fee is charged each day the rent is late.
Any additional fees that are the responsibility of the tenants – The rental agreement should list out any utilities and specify which are paid by the landlord or tenants. If parking is an additional expense this should be included on the agreement.
What maintenance responsibilities are required of each party – The landlord is ultimately responsible to make the property inhabitable, but the parties can agree to have the tenant pick up some of the maintenance burden like lawn care.
The names of any additional occupants – It is recommended that all persons over the age of 18 be listed as a tenant and sign the rental agreement, however children should be listed as occupants of the rental property.
If the property is rented as unfurnished or furnished – If you are renting a furnished rental, take care to document and list all items included in the property. These items can be listed in an addendum to the lease, but should be signed off on by the tenant.
Any use restrictions on the property - Be sure to list the legal and illegal uses of your rental property. If your tenant wishes to run a business out of your residential unit, you do not want to violate any zoning ordinances.
If pets are allowed and what types – Pet-friendly communities are becoming more popular, which may influence your decision to allow pets. You need to list the types and quantity of pets allowed. The rental agreement should also include any pet deposits or additional pet rent.
A clause referring to legal fees – Should you find yourself in a legal dispute with your tenant, a clause allowing the prevailing party to collect legal fees from the other party will be necessary. This will also discourage your tenants from bringing a frivolous suit against you.
A clause referring to rental concessions – In a slow rental market, landlords may find themselves offering free rent to tenants called concessions. You should include a clause in the lease that states if a tenant does not fulfill the terms of the lease, they forfeit these concessions and will be responsible for reimbursement of the free rent.
Lease termination – The rental agreement should state that tenancy cannot be terminated unless done so in writing. This will provide all parties with the appropriate paper trail and records.
Signatures – The most important part of the lease is the signature of both parties. This makes the agreement legally binding.
Photo by: Aidan Whiteley
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