Before companies make any kind of transaction, contracts are exchanged and signed. Doing so prevents conflicts since all parties are aware of the provisions behind the agreement. This applies when renting out a property as well. You need a leasing agreement to outline the details of the tenancy’s terms and conditions.
Having a lease means your tenants are guided on what to do when reporting a property issue, requesting maintenance, and paying the rent. The lease would also make them aware of their rights and responsibilities as residents.
Defining a Lease
A lease is a contract between the landlord and tenant that covers the property policies and terms and conditions of occupying the rental space. It provides information on restrictions and disclosures that need to be divulged to the renter. All singing parties are obliged to comply with the lease.
Purpose of a Lease
Even if you’ve cultivated friendly relations with a tenant, conflicts are possible in the future. To reduce this risk and protect your interest as a landlord, a lease is required. In court, leases are valid evidence since both parties signed the contract. The details of the rental agreement are also contained in the document.
If you only have a verbal agreement then it can take time to prove your word. A renter can also misinterpret the conditions you spoke about. This is why written leases have more power to protect you.
Initially, creating a lease appears challenging but with proper awareness, you would be able to draft a clear and specific one customized to your own rental home. Here are important details to include in your leasing agreement:
Tenant and Landlord’s Names and the Property’s Address
All the parties signed to the lease should have their full names written on the agreement. This also includes the full address of the rental property. If it’s a condo or apartment unit, the unit number should also be included to differentiate it from other rentals in the same building.
Rental Due Date
To ensure you get paid on time, it’s vital to detail the full payment due dates on the lease. Always spell out the full date. Otherwise, you can risk confusing a renter and getting your rental income late.
Rental Amount
The best practice is writing down the amount of the rent in words and figures to be clear. If there are other fees you’ll be collecting, like pet rent or security deposits, it’s best to provide the information in a separate category of the lease.
Rental Period
Landlords must also state the complete dates for the whole rental duration. For example, from June 1, 2023, to June 1, 2024. Adopting this protects you from loopholes. If you only state a rental period as one year, there’s a risk of renters overstaying.
Signatures of all parties
To make the lease agreement valid, both parties must sign the document declaring they mutually understood and agreed to the outlined terms and conditions of the rental contract.
Important Clauses and Policies to Include in Your Lease
Clauses tend to be similar among rental properties since they should be compliant with state and federal laws. Here are some clauses to consider for your leasing agreement:
Occupancy / Subletting
Some landlords allow their tenants to sublet the unit with another renter to split the rental cost. If you’re open to the idea but want to retain control over who occupies your unit, you can require your tenants to submit a written request for authorization before allowing a new resident to stay in your rental property.
Rights and Responsibilities of the Tenant
To help reduce property damage and ensure the upkeep of your rental space, you can list down the duties that a renter has to fulfill, such as discarding the trash in the proper receptacles to prevent a pest infestation issue. You must also outline their rights, such as getting back their security deposit refund, if no legal deductions are made.
Rights and Responsibilities of the Landlord
Mentioning your duties and responsibilities as a landlord must be part of the lease agreement. Among your responsibilities to fulfill is making sure you’re providing a habitable environment to your renters.
Including notice period for property inspections and repair timeframes once a request had been made also fall under this section. Check the state laws for updated information first.
Termination of the Lease
Under this clause, your tenants are briefed on the acceptable situations for leases to end early. Some of the accepted reasons for early termination are cases of domestic violence, landlord harassment, and serving military duty. If there are other reasons that landlords are open to, this must be written clearly on the lease agreement.
This section should also inform them of the penalties for early termination of the lease without a valid reason.
Security Deposit
Landlords must write down the security deposit amount requirement and the process of the refund. Almost all rentals collect a security deposit and in some states, renters must know where their security deposits are stored and if it’s earning interest.
When the tenancy ends, the cost of repairs resulting from property damage beyond wear and tear can be deducted from the security deposit. It’s good practice, and sometimes legally required, to remain transparent with your renters about these deductions.
Disclosures
Landlords are required to disclose specific information to their renters, For instance, they must inform tenants if the property is located in a flood zone area, or if there’s a presence of bed bugs, radon, and lead-based paint.
Bottom Line
Creating a leasing agreement may require time and effort but it grants peace of mind to landlords and tenants. It eliminates conflicts since terms and conditions are clear and specific.
You can also partner with a property manager to help craft a lease. The team at Keyrenter BuxMont can help with your leases, tenant screening, property maintenance, and so much more. Contact us today to learn more!