The lease agreement that you and your tenant sign contains rules (referred to as “terms”) that each of you is legally bound to follow. Consequently, it is critical that all of the legal aspects of your relationship are clearly and completely spelled out in the lease.
Before either you or your tenant sign a lease, it is important that you have a real estate lawyer review it to ensure that it is accurate and unambiguous, and that it follows all the laws and regulations in your area. It is also important that you understand the lease terms.
What to Look for in a Lease
As you develop a lease in preparation for reviewing it with your lawyer, be sure that it includes, at a minimum, this information:
- Parties to the agreement.The lease should name you, as the landlord, and all the tenants who will be bound by the lease.
- Property description.You must indicate the address of the property.
- Lease dates and termination.When does the lease start and end? And how can the landlord or tenant terminate the lease?
- Rent amount and payment rules.The lease should indicate the dollar amount of the rent, the day of the month it is due, and how/where the rent will be accepted. The lease should also indicate the point at which rent is considered “late” and what the late payment fee is.
- Details on the security deposit.The agreement should spell out how much money the tenant must put down as a security deposit and what the conditions are for the tenant to get the money back at the end of the lease.
- List of occupants.The lease should list the names of everyone who will be living in the home, even if they are not a party to the lease.
- Pet rules.Is the tenant allowed to keep a pet on the property? If so, of what species and size, and how many? If there are exclusion, such as certain dog breeds, that should be noted as well. You might also include terms related to pets belonging to visitors.
- Property damage and repairs.The lease should indicate responsibilities related to general maintenance as well as damage repairs.
- Property alterations. The agreement should outline what changes, if any, the tenant can make to the property. For example, are they allowed to paint rooms? If so, are they required to get your approval on the color?
- Right of entry. The lease should indicate that you, as landlord, are allowed to enter the property and inspect it with reasonable notice. And “reasonable notice” should be clearly defined.
- Locally required terms.Many states, and even some cities, have required language that must be included in a lease – make sure you understand what is required for each jurisdiction where you own property or you could be at a significant disadvantage if you ever end up in court with your tenants.
Good Leases Make Good Relationships
The poet Robert Frost said, “Good fences make good neighbors,” the idea being that they clearly define relationships. The same is true of single family rental property leases. Be sure that you and your lawyer agree that your lease agreement covers all aspects of this relationship in appropriate detail and you will find that it greatly simplifies your landlord/tenant interactions.