Guide to Making a Solid Lease Agreement for Your Rental Property
Verbal agreements are easy to make but can be hard to keep on top of. So, with your rental business, it’s essential to create a clear leasing agreement and have a clear understanding and acceptance of the terms and conditions stated on the document.
The lease should outline the responsibilities and duties of both the landlord and tenant. It also contains all the property policies, clauses, and disclosures. A solid lease can be a reference for specific procedures during certain situations that occur. It can inform the renters about the different rental payment channels and the right process to make a property maintenance request.
At Alltrade Property Management we believe a solid lease is a foundation for a great investment. This is why we have put together this guide on what to include in a great lease agreement.
Ways to Create a Leasing Agreement
Several routes are available to craft a lease. You can make one yourself, seek the assistance of a property manager or attorney, or simply copy from an online template. First-time landlords may take long to draft a lease especially when knowledge of State laws and local regulations is inadequate.
Engaging the services of a property manager can save you time as you don’t need to study the property laws and reduce any costly mistakes. Although some may use a template, the leasing terms in these are generic by design. So, hiring a property manager is much more favorable since they are experienced, and can easily design a clear, solid leasing agreement for you.
The Need for a Lease
When you own a rental unit, you own a business that needs rules and policies. With a solid lease, you can save a lot of time. In the event your tenants have questions, they can simply go through the leasing contract to find the important information they’re looking for.
You won’t have to keep answering the same questions over and over again. It also makes your rules easier to follow given the outlined terms. Oral agreements can be unreliable as they leave room for misinterpretation. So, if you need to go to court or have any other legal matter regarding your investment property, your lease can protect you.
Basic Terms Included in Leases
Though leasing agreements can differ, the essential parts of every agreement remain the same. Here are some of the important terms that should be present in your agreement:
Personal Details of the Parties
The full legal names of the property owner and renters must be written down in the lease, including the rental property name. The address of the rental must also be included in full.
Rent Due Date
To prevent confusion, spell out the full date of payment in your lease agreement. Month, day, and year must be specified so the tenants are more likely to pay on time.
Similar to the due date, the rental fee must also be spelled out in both figures and words. Should there be extra charges such as pet deposits, this must be written down, separately from the rent amount.
The rental period must be mentioned in full. For example, if the rental term is one year, include the start date and end date such as June 1, 2022, to May 31, 2023. If you make this generic such as one year then the renters can overextend their stay since this can be a vague term.
Signatures of All Parties
Signing the lease indicates the full agreement and understanding of the contract terms and conditions for all the parties involved. This is the reason it’s necessary to add your signature. Make sure to write down the date beside the signature as well.
Important Clauses and Policies
The leasing agreement will contain a variety of policies, with respect to the landlord’s wishes. But there are some normal clauses that follow State laws.
Here are some basic clauses to keep in mind when it comes to writing your leasing agreement:
To ensure that you know the people staying in your rental, you should create a subletting policy. Subletting means permitting the renter to accept other tenants to reduce their overall rental payment. If this is agreeable to you, just make sure a written request is sent to you beforehand.
To protect the tenant's right to quiet enjoyment of the property, landlords need to outline the instances when they can enter the rental home. If not, the State law must be followed when it comes to providing a notice period.
Landlords have a duty to keep their rental units livable to the renters, as mandated by State laws. In the same manner, renters must also do their reasonable share of property maintenance by ensuring that the trash is properly emptied and honoring the other renters’ right to peace and quiet.
This is especially important to understand if you are a new or first-time landlord.
Breaking the Lease
There are certain circumstances where a tenant can legally break a lease. For instance, you can’t force tenants to stay when they’re on active military duty, experiences domestic violence, or wants to avoid landlord harassment.
Should you offer flexibility for early breaking of leases due to a job relocation, you should include this in your leasing agreement.
Under the State’s security deposit law, you must provide a tenant with certain information regarding their deposit. They must know where it's kept and if it’s stored under an interest-bearing account.
To manage expectations and reduce disputes, you must also include the security deposit refund process in your leasing agreement,
Importance of Disclosures in the Lease
Under the law, landlords are expected to divulge particular information to the tenants such as flood zone, bed bugs, radon, and lead-based paint for health reasons and safety.
Creating a solid lease agreement is incredibly important when it comes to managing your rental property effectively.
So, if you have any further questions, please don’t hesitate to contact us at Alltrade Property Management today!