Essential Terms for a Lease Agreement
Whether you're a landlord or a tenant, having a proper lease agreement for your rental unit is essential for protecting your rights. But not all rental agreements are created equal. For a lease to be effective, it should include some important terms and standard information to secure your legal rights.
Landlord-tenant laws are different in every state and may also differ by county or city. If you have questions about what terms you need for your property rental agreements, speak with an experienced landlord-tenant attorney in your area.
A rental agreement for a residential property provides the terms for a person or persons to lease a property for the purpose of living in it. There may be specific state or local tenants rights laws that also guide what terms should be included in a rental agreement. A residential lease should almost always have the following basic information.
Leases for residential property typically fall under one of three categories:
- A tenancy for years. Despite the name, a tenancy for years can last for any specified unit of time, as a designated number of weeks, months, or years. These leases have a definite end date provided in the lease.
- A periodic tenancy. A periodic tenancy lease continues for consecutive periods, such as month-month. In many cases, there is no specified end date. The landlord or the renter can end the lease with the appropriate notice.
- An at-will tenancy. At-will tenancies may not specify a period of time at all, but either party can end the lease at any time with appropriate notice.
A lease should always specify how long the rental will last, as well as terms for breaking the lease early and options for renewal. Most leases apply for a year with an option to renew at the end, or change to month-to-month. Rental agreements should be in writing to protect both parties and prove their agreement. In many cases, you may be required to have a written lease for a rental period of a year or more.
Your rental agreement should also include details on payments, such as how much rent will be, when it needs to be paid, how it should be paid, and what the penalties are for not paying on time. Typically, if a landlord wants to charge a late fee for delayed rental payments, it needs to be specified in the lease.
Security deposits and stipulations for paying last month's rent upfront should also be included. State and local landlord-tenant laws may provide specific guidance for rental costs, fees, and security deposits.
Your lease should state the names and addresses of the tenants and the property owner. Other occupancy rules may include the number of people allowed to live in the property, how many guests can enter the property, and how long they're allowed to stay, which should all be included. All parties, including multiple tenants and co-signers, must sign the lease.
Many properties have rules about pets in the rental. This includes the types of pets, appropriate sizes, and how many pets the renters are allowed to have. If renters need to pay an additional security deposit or monthly pet fee, that will need to be spelled out in the lease.
The lease should clarify which utilities the landlord will cover and which utilities are the tenant's responsibility. Some states require landlords to cover specific utilities, such as trash or water. If there are any particular rules about appliances, such as air conditioning units or optional washer and dryer setups, these terms should also be explained.
Most of the time, landlords cannot enter a lessee's rental unit without their permission and sufficient notice, often at least 24 hours before. The rental agreement should clarify when and how the landlord can enter the premises and who will be responsible for repairs. Residential landlords are generally required to maintain the property and repair the units and common areas.
Ideally, the landlord would not have to worry about eviction. However, if the owner ended up renting to a nightmare tenant, they may be forced to move forward with terminating the tenancy. State and local housing laws may limit how the landlord can terminate a lease or evict a tenant, including time limits and the causes for eviction. Make sure the terms for termination of the lease are included, and the agreement does not violate local housing rights laws.
Some additional terms that may be included in a lease include information on parking, prohibited items, general rules for use, requirements for renter's insurance, and any information related to state and local laws that apply to renting property.
You should also note the rules on subletting or assignment of the lease. In many places, a renter can sublet the property without the landlord's permission unless the lease states otherwise.
It's in your best interest to include documentation on the state of the rental unit before the lessee moves in, including the condition of the paint, carpet, flooring, counters, cabinets, and appliances.
Many leases also have rules about altering the property, like if the renter can paint the walls or hang decorations with nails. These agreements should also include consequences for making changes or damaging the rental. This will make it easier to settle any disputes around the security deposit when the lease is over.
Commercial leases are for rental properties used to run a business. Commercial leases differ significantly from residential rental agreements, and a residential rental form should not be used for a commercial lease.
Commercial tenants and property managers should pay close attention to the terms of the commercial lease, as there may be fewer protections that will apply to them beyond what's written in the agreement. On the other hand, residential leases usually have additional protections on habitability that are required by law. Many residential tenant rights laws do not apply to commercial renters.
Commercial rental agreements generally last for a longer period. Commercial agreements may include terms for build-outs and where the tenant is responsible for repairs and maintenance.
Most of the basic terms above will also apply to a commercial lease, such as the length of time, rental payment information, and information on the occupants and the landlord. But commercial properties may have additional terms related to the company leasing it, such as what type of business is allowed to operate there, parking and delivery restrictions, and hours of operation.
If you're unsure if the terms of your lease are fair or legal and what you might be missing, you may want to consult with an experienced local landlord-tenant attorney. An attorney experienced with residential or commercial leases can help protect your property and make sure you're following state landlord-tenant laws.