The fundamental premise of a residential lease agreement, or rental agreement, is a legally binding agreement between a landlord and a resident. A residential rental and lease agreement serves to outline both the landlord’s and the resident’s rights and responsibilities and strives to ensure a positive experience for both landlord and tenant. If you have questions about what to include in the residential lease agreements, this template could be useful.
It is not only a legally binding contract that the parties can enforce in court; it is also an efficient document full of critical business operating details, such as how long the residents can occupy the property, the amount of rent due each month when it is due, and the consequences of failing to comply with the agreement.
What Is The Purpose of a Rental Agreement?
Rental agreements serve to ensure that both the landlord’s and tenant’s rights and assets are respected and that the relationship has legally enforceable components in the event of either party’s misstep.
Basic rental agreements or lease agreements must follow each state’s property laws. This should be considered in all stages of planning, implementing, and signing a lease agreement.
Every state has laws governing what landlords can and cannot do regarding security deposits, fees, and rent increases. Landlords in California, for example, can charge up to two months’ rent as a security deposit or three months if the unit is furnished, and some states require landlords to pay tenants interest on security deposits.
It is imperative to understand the respective state’s laws to ensure that a lease is in compliance with state legislation.
What Is Covered In Residential Lease Agreements?
Most residential lease agreements have similar consistent terms that ensure the validity of the document and the expectations of both parties involved. The followings terms are included in the rental lease agreements:
- Agreed rental amount
- The day rent is due, and the frequency of payment
- In-going condition of the property
- Ongoing maintenance and how the property is expected to be maintained during the tenancy
- Out-going inspection & how the resident is expected to leave the property
These components ensure that both parties understand the expectations from the agreement and the importance of having an agreement in place to run this process smoothly.
Key Elements of a Lease Agreement
Most lease agreements include additional information to outline the expectations and conditions that both parties must follow. It is critical to consider any additional components that should be included in a standard lease agreement to ensure that the property owner’s expectations are met. These key elements are included in the standard lease agreement, but are not limited to:
- The landlord’s, property manager’s (if applicable), and tenant’s names and addresses (s)
- The location and description of the leased residential premises
- The lease’s duration
- How frequently rent must be paid
- The rent amount that must be paid for each new lease term
- Details on how much the security deposit must be paid
- The key terms define how the property may and may not be used, such as whether pets are permitted
- A written indication of exactly which party is responsible for repairs and maintenance
- Any additional fees or payments for services that the tenant is required to make on a regular basis
- The rules governing how either party must act if the agreement is terminated prematurely. For instance, if an eviction notice is issued
Additional Lease Components to Consider
It is also important to note that additional components of a residential agreement can be included in order to ensure that a landlord’s expectations are met and both parties can perform harmoniously.
A pet clause should be used to state whether the property allows pets and, if so, what types of pets. This is also an opportunity to include clauses regarding pet damage and the tenant’s responsibility for these damages.
A clause could also be included on the tenant’s duties. This can state what a tenant can and cannot do, such as no smoking in the building, maintaining the property in good condition, and other expectations in place to promote harmony among the landlord and tenants.
How to Create a Rental & Lease Agreement
A residential lease agreement or rental agreement can last for months or years. As a result, it is critical that the final document covers all of the necessary information needed and accurately describes the premises, location, and the proposed terms of the agreement.
Most of the details listed in the preceding section must be included in the finalized contract. To obtain this information, you must first speak with the prospective tenant in order to agree on mutually beneficial terms. Once the agreement terms have been agreed upon in principle and the tenant is certain that they want to sign the contract, the landlord should collect the potential lessee’s information to complete the draft document.
Additionally, prior to presenting and signing the residential lease agreement, a landlord should check the tenant’s credit history and criminal record to ensure that it will be a favorable endeavor for both parties.
After reviewing the tenant’s circumstances, the landlord can decide whether to continue with the process. If everything checks out, the landlord or property manager and tenant can meet and sign the contract exchange keys, and the tenant can be granted access to the rental property.
After reading this blog, I hope you know all the basic things about residential lease agreements, and they will become helpful to you.