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ContinueLearn how to write a lease agreement and the key provisions to include to ensure it is legal and fair so you can protect both yourself and your tenants.
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If you own multiple rental properties, you know that managing tenants, maintenance, and rent payments can be a challenge. A strong lease agreement helps keep things simple. It sets clear rules, protects your property, and prevents problems like late payments or unexpected repairs. Having one in place for each tenant can protect your units, streamline operations, and reduce disputes.
Learn how to create a legally sound lease agreement and the key provisions every landlord should include.
A legally sound lease agreement isn't just a formality—it's your safety net. It sets clear rules for you and your tenant, reducing the chances of conflict. It also brings predictability to the rental relationship so that there are no surprises when it comes to key terms, such as rent payments, maintenance responsibilities, and tenancy length.
Writing a lease agreement can also ensure compliance with local rental laws, especially if your area enforces rent control or rent stabilization. This document creates a reliable arrangement that protects both parties from legal complications.
Even well-written leases can have mistakes. If your lease accidentally includes an illegal term, it doesn't necessarily make the entire agreement void. A severability clause ensures that only the problematic term is ignored while the rest of the lease remains enforceable.
Before you write the lease, you must consider key factors that can affect the success of your rental business and your compliance with applicable laws. Start by understanding the market conditions and setting the right price for your unit. Research comparable rentals in your area to determine a competitive and fair rate.
Once you have interest, you can vet applicants to ensure they're reliable and able to make their rent payments. Start by verifying their income via documentation they submit, including pay stubs, bank statements, or W-2 forms. You can also conduct credit checks and background checks to learn about their financial history and see if they've had issues with the law in the past.
Additionally, as an independent landlord, you must ensure that your rental unit is habitable. In some locations, you may be unable to rent out certain units if they don't meet specific safety and zoning requirements. Depending on where you live, you may need to ensure compliance with requirements for proper ventilation, adequate exit methods, and local building codes. When you address these concerns upfront, you can prepare to create an enforceable lease with thorough protections.
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A lease agreement does more than set rent. It creates a clear, legally binding contract that outlines your and the tenant's rights and responsibilities. Follow these steps to write a strong, legally sound lease.
Identify yourself as the landlord and list all the tenants' names. Use everyone's full legal name and double-check for accuracy to prevent enforcement issues. Many landlords verify identity and conduct credit checks before finalizing a lease, so having this information ready is useful.
Remember to list the full address and unit number to distinguish it from surrounding properties. Describe the unit, including whether it should be furnished, so the tenant knows what they're getting. Identify any additional areas, such as parking spaces, shared amenities, or storage units.
These details will establish clear boundaries for the unit and associated areas. When you sort these terms out from the beginning, you can avoid disputes over property access.
Define whether the lease is for a fixed term (e.g., one year) or month-to-month. Lease length impacts tenant rights, eviction rules, and rent adjustments.
For example, fixed-term leases provide stability and ensure tenants can stay for the entire period unless they breach the agreement. Landlords cannot terminate early without cause, and rent increases usually can't happen until lease renewal.
In contrast, month-to-month leases offer more flexibility. They allow either party to end the lease with proper notice, which varies by state. Landlords can typically raise rent more frequently, but rent increases are subject to legal notice periods.
Depending on whether your area has rent control or rent stabilization, you may need to offer specific lease lengths with limits on rent increases.
Detail the monthly rent amount, the due date, and the accepted payment methods. If you plan to use an online rent collection tool, mention it in your lease to encourage timely payments.
You should also explain your late payment policy. Describe when late fees start, how much they'll cost, and whether you allow grace periods. Setting these expectations upfront can facilitate smoother rent collection.
Be sure to review the specific late rent fees and grace period laws for your state. Many states limit how much you can charge for a late fee. They also restrict the circumstances under which you can charge them. In some states, the late fee must be reasonable and clearly stated in the lease to be enforceable.
Security deposits protect landlords from property damage and unpaid rent, but you should establish clear guidelines to avoid disputes. In many states, like New York, landlords must keep deposits in interest-bearing accounts. You may also need or want to provide a security deposit receipt to show the tenant where it's held.
Each state has its own rules about how much the deposit can be (often one or two months' rent) and how quickly the landlord must return it. Some places also require landlords to give an itemized list of deductions if they keep all or part of the deposit.
If you don't follow these rules, you could face penalties that vary from state to state. Make sure your lease explains how you will handle and return your security deposit to create clarity. Look up your state's security deposit laws to ensure compliance.
Clearly outline maintenance responsibilities in the lease. Tenants typically handle small tasks, such as cleaning and replacing light bulbs. They will also need to report maintenance or repair issues for their landlord to address. Landlords are usually responsible for major repairs, like plumbing and heating, to keep the property safe and livable.
Some areas may require landlords to give notice before entering for repairs or inspections, so include this in the lease. A well-defined maintenance section ensures the property's upkeep and prevents legal issues for both parties.
Utility provisions in a lease specify who is responsible for paying for essential utilities, such as gas, electricity, and water. Depending on local laws, landlords may need to provide certain utilities as part of the lease to maintain habitability. You may also need to disclose energy usage and costs for transparency. Other areas may allow tenants to manage their own utility accounts.
When you record specific rules and policies, you can guide tenant behavior and ensure they act in alignment with your preferences. Some policies to outline include the following:
Being detailed helps avoid misunderstandings, especially when managing several units with varying tenant needs.
Many states require landlords to disclose potential risks on the rental property within the lease. For example, under federal law, landlords must tell tenants if a home built before 1978 contains lead paint. You may also have to follow disclosure requirements per state and local laws. For example, some states or cities may require you to notify tenants if the property is in a flood zone or has had issues with pests.
Making these disclosures helps you comply with the law and show tenants that you prioritize their well-being. Stay updated on your state's disclosure requirements to avoid legal consequences and build strong tenant connections. Review local landlord-tenant laws to ensure you're fully prepared.
Explain what happens at the end of the lease term. Will the lease automatically renew? Will either party need to provide notice via a lease termination letter? What penalties apply if the tenant breaks the lease early? Clear guidelines can reduce confusion and make property management more straightforward.
As you write protections in your lease, you must avoid clauses that violate tenant rights or state laws. For example, the Fair Housing Act prohibits landlords from treating tenants differently based on race, gender, disability, or other protected categories.
Ensure your lease doesn't include terms that restrict a tenant's rights, such as imposing unfair fees or penalties. Also, don't include clauses that attempt to waive legal obligations, such as your duty to provide livable conditions.
Get a free lease agreement template and review a range of other key landlord documents and templates from our free downloadable resources page here.
Independent landlords managing several properties need clear and enforceable leases. By creating a lease that fits your properties and tenants, you can defend your property and create a positive tenant experience.
When you make a solid, legal lease agreement upfront, you can focus on running your rental business smoothly. With tools like LandlordStudio, you can manage other aspects of your operation, such as finding and managing tenants, rental accounting, and tax reporting, to help you stay organized and compliant.
Make tracking leases and managing tenants easy with property management and accounting software designed for you. Run a profitable, scalable rental business. Create your free Landlord Studio account today.
Yes, but you must be familiar with landlord-tenant law in your area. This way, you ensure your lease complies with local regulations. If you're unsure how to stay legally compliant, consult a lawyer.
In most cases, no. A lease agreement can be enforceable without notarization. However, some jurisdictions may have specific requirements, so always check before signing a lease.
A handwritten lease can be legally binding if it contains enforceable terms and has both parties' signatures. However, having a typed lease is often more efficient, as it can be more formal and reduce misunderstandings.
Start by reviewing the lease agreement for specific clauses about ending the rental. Make sure you follow state and local landlord tenant laws and provide the required written notice.
You should also record the property's condition and handle security deposit deductions. If the tenant refuses to leave, you may need to initiate the eviction process. Always make sure you follow the legal process to prevent disputes.
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