Lease agreements are necessary — you know that. They are the DNA of your tenant-landlord relationship, but creating a fantastic one is aggravating and time consuming..
You have to make sure you cover everything… but all that legalese is boring to read/write and you’ve obviously got better things to do with your time.
So, if you’re trying to make sure you craft an iron-clad lease agreement, AND would appreciate some no-nonsense advice on what to include, then keep reading… we’ve got you covered with a step-by-step guide.
We’re going to show seven key things to pay attention to to ensure that you’re covered if anything goes wrong… plus you’ll make sure your tenants know exactly what to expect when they move in.
1. What are the Must Have Elements?
Certain pieces are needed in every lease agreement. These are the basic elements that define the: timeline, monetary aspects, and use of the rental property.
The obvious culprits here are:
- Location: Details specifying the exact rental property.
- Lease terms: This is the time period of the rental. Most commonly, this is either a one-year lease or an indefinite month-to-month lease.
(This is the common difference between a lease and a rental agreement. Generally, contracts for month-to-month rental are called “rental agreements”.)
- Money Issues: What the tenant can and will owe you and payment terms. These might include:
– Rent,
– Security Deposit,
– Late Fees, Pet Deposit Fees, etc.
For these charges, clearly detail:
– when payment is expected,
– definition of a grace period, if any, is allowed
– what form of payment is allowed or expected, i.e., online, by check, etc. - What is and is NOT included in the rental for use by tenants: This accounts for items, furniture, facilities, etc., on or about the premises.
So, for instance, tenants can use the laundry facilities in the basement but NOT the shed in the backyard. Parking is a joint facility that often needs good clarification.
The key for any and all of these lease components is to be clear, concise, and complete in setting tenant expectations. Tenants should have no ambiguity about what is done when, and their role in the relationship.
(Lots of great blogs have very detailed listings of lease and rental agreement contents.)
2. Which Features are Key to Quality?
So we know the minimum that our lease should contain, now let’s discuss some other important features.
- Simple language, avoid legalese: Keep the language of the lease or rental agreement straightforward and easy to understand.
Avoid legal jargon that may confuse tenants. If your, or the neighbor’s, high schooler can’t follow it, you are using too much jargon. When shopping around for a lease, this should be a major criterion in your decision. - Include good definitions: If your lease must use legal terms, have a definitions section. Be sure to include clear definitions of the legal terms there.
- Make the document easy to reference: Organize the lease well and label the sections in very readable and referenceable language.
- Feel free to use appendices: Consider including expectations about behavior, property feature usage, or tenant responsibilities in an addendum or appendix. Elements in an appendix are much easier to update and maintain than text buried in the document’s body.
- Discuss how disputes should be handled: To facilitate good communication, be very clear about how notices of violations, responses, and timelines for these will be addressed.
Can’t I Just Get A Good Lease?
OK, I can hear you saying:
“Fine, Fine, this is all good, but can’t I just get a lease pre-written?”
The answer is obviously, “yes, you can,” and, yes, you should. There are many good sources for copies of leases, and you should never try to write one yourself from scratch; it’s just not worth the effort.
Where can you get one?
3. Talk to a good lawyer:
It is, after all, a legal document, so have a lawyer draft one for you. This is the most expensive option, but it does get you two things:
- An advocate and editor if you want to make changes to the boiler-plate, bog-standard lease
- Someone who understands the local, regional, and state laws and gotchas in housing rental
4. Use online contract and legal services:
Instead of paying an attorney, you can pay for online legal services.
- LegalZoom (https://www.legalzoom.com/forms/real-estate/lease-agreement)
- Rocket Lawyer (https://www.rocketlawyer.com/form/lease-agreement.rl)
- LawDepot (https://www.lawdepot.com/contracts/lease-agreement/)
- US Legal Forms (https://www.uslegalforms.com/landlord-tenant/lease-agreement-forms.htm)
5. Search online or with fellow landlords:
Look at a bunch of free copies you can find online and piece together what you like. Be sure to find documents that are for your state and preferably your region/locale. Beyond just Google searching, try online landlord discussion forums (e.g., https://www.reddit.com/r/Landlord/), or just talk to other local landlords you know.
This is a viable approach, but definitely have a lawyer review the final copy for:
- missing language,
- adherence to local laws,
- inconsistencies, and
- protections for your rental business.
Remember, just because you have a good lease document in hand does not mean it is the best for you or covers all your needs. Put the time in to read the document thoroughly. Be sure to include changes you need for your rental situation.
[Part 2 – Coming Soon]
