If you are planning to rent out the property that you own, it is important that you should be able to execute a written lease agreement in order to document the relationship between you and your tenant. A basic lease agreement stipulates the responsibilities of the tenant along with your duties of maintaining the property. You can also stipulate any other rules or conditions while they are living on the property that is subject to the local landlord and tenant law. If in the event that you did not execute a written lease agreement, it may be difficult when it comes to evicting a problematic tenant.
Things to Consider in Writing a Lease Agreement
Format your Lease Agreement
- The first is for you to for free templates online. There are government agencies, legal assistance companies, and nonprofit organizations that have available lease agreement templates that you can use for you to write your lease terms and conditions. You may choose to use the template in verbatim but at least it is a lot easier than writing a lease agreement from scratch.
Most of the templates design is based on the laws in a particular area. It is also essential that you make sure that the template is going to be valid and enforceable where your property is situated. You can also add the location names for you to narrow your search and making sure that you are getting a template that you can really use.
There are also a number of government agencies that have model agreements available that you can use. These model agreements are designed to comply with the law in that specific area..
- The next thing that you need to do is to create a title for the lease agreement. You can use a title as specific as you want or you can also make the document tile simple like putting in like “Lease” or “ Rental Agreement” or “Lease Agreement”.
If you are using a model agreement that is produced by a government agency, you can check if you will have to use the title that is provided, or you can change the title the suit to your needs.
- The next thing to do is to draft the headings for the sections of the lease. So, if you are organizing your lease under specific headings, information is going to be easy for both of you and your tenant to find even if you will not have to read the entire document. You may choose to include terms like “property”, “term”, “rent” and “deposit”.
You may also choose to put in headings for the tenant’s responsibilities and the landlord’s duties. If you put in these heading, you should use bold for your headings so that they will be easy to see in the document. You can also place it at the center on their own lines. As a pro tip, it is good to use bold and italic font so that it will draw attention to the specific details in the lease itself like the amount of the rent. But, you can also use them sparingly or your document will end up looking cluttered and your formatting may then lead to confusion.
- Then you should outline the provisions that you plan to include in the lease agreement. You should take a pause to write a list of the key issues that you want your lease agreement to address. Then you can easily organize the issues under the section headings if you are not using a template. If in the event that your section headings are not sufficient, you may need to add a new one to cover the provisions that you will need.
If you are using a template, you can read over the template and compare it to your list. So, if you have anything included in your list that is not yet covered by the template, you may need to write a new clause in your template in order to cover it.
- Next, you should add a space for signatures at the end. The lease must be signed by you and your tenant for it to be legally valid. Additional witnesses are not typically required and you should also don’t have to sign the document in front of a notary. But you may choose to do so if you want to have added security.
So, if you are creating a form that is to be used multiple times, you may want to simply type the words “tenant” and “landlord” under the lines. But, you should include specific names for a single-use document.
- Check with the local landlord and tenant law so that your lease agreement along with the rental property itself will be compliant with all of the applicable laws. Also, in addition to any national laws, there are also local ordinances that may apply which depends on the location of the property.
If the lease agreement will contain provisions that are violative of any local law, it would simply be unenforceable in court. But, that will not mean that whatever issue that the provision was supposed to cover, it will not be covered under the lease.
So, if an important provision like the amount of the rent turns out to be unenforceable, then it may render the entire lease illegal and unenforceable. Thus it is critical that you pay particular attention to laws that are governing deposits because that is part of your responsibilities as a landlord including the amount that you can charge.
The lease agreement should cover the standard provisions
- The first is to identify the property that is being covered by the lease. You should provide the address and the street number of the property or the individual unit that you are going to rent out. It may also be a good choice to include a description of the property particularly if the description of the property will affect ownership or legal rights.
- Then, list the parties that are involved in the agreement. After having described the property that is going to be the subject of the lease, you should provide your name and the name of the person who is going to rent the property from you. If you have organized your rental business either as a corporation, LLC or other business entity, you should provide the name of the business instead of putting in your own name.
- Then, set the length of time that the lease agreement will be effective. If you are executing a residential lease, this is typically lasting for a year. However, it may also be as short as three or four months or it may even last for several years. So, you should be able to provide the exact duration of the lease along with the specific dates during which the lease will be in effect.
- Make sure to specify the rent that is to be paid and when the rent is due. Most of the leases include a provision for a grace period of a week or so for the tenant when it comes to paying the rent. But, it should be noted that a grace period is not typically legally required. It may also be good if you will include acceptable methods of payment.
There are also some cities that have rent control ordinances that determine the maximum amount of rent that you can charge when it comes to certain types of residences.
- Make sure that you state the amount of the deposits or fees. The deposits that you are going to stipulate must be used to repair damage to the rental unit or returned to the tenant at the end of the lease. The deposit money that you will collect from the tenant must be protected, and usually, the deposit is kept in an escrow account that earns interest.
The lease agreement should be able to specify terms that when there are unused deposits, it will be returned to the tenant after they have vacated the rented property. There are also laws that require any unused deposit to be returned to the tenant within a specific period of time which is typically 30 to 90 days after that tenant has vacated the property.
- Make sure that you describe the consequences of late payment. After specifying the rent that is to be paid, list the late fees and the penalties that are to be imposed in the event that the tenant does not pay the rent on time. You should include notices that you are going to send to the tenant regarding the late rent and when you are going to file for eviction of unpaid rent.
- Make sure that you include provision for the renewal or termination of the lease relationship. It is good that you may want to set the lease to automatically renew unless the tenant will give you an advance notice that they are moving out. On the one hand, it is also recommended for you to require your tenant to give an advance notice that they want to renew the lease.