Across the nation, and due to the housing and unemployment crisis of the past decade and a half, many former homeowners have returned to renting property. Plagued by high unemployment, many college graduates have also put buying a home aside and settled in a generation of renters.

Residential demographics from 2012 obtained by the National Multi-Housing Council indicate that renter-occupied households make up 32% of the total U.S. households. That number changes depending on the region with cities like New York and Los Angeles having 50% and 42% (respectively) households in rental properties.

If you’re a landlord or property owner, your lease agreement is probably one of the most important documents you use. it is the legal agreement between you and each tenant that occupies the space you own, and therefore, it acts as the rules by which they live in that space as well as defining the repercussions should the rules be broken.

The lease agreement provides renters and landlords with a legally enforceable contract and it’s important that this document have the necessary elements to provide security to both renter and landlord. A good lease agreement protects your interests and prevents misunderstandings that could potentially lead to litigation.

10 Lease Agreement Terms You Have to Include

The following are the essential terms that should be in every lease agreement:

  1. Parties to the lease – the lease agreement should name the landlords and tenants who are bound by the agreement.

  2. Description of the property – the lease agreement should have a description of the property controlled by the lease agreement. It may be as simple as the address and apartment number but it must be identified or the agreement cannot be enforced.

  3. Terms of rent – the dollar amount should be in the agreement as well as the day of the month rent is due, where the rent is to be sent, and how it will be accepted (by check, by automatic draft, etc.). The terms for late rent should also be in this portion of the agreement.

  4. Lease dates and termination – the start and end of the lease should be in the agreement as well as the description of how and when the landlord and tenant can end the lease. For example, an apartment lease may be terminated with one month’s notice and a final month’s rent.

  5. Security deposit details – the amount of the security deposit, how it is to be paid, and the terms of its future release should be specified in the lease agreement.

  6. Occupants of the property – the lease agreement should list the names of every person who will regularly occupy the property and what happens if a person stays for more than a certain length of time.

  7. Pet details – the lease agreement should specify whether or not a tenant is allowed to have a pet. The limitations on number, size, and species should be listed as well. If there is an additional deposit required for a pet, that amount should be included in the lease agreement.

  8. Repairs and damages- the condition of the property should be noted as well as the tenant’s and landlord’s responsibilities for repairs and problems with the property. The lease agreement should also describe whether the landlord or tenant is responsible for damages to the property.

  9. Alterations to the property – the lease agreement should describe what, if any, alterations the tenant may make to the property.

  10. Right of entry – the lease should include a clause that allows the landlord to enter and inspect the property with reasonable notice. The terms should define reasonable notice and explain the rights of the tenant.

In addition to the essential terms above, see the following optional terms that may apply to your property.

Some Optional Terms You May Want to Add

Depending on your property, the following lease agreement terms may be useful to include in your lease agreement:

  • Right to renew the lease – if the tenant has the right to renew the lease at the end of the lease agreement, those terms should be listed in the lease agreement. Ideally, a new lease agreement will be signed each time the tenant renews.

  • Right to sublet the space – if the tenant has the right to sublet the property to another person, the lease agreement should spell out those terms.

  • Parking restrictions/rules – if the property has parking or offers parking in a designated spot, those terms should be listed in the lease agreement.

  • Possessions – if certain possessions, like water beds or grills are not allowed on the property, those terms should be listed – along with the consequences if those items cause damage to the property.

  • Property rules – if the property is a multi-unit, the landlord may specify rules that govern behavior on the property such as avoiding loud noises after 10 p.m. or not doing vehicle repairs in the parking lot, for example.

While many essential and optional lease terms are included in pre-printed, standardized lease forms, those terms may or may not fit your needs as a property owner. It’s important to note, however, that standardized agreements don’t always fit the situation and they may or may not be customized to meet your state and local requirements. When you have questions or want to customize a lease agreement, working with a qualified real estate lawyer is the best way to get the best lease agreement – one you and your tenants can live with comfortably.

About the author

Matt Faustman

Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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