Lease Contracts: Everything You Need to Know
Lease contracts, also known as rental agreements, are formal documents that identify the lessor, lessee, and what's being leased, whether it's an asset or a property. 3 min read
Lease contracts, also known as rental agreements, are formal documents that identify the lessor, lessee, and what's being leased, whether it's an asset or a property. Such contracts also detail the length of a lease, rent cost, and terms and conditions of the lease.
Basics of a Lease Contract
A lease agreement or contract is a legally binding document and is useful whether you are a tenant, a roommate, a property manager, or a property owner. Creating a lease agreement at the beginning of a landlord-tenant relationship can minimize misunderstandings about the rental agreement. Lease agreements include information that covers such terms as:
- The length of a lease
- The dates and terms of a lease renewal
- The fee or rent amount
- Rent schedule and due dates for payments
- The address and name for submitting payments
- Who's responsible for utilities
- Tenant privileges, such as access to amenities
- Security deposit information
- Guest and pet policies
- Penalties for late payments
- Early termination conditions and fees
- A property damage clause
Creating and printing a lease agreement with these terms and conditions helps to reduce misunderstandings about who's responsible for what for the duration of a lease contract. Make sure each party gets a copy of the lease to refer to.
Provisions in the Lease Contract
Specific information is required in the lease contract to make sure that the document covers all parties involved, for the reasons of enforcing liability.
Make sure to get the names of all tenants who are legally allowed to live in the rental unit. That includes names of married or unmarried couples, individuals, and roommates. Listing the names of tenants makes them legally liable for all the terms laid out, including payment of the rent in full each month and proper use of the unit and common areas. This allows a landlord to legally seek the entirety of the rent from any one of the tenants when the others leave the unit or are unable to pay. If one or more tenants violate a term of the contract, the landlord can terminate the lease for all tenants listed in the lease or rental agreement.
Limiting occupancy is another provision that needs to be in the lease contract. The agreement should specify that a rented unit is the residence only for those who have signed the lease and their minor children. This lets the lessor determine who lives in the property as well as limiting the number of occupants. It also allows the lessor to evict a tenant who moved in his family, friends, and relatives or sublets the unit without a permission.
The length of tenancy should state that it's a rental agreement or a fixed-term lease. A lease typically lasts a year. A landlord can set the lease to any length of time or opt for flexible leasing terms.
Rental cost should be specified along with the due date and how it should be paid. Most of the time, rent is due on the 1st of every month, with a short grace period for those who may not be able to get to the office on the first day. Payment options can also be laid out in the lease. Make sure to specify the types of payment methods accepted, late fees if rent is not paid in a timely manner, the amount of the fee, and charges for a bounced rent check.
A lease should also state whether pets are allowed, which species, weight limitations, and who is responsible for pet damage.
Landlord and Tenant Responsibilities Under a Basic Lease Contract
State and local laws set responsibilities for both landlord and tenant. For example, a landlord has to take care of the property and make sure it is habitable, while a tenant pays rent and some or all of the utilities. As every house or apartment is different, a generic lease contract may not suit the needs of all lessors. Lessors should consult with a lawyer to make sure their lease agreement satisfies all regulations and protects them from any legal action brought about by a tenant.
If you need help with lease contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.