Key Takeaways

  • A contract of lease outlines specific legal obligations and rights between landlords and tenants, including payment terms, property use, and termination conditions.
  • Lease types include fixed-term, month-to-month, and periodic agreements, each offering different flexibility and duration.
  • Required provisions often include security deposit terms, maintenance responsibilities, rent control disclosures, and entry notice rules.
  • State-specific requirements and federal regulations may apply to lease contracts.
  • Customizing your lease to your property type and tenant situation can help prevent disputes.

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. 

Types of Lease Contracts

There are several types of lease contracts, and selecting the appropriate one depends on the needs of both parties involved. The main types include:

  • Fixed-Term Lease: This agreement specifies a set period (usually one year) during which the tenant agrees to stay. Rent is fixed during this period, and neither party can alter the terms unless both agree.
  • Month-to-Month Lease: This type renews each month until either party gives proper notice to terminate. It offers flexibility, but rent and other terms may change with each renewal.
  • Periodic Tenancy: A lease that automatically renews for a specific period (e.g., monthly or weekly) unless terminated. Notice requirements vary by state.
  • Tenancy at Will: A more informal lease that can be terminated at any time by either party, typically with short notice.
  • Sublease Agreement: Occurs when the original tenant rents out the property (or a portion of it) to another person. This usually requires landlord approval.

Understanding the different types helps ensure that your contract of lease reflects the intended duration and flexibility.

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.

Legal Requirements and Disclosures in a Lease Contract

Depending on local and state laws, lease contracts may be required to include specific disclosures and legal provisions, including:

  • Security Deposit Limits and Return Policy: Some states cap the amount a landlord may charge and require that it be returned within a certain period after tenancy ends.
  • Lead-Based Paint Disclosure: Federally required for properties built before 1978.
  • Mold, Bed Bugs, or Pest Disclosure: Some jurisdictions require landlords to disclose known hazards.
  • Notice Requirements for Entry: The lease should specify how much notice a landlord must give before entering the property—usually 24–48 hours.
  • Rent Control and Stabilization Notices: In areas with rent control, landlords must provide disclosures about applicable regulations.
  • Fair Housing Compliance: Leases should include non-discrimination clauses in line with the Fair Housing Act.

Landlords and tenants should both understand these legal requirements to avoid fines or disputes.

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.

Customizing Lease Agreements by Property Type

A contract of lease can and should be customized based on the type of property being rented and its intended use. Here are a few examples:

  • Residential Properties: May require clauses regarding pet policies, parking assignments, and use of common areas.
  • Commercial Properties: Often include terms about business hours, signage, maintenance responsibilities, and insurance requirements.
  • Furnished Units: Should specify which furnishings are included and their condition at move-in.
  • Multi-Tenant Buildings: Might require quiet hours or rules for shared facilities (e.g., laundry, gyms).
  • Short-Term or Vacation Rentals: Must clearly define check-in/check-out policies, cleaning fees, and local lodging tax responsibilities.

By tailoring the lease contract to the specific situation, landlords can reduce the likelihood of misunderstandings and legal issues.

Frequently Asked Questions

1. What is a contract of lease? A contract of lease is a legally binding agreement between a landlord and tenant that outlines terms for using property or assets in exchange for rent.

2. Can a lease contract be terminated early? Yes, but early termination terms must be specified in the lease. Breaking a lease without a valid reason may result in penalties.

3. Are lease agreements the same as rental agreements? Not exactly. A lease typically covers a fixed term (e.g., 12 months), while a rental agreement is usually month-to-month.

4. What happens if a tenant violates the lease? The landlord may issue a warning, charge fees, or initiate eviction depending on the severity and the terms of the lease.

5. Do all lease contracts need to be in writing? While oral agreements may be valid in some cases, written lease contracts are always recommended for clarity and legal enforceability.

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