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10 Things Every Residential Lease Agreement Should Include

Written by Posted On Wednesday, 27 April 2022 14:08
10 Things Every Residential Lease Agreement Should Include

Imagine this hypothetical scenario; Michael and his tenant are caught in a bitter dispute about the nonpayment of rent. Michael is incessant that his tenant violates their lease because rent is due monthly. But his tenant, Ben, is adamant that he still has a week left because his rent should be due on the 21st when he moved his things into the property six months ago. 

Unfortunately, scenarios like these are pretty common when you don't have a solid lease agreement. This article highlights 10 essential lease clauses you should include to protect yourself from liability. Further, we’ll be discussing some relevant topics like what mistakes to avoid, your legal requirements, and what an addendum is. 

Common Lease Clauses

  1. 1. Names of All Parties: The first thing to include in any lease is the full name of the landlords and tenants. Your property manager will have a professionally written lease agreement, with everyone's names, including all tenants over 18 as well as underage occupants. 
  2. 2. Tenant Responsibilities: Not all rental agreements are created equal. Thus it's essential to include who is supposed to pay and fix what. In other words, you should add all the tenants' obligations to the property. That includes which utilities they will cover and an acknowledgment not to cause damage to the dwelling.
  3. 3. Specific Contract Terms: It's not enough to state that a lease will last a year. You have to be clear about the timeframe. For example, your start date would be April  11th, 2022, and your end date April 10th, 2023, for a year-long lease.  
  4. 4. Rent Payment: Like the point above, you also have to state the exact terms for rent payment. It would help if you outlined which day of the month tenants have to pay rent and any consequences of late payment. It's good to set up an automated payment system that eliminates your need to send a reminder or charge late dues.
  5. 5. Penalties for Late Payment: Often, renters face penalties for paying their rent late. If you have such an arrangement, then you should include the specifics. How long is the grace period? When does it elapse? How much and how should the tenant make late payments? These are vital things your lease should include.
  6. 6. Security Deposit Information: While landlords have a right to charge a security deposit, they also have to disclose information about the funds. You should include the amount due, date of collection, where you intend to hold the promise, and reasons you can make deductions. It's best to lay all these out in clear terms, and it can be a source of friction and perhaps litigation.   
  7. 7. Occupancy Limits: Your lease should clearly outline any occupancy limits on the residents. This clause protects you from having unscreened occupants on your property and limits the number of residents in a unit. It also gives you grounds to evict a non-compliant tenant that sublets the house or has a prolonged guest. 
  8. 8. Disclosures: Any disclosure you're legally required to present to the tenant is another clause your lease should include. The most common examples are if you have lead paint in the units, another occupant is a criminal offender, or someone died on the property.
  9. 9. Building Policies: You must outline any specific building policies you might have. It could include a range of subjects from one parking per unit to additional fees for pets or zero no smoking policy.
  10. 10. Signatures: Finally, the terms of your contract would not be binding without the signature of each party. Landlords and tenants must sign the agreement with a sound mind and without coercion. 

Legal Requirements of a Landlord

According to landlord-tenant laws, we can summarize a property owner's legal requirements and responsibilities to their tenants as follow:

  • You must manage the security deposit correctly: Landlords can charge tenants for a security deposit within the legal limits, but you also have to disclose information about the funds. Like where you’re holding it, when and what you’re making deductions for, and the balance after the tenancy period expires.
  • You must provide your tenant with relevant information: Another legal requirement for your tenants is to disclose who the property owner is. You cannot hide your identity, even when you have a property manager acting on your behalf. 
  • You must keep up with maintenance: Tenants have the right to live in a habitable unit. Thus, you should adhere to safety codes and ensure the property is in good condition.

What are Rental Lease Addendums

An addendum is a separate legal document accompanying the initial lease and includes information the original does not cover. In other words, you can think of it as an extension of your rental agreement that covers specific subjects like pets, renovations, and disclosures. 

If you include an addendum, it must refer to the original lease. It should also specify if it has the power to supersede a clause in the initial agreement. 

Lease Mistakes to Avoid

  • Using a Generic Form: Your lease must include the specific terms of your agreement with a resident and adhere to the most recent landlord-tenant laws. An outdated clause could void your contract and leave you liable to litigation, irrespective of whether you were initially aware. 
  • Bypassing Renter's Insurance: You should make it mandatory for occupants to get renter's insurance under tenant responsibilities. Without it, you risk covering medical or personal liabilities from injuries or damage to your property. 
  • Unclear Precedents Regarding Roommates: Leases can be tricky, especially for tenants with roommates. If you don't set a clear precedent on tenant screening or security deposit deductions, you could be in a bad spot. 

Conclusion

A lease, and its addendums, is a legally binding document that dictates the relationship between landlords and their tenants. Thus, yours must contain the 10 things every residential lease should include. If you're having trouble writing your lease or would like to avoid mistakes, speak with an experienced property manager who can offer some guidance. 

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