The lease is the base of your rental agreement with tenants, so it is essential that you invest a good amount of time, money, and energy into properly developing it. A number of new and even more experienced property owners solely rely on sample leases found on the Internet to create their rental transactions. These documents can be remarkably useful; however, it is also essential that the time is taken to study and become skilled at writing a lease agreement.
Putting together this vital document yourself, or with the help of a property management company or legal professional, will allow you to customize it specifically to your property and management needs. In addition, it will provide you with a new point of view on managing your properties. Below are some of the most important steps in writing a solid lease:
Step 1: Title and Format the Lease
Setting up the outline of the document is the first thing, beginning with the title. It is enough to simply utilize the term “Lease Agreement” for the title. This font should be readable and centered at the top of page 1.
Setting up the general format of the document is the next step. To assist in logically organizing your lease and for easy readability, it is recommended that landlords divide the lease under different sections using headers and subheaders. This straightforward technique will ensure that everything is easy to follow and very clear.
Step 2: Create a List of Provisions for the Lease
Think about some essential questions regarding the lease. What issues should the lease address? What were issues tackled in the sample leases you looked at? Contemplate what your ultimate lease would cover and write down all of the provisions. When you are done, split them up into categories and list them underneath the topical headers in the lease.
Step 3: Explain Each Clause
On your lists, create clauses by adding detail to every provision. Each clause will provide vital and legally-binding information about each related provision or heading. If you would like the provision to be legally binding and clearly laid out for the tenant, you must include comprehensive information regarding what the rules will be.
Regarding the Property
Property-Identifying Info
Include all the information that will completely and thoroughly identify the property so there is no confusion, like the property name and address. List the names of all the tenants and supply their contact information as well. They should be identified as “tenants” initially. After which, you should add your name and contact information, categorizing yourself as “property owner.” In lieu of any names, the terms “owner” and “tenant” can thereafter be used for the remainder of the lease.
Terms
Term of Lease
This segment should include specific dates on which the lease agreement will be in effect. Typically, residential leases are written for one-year durations; however, they can range between three months and a few years. Local laws may limit the lease period that can be written into an agreement. If this is the case, make sure you comply.
Renewal Procedure
The renewal procedure should be included in this section. Is an automatic renewal something you or the tenant is interested in? Is notice for renewal required from the tenant? Ensure to provide yourself with the power to refuse renewal of the lease for whatever reason. Additionally, this section should explain how much notice the tenant requires to renew or end a one-year lease.
Rent
Rent Amount
The rental cost should be detailed along with the due date. Typically, leases include a grace period, like seven days, in which the tenant can pay rent late without penalty. This is not a legal requirement in the majority of states. Furthermore, all accepted forms of payment should be detailed. All rent-associated information should be included here.
Late Fees and Related Penalties
If there is a bounced check, how much will be charged? What are the fees for late rental payments? What penalties will be reinforced if rent is not paid on time? What notices will be sent and when will eviction be filed for nonpayment of rent? This information should all be included. The majority of states have rules regarding the type of notice and the length of the notice tenants must be given prior to filing for eviction for not paying rent; ensure your lease follows those laws.
Deposit
A security deposit is required by the landlord as collateral for any possible property damage. When the lease period ends, the deposit can be used by the landlord to fix damages outside of typical wear and tear.
You should also include a clear description of what is viewed as damage and what is considered as typical wear and tear. The tenant should also know from the lease the time when the security deposit will be repaid.
Utilities
This section should state who will have responsibility for what utility bills. If there are any utilities to split between the two parties, detailed information regarding this should be included here.
Occupancy and Subletting
This segment of the lease should describe who is authorized to be on the property, the length of time guests can remain at the property and whether subletting is allowed. Normally, it is recommended that subletting should not be allowed without a strong reason for doing so.
Rights and Responsibilities of Tenants
Tenants have the right to privacy, and they are authorized to use the property as they please while living there. However, this does not take away from the responsibility they have to ensure that they do not cause property damage or engage in criminal activity on your property. You should list all restrictions on what tenants can do on the property in this section. For instance, things like taking down walls and hanging items with permanent fixtures should be included if they are forbidden. You can also choose to allow repainting or not.
Owner Rights and Responsibilities
This lease agreement must grant rights and responsibilities to the property investor as well. As the owner, you have a number of responsibilities as well, especially if you self-manage your properties. These responsibilities are stipulated by the local landlord-tenant law; however, it is good to incorporate a reiteration of those duties and responsibilities into the lease to help the tenant understand.
The main thing for which you are responsible as the owner is keeping the property in a habitable condition. Additionally, you might be required to make specific repairs within a particular period after they have been reported. If the governing law of your property requires this, it should be outlined in this section.
Property Entry
At any time, landlords have the distinct right to go onto or inspect their properties; however, the tenant must be given notice according to the local laws; information on these laws should be included. Adhering to the law and giving proper notice safeguards you against privacy lawsuits; therefore, you should ensure the appropriate regulations are enacted and followed.
Disclosures
Both state and federal governments have required disclosures with which the renter should be presented before the lease agreement is signed. To verify that these have been given to the tenant, ensure a disclosures section is included which states this in your lease. Make the valid circumstances for terminating the lease before the contract term ends very clear. The following information should be included:
Outline the reasons you as the landlord can enforce an early termination of a lease agreement. This could include:
- Nonpayment of rent
- Breaking the law on the property
- Constant late payment of rent
- Severe property damage
- Intent to move into the house
- Intent to sell the house
Besides explaining each of the reasons, information must also be included regarding the process that will take if the lease is terminated for any of the reasons above. This includes a notice period, what will be included in that notice, when the tenant will need to respond to the notice, and when the eviction can be filed with the courts.
Governing Law
Before the lease is finished, ensure a clause is included that highlights the governing law by which the lease is regulated. Additionally, the clause should include a provision that if there is something in the lease that is not in keeping with the governing law, the governing law clause will supersede the incorrect clause without the rest of the agreement being invalidated.
Step 4: Check Out Local Laws
This is where the previously mentioned law references will come in handy. After checking out your local legislature and putting in the correct information, you should again sit down once and thoroughly check the lease for inconsistencies.
Step 5: Establish a Signature Section
To be deemed legal, the lease agreement has to be signed. The agreement will have to be signed and dated by the landlord and all the tenants staying on the property.
Addendums: Ways They Can Enhance the Lease
Along with the standard provisions, there will always be more addendums that could be added to your lease if needed.
Conclusion
There are a number of things that need to be worked on to get a solid lease together; hopefully, this guide will make it simpler for you. Creating a lease for your rental property can be a daunting task, so let us help! Specialized Property Management Orlando is a team of highly professional people with years of property management experience. We would love to sit down with you and help you write or edit your rental lease. We will do everything we can to help your rental property succeed. Contact us online or call us at 407-698-3322 for a quote.
