A rental agreement or lease form specifies all the rules and expectations that a landlord and tenant need to agree on during a lease period. This important contract helps protect your investment from problem tenants. In this article, I will be presenting an overview of what needs to be included in a lease agreement. Existing Landlord prep students can download a copy of the lease contract and also access the video where I tackle each section of the contract - paragraph by paragraph.
On this topic, several questions arise:
1. What are the basics to be covered in a lease form?
2. What are other things you need to consider when it comes to including party names in the lease form?
3. Why can the date of a lease differ from the start date? What is the difference between the effective date and commencement date?
4. What is an attorney fee provision and why is it not advisable for landlords to have an attorney fee provision?
Let's talk about the first of these 4 questions. What are the basics to be covered in a lease form?
In general, a lease form should include the following:
- Party names - The lease form should specify the parties involved in a lease.
- Date of the lease - Differ than start date.
- Property address - Be sure to specify the complete address of your rental property. Include the unit number, zip code, and mailbox location for a larger complex.
- Define premises - Specify what is and what is not included in the rental property. For example, you need to describe whether you allow a shared yard, exclude the garage, etc.
- Term of lease and start date
- Late fees - Indicate whether you charge late fees for tenants who do not pay rent on time.
- Utilities - Include the utilities that you are going to provide in the rent. You may want to cover some costs such as water.
- Security deposit
- Insurance - You may require your tenant to have renters' insurance.
- Rent due date
- Rent payment method - Direct deposit, etc.
- Meghan’s law - This is California-specific. It is a requirement for you to give your tenants information on Meghan's law.
- Lead & Asbestos (’78 & ’81)
- Pet clause - You need to specify whether you allow pets. Also, indicate that you permit pets that are trained (service dogs) to assist their owners.
- HOA rules - If there are rules that apply to your planned community, include these rules to prevent violations and fines as much as possible.
- Sublease prohibition
- Smoking clause - Indicate if you allow or prohibit smoking, as well as the fines involved.
- Waterbed clause - Indicate if you allow waterbeds or water-filled furniture.
- Mold clause - Mold issues are common due to air humidity. Health issues and property damage can occur as a result of mold. Make sure to tackle this in your lease.
- Furniture inventory - If you have a fully furnished rental, include an inventory of your furniture.
- Smoke detector - You may want to mention that your tenant should be responsible for changing the batteries of the smoke detector.
- Access rights - You want to make sure that you can come in the unit to show the unit to others just in case you decide to sell it or want to do something with the rental.
- Signatures - Signatures are very important. Some landlords forget to have the lease form signed. Make sure to have tenants write their initials on every page.
Lastly, remember that if it's not in the lease, it's not part of the deal.
For the rest of this lesson, existing Landlord Prep students should log-in to the module entitled Between Tenants - New Lease Contract - What Your Lease Should Contain.
Not a member yet? Join the Landlord Prep: Video E-Course and How-To Tutorials so you can access this section and the video that completely discusses every section of the residential lease form, as well as the complete DIY landlording course. This will help you stay knowledgeable and confident as a landlord.