If you want your rental business to run smoothly, you will need to prioritize drafting a sound lease agreement. Leases are binding contracts between the landlord and the tenant. It clarifies the policies, conditions, rights, and responsibilities of the two parties. Having a solid rental agreement also protect the interests of the landlord, especially when dealing with lawsuits.
A well-made lease agreement is detailed, specific, and comprehensive. It reduces conflicts between the landlord and the tenant. Archer Management Group has put together the best ways to craft an effective lease contract:
Specify the Property
It must be clear to everyone what the rental property name is and its full mailing address. For apartment units, it’s vital to include the door number to ensure it’s the specific unit referred to in the leasing contract.
Name the Parties
The lease must contain the full names of both parties that are signing the leasing agreement. Ensure that the real names are used instead of nicknames to properly identify the landlord and the tenant.
Establish the Lease Term
Each leasing agreement has an expiry. Specify the lease period using the complete dates from the start day, month, and year to the end day, month, and year. For example, from January 1, 2021, to January 1, 2022. This keeps things from becoming confusing. If you only mention the agreement is valid for one year, there can be different interpretations and tenants can create a loophole out of this.
Include Rent Due Date
To prevent any confusion, be specific about the rental due date each month. Eliminating this source of conflict will make rent collection efficient for the landlord. It may be a simple method but it’s crucial.
State Rent Price
Even if this sounds obvious, some landlords can neglect to put the actual rent rate per month in writing. It’s best to mention the entire rent due for the whole duration of the rental period and the monthly rent charge to prevent any confusion. Write out the amount in words and figures for further clarity. Also, be sure to adhere to the Fair Housing Act when setting the rent price.
For new landlords, you might be tempted to use a basic leasing template. Even if this saves you time, it will pay off to include specific clauses to protect your interest. This can reduce the inquiries of renters and provide guidance to their actions such as:
Security deposit clause – tenants need to know that you require them to pay a security deposit before they are accepted as tenants in your rental space. This can cover property damages and potential income losses due to breaking the lease and other circumstances. Tenants will also know the refund procedure of the security deposit if the property remains damage-free and the rent payments have been fully paid.
Pet policy clause – tenants need to know if you will allow them to keep pets in your rental property. If you do, then they will also be presented with restrictions and guided rules in maintaining a pet. Moreover, your pet policy can mention the acceptable pets, the number of pets one can own, and the size of the pet allowed in the rental unit. Also, being specific about the actual pet fees that a tenant must pay is important.
Subletting policy – tenants need to be informed if they’re permitted to accept other renters to lessen their rental cost. This clause manages your tenant’s expectations. Depending on your flexibility, you may permit a tenant to receive other renters if there’s full transparency.
Utility payment policy – to avoid conflicts between the landlord and renter, this can state who is responsible for paying off the utility bills of the rental.
Property access – this provides information to tenants when you’re allowed entry into the rental unit and the expected notice period. It lets your tenants know that you respect their privacy and will only enter the property for specific purposes outlined in this policy. That said, the landlord must follow the stipulated State mandate of the proper notice period.
Tenant rights and responsibilities – this creates tenant awareness on what duties are expected to be performed and what rights they can exercise. An example would be the right to privacy and the responsibility to reasonably maintain the rental and keep it free from damages.
Landlord rights and responsibilities – these guide landlords on the duties that they’re required to follow through and what rights they have. An example would be the right to enter the property during an emergency. Another would be the landlord’s responsibility to keep the rental space habitable for the tenants.
Disclosures – it’s a requisite for landlords to include this in the lease agreement. For example, if the property was constructed prior to 1978, renters must be informed of the presence of lead paint in the rental building.
Lease termination – this guides the renters on the consequences of breaking the lease early and the conditions when they’re allowed to. There are only specific situations in which landlords allow renters to end the leasing agreement. Thus, penalty fees, remedies, and acceptable conditions will be covered here.
Sign the Lease
A contract becomes binding when it contains the signatures of the landlord and tenants. So it’s vital not to forget to affix your signatures. This includes every resident over the age of 18, so they’re also covered by the contract’s terms and conditions.
The Bottom Line
Experienced landlords take time to construct a detailed and solid lease agreement instead of using a basic contract. The more specific the information, the more it protects the rental owner. This can also help the landlord during legal proceedings since it contains more particulars of the agreement.
Initially, a lease agreement can require more effort to create but once you have an effective one, you can use it for every tenant. You only make fewer adjustments to match the specifics of the rental situation. That said, a landlord must check the local regulations and remain updated with the State’s landlord-tenant laws to ensure that they’re compliant with the current statutes.
For more help, contact the experienced team of property managers at Archer Management Group! We are dedicated to ensuring you create the perfect California rental property lease agreement.