Guide to Making a Solid Lease Agreement For Your Rental Property

Key Takeaways

• A well-drafted lease agreement creates clear expectations, protects both landlord and tenant, and serves as a legally binding framework for a smooth rental relationship.
• Essential lease components include detailed terms on rent, security deposits, maintenance responsibilities, disclosures, property use, dispute resolution, and termination procedures.
• Because lease agreements are complex legal documents where precise wording matters, working with a professional property management company like Keyrenter Eastern Long Island can help prevent costly mistakes and legal disputes.

All human relationships – personal, business, or political – need clear boundaries to thrive. When relationships fail, it is often because the expectations of one or both parties are unmet. This usually happens when the needs of the individuals in that relationship are not fully discussed.

These realities also apply to the relationship between landlords and tenants. If the relationship is going to be conflict-free, it must operate on an established framework. This framework is the rental lease agreement. What is a lease agreement, and why does it matter for landlords?

Keyrenter Eastern Long Island has put together the following guide to making a solid lease agreement for your rental property. 

Rental Lease Agreements and Why They Matter

The lease agreement is a written, legally binding contract between a landlord and a tenant. It defines the terms under which the long-term tenant can occupy the landlord’s property. It outlines the rules of the relationship and the responsibilities of both parties.

The lease agreement helps to clarify expectations. It:

• Injects transparency and trust into the landlord-tenant relationship.
• Establishes a platform of mutual respect between landlords and tenants
• Eliminates confusion by clearly assigning roles and responsibilities to each party
• Provides a reference point for resolving disputes between landlords and tenants
• Offers landlords financial security and makes the management of their rental easier
• Serves as evidence in the event of disputes between the landlord and their tenant

A rental lease agreement should contain a number of key components. What are they?

Key Elements of a Rental Lease Agreement

1. Basic Information About the Parties

This part of the lease agreement identifies the parties involved. It details the full names and contact information of the landlord and tenant. It also includes the full names of every adult – 18 and older – who will reside in the property, to ensure that the lease terms are also binding on them. 

2. The Description of the Property

This section states the full and exact address of the property and the specific rental unit, if applicable. If there are additional spaces or assets included in the lease, such as parking spots, shared amenities, or storage units, they must be mentioned. This section establishes the full scope of the rental unit in the agreement. 

3. The Terms of the Lease

The document should state if this is a fixed-term lease (6-12 months) or a periodic lease (month-to-month). It should also include the start and end dates for the lease and whether it will renew automatically, unless terminated by one of the parties. It also explains how the lease may be renewed or extended.

4. The Use of the Property

This section defines the allowed uses for the rental property, based on the lease. It usually requires that the property be used strictly for residential purposes, rather than business purposes.

It will often include provisions on subleasing the property, only permitting the tenant to sublease the rental if they obtain the written permission of the owner.

5. Rent and Payment Terms

This section specifies the rent amount, the rent due date, accepted payment methods, and the details of those accepted methods.

It specifies the grace period (if any) and what happens if the rent is late. Additionally, this section should clarify which utilities and costs (such as trash collection, maintenance, etc.) are included in the rent.

6. Security Deposits and Fees

The lease should state the amount and purpose of the security deposit, where the money will be held (bank account details and bank address), conditions for returning the money, when it will be returned, and allowed deductions from the security deposit.

If there are other fees, like parking fees, they should be included in this section.

7. Maintenance and Repairs

This section, one of the most critical clauses in the lease, allocates responsibility for maintaining the property. It explains the kind of repairs & maintenance that must be undertaken by the owner, minor repairs that are the tenant’s duty, procedures for tenants to report repairs, and protocols for handling emergencies.

8. Required Disclosures

In compliance with local laws, this section contains mandatory disclosures. Firstly, the property must meet the city’s legal standards for rentals. 

Secondly, if there are known hazards in the property, past or existing, they must be disclosed in the lease. These may include lead-based paint, mold risk, bedbug infestation, radon gas, flood risk, etc.

9. Utilities and Other Expenses

The lease should clarify which party will be responsible for paying for utilities like gas, water, and electricity. It must assign responsibility for other costs such as landscaping, pool maintenance, HOA fees, and other expenses. If these costs are to be shared between the owner and tenant, the sharing formula should be defined. 

10. Inspection and Property Access

This section details the procedures for the property owner to legally enter the tenant’s rental unit for repairs, inspections, and showings. The standard requirement is for the landlord to give the tenant at least 24-48 hours’ notice, except in an emergency. This clause preserves the tenant’s right to quiet enjoyment of their home.

11. Dispute Resolution

In the event of disputes between the parties, this section outlines the steps for handling them. It creates a path for efficient resolution of conflict, beginning with dialogue and including options like meditation and arbitration. The clause facilitates smooth resolution of disputes and the protection of both parties’ rights. 

12. Lease Termination and Eviction Terms

This clause outlines the terms for early termination of the lease by the tenant, along with applicable penalties (depending on the reason for termination). 

Additionally, it states the conditions under which the landlord may terminate the lease. This clause must include termination conditions, notice periods, etc. 

13. Signature Sections

The lease cannot come into effect without the signatures of the parties. The landlord and the tenant must append their signatures to the document as proof that they agree to the terms of the contract.

Every adult occupant of the unit listed in the document must also sign the lease. It is always a good idea to also have witnesses sign the lease.

Other important clauses to add to your lease agreement include a pet, noise & smoking policy, occupancy limits, and clauses that address specific, unique scenarios in the property.

Conclusion

Should you write your rental lease agreement by yourself? While there is no prohibition against writing your lease agreement by yourself, the complexity and legal nature of the document make it a bad idea.

Words and how they are used mean everything when creating a lease agreement. Unless you have professional expertise in this area, it is easy to use the wrong word or turn of phrase when creating a lease agreement.

This innocent mistake can cost you thousands of dollars in litigation costs or lost rent. That’s why you are better-off working with a professional property management company like Keyrenter Eastern Long Island. The cost of hiring an expert is nothing in comparison to the huge costs of a minor error in your rental lease agreement.