A solid lease agreement is an essential component to running a successful rental business. It sets rules and boundaries for both you and your tenant to follow and can help avoid any potential misunderstandings. This agreement works to protect both you and your tenant’s expectations. Here are 6 elements to consider when creating your rental agreement:
1. All parties involved
It’s important to have all tenants living in the property listed with contact details on the rental agreement. Regardless of who will be paying rent, you’ll want to be aware of how many people are living in your property. You should also think about including information on the landlord, any co-owners or property managers, as well.
In addition, contemplate how you may feel about tenants adding additional guests or subletters. Clearly state any policies or qualifications to avoid later conflict.
2. Property description
Renters want to see exactly what they’re getting in writing. Include basic information like property type, address, and any included appliances. List utilities that may be included, as well as utilities renters are responsible for. Be transparent about any issues with the property to most accurately capture your rental and dodge any potential legal troubles down the road.
3. Length of tenancy
State the term of lease, such as 3-month, a year, or a month-to-month basis. Make sure you are abiding by any local laws. Clearly specify what might happen if a tenant breaks the lease or how much notice is required if you or the renter wants to end the agreement. When the term is almost up, see if the tenant wants to renew before signing any new renters.
4. Rent and additional fees
Spell out the monthly cost of rent, when it’s due, and available payment options in the agreement. It’s essential to be clear on any repercussions if payment is late, including if there is a grace period for payments or any additional charges if a rent check were to bounce.
Also consider requiring a security deposit and state the amount, its due date, and under what circumstances the tenant will receive the money back at the end of the lease.
5. Repairs and maintenance
Communicate to your tenant exactly what you and they are responsible for when it comes to upkeep of the property. Note the condition of amenities included in the property prior to move in and clearly state any restrictions on repairs or alterations. It’s also important to have guidelines in place for having to enter the property if necessary and details on how to relay any maintenance needs.
6. Policies and responsibilities
Spell out any rules your tenant must abide by while living in your property. This includes things like pets, smoking, noise control and parking. Be as detailed as possible to ensure your expectations are understood. Make sure to plainly state any consequences if tenants refuse to comply.
Also consider listing any local laws or restrictions that renters should be aware of, such as occupancy restrictions or health and safety codes.
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