In 2021, 89.1% of Americans rented their homes.
If you’re one of the landlords catering to these rental needs, then you need to know how important a lease is. You also need to know how to write one, it’s an important skill even if you’re not doing the property management.
Knowing how to write one will give you a deeper understanding, but you might not even know where to start. Especially if you’re a new landlord getting started with your portfolio.
Don’t worry though, we’ve got your back! Keep reading for our guide on how to write a lease agreement to make sure you cover all the angles.
Lease Format & Titles
First outline the lease documents, your format and consider what font you’ll use.
Next, you need to work out your document layout. It’s recommended you use sections with subheaders and headers. Here is a list of headers we’d recommend you use:
- Property Details
- Lease Term
- Payments & Fees
- Rights & Responsibilities
- Governing Law (e.g: Memphis Rental Laws)
You can add other headers if you think something is missing or you have too much under one section.
When you have this list, you need to detail the provisions it covers. This is called making a lease clause. Each one is important, and a legally binding agreement related to those headers.
This section breaks down into two sections: property information and party information. Property should include things like:
- Zoning type
- Description of the property
- Definition of what areas are “the property”
Party information will be a list of all the tenants’ names and contact information. Mark them as “the tenant”. You then need to give your name and contact information. Mark yourself as “the landlord”.
Here you want to talk about the term of the lease and the renewal procedure. The first section needs to include the length of the lease and the start and end dates.
Next, detail renewal terms. Do you want it to roll over straight into a new lease? Do you want them to notify you they want to renew and sign a new agreement? Whatever you want to do, detail it so they know how to follow your requests.
Make sure you give yourself the ability not to renew. You also need to detail the notice period for them to say they’re moving out. This is usually 30-90 days, and it works for the notice you serve them too if you want them to move out.
This section has to detail the full cost of the rent and the date it’s due. Usually, you include a 7-14 day grace period for the tenant to present their rent. Also, detail how you want payment. Do you come and collect rent or is it a bank transfer? Let them know.
Let the tenant know what penalties they will face if they don’t pay their rent on time. Including when you would file for eviction.
Next, you need to detail the amount of deposit the tenant pays. If there is no damage when they move out, you need to give that deposit back. If they do cause intentional damage, you can take the cost of repairs out of that sum. You cannot keep it for general wear and tear.
Outline what you class as damages and what you will charge for. Check your state requirements for where you need to hold that deposit money. Some states need you to keep it with a third party to protect the tenant’s interests and yours
Rights & Responsibilities
Tenants have a responsibility to look after the place and not cause damage or break the law.
If you have limitations, list them. Some limitations often include:
- Taking walls down or changing the structure/layout
- Removing/selling supplied furniture and appliances
- Hanging items with fixtures that are permanent.
Anything you don’t want to be altered you need to include it. Also detail what changes they can make, as long as they undo it once they’re reading to move out.
On top of this, you need to list what you will be responsible for as the landlord. If you’re going to need access to the property you’ll need to give the tenant the right notice as per local law.
State and federal governments need you to give certain disclosures to renters. You need to do this before they sign anything. To prove you’ve done this, it’s best to put it in a section in your lease.
First, you need to explain how tenants can end the lease before the term. Detail:
- When they can end it
- What penalties there are
- What fees there will be
- Are there alternative remedies you offer
On your part, you need to detail the circumstances that you can end the lease over. These usually include not paying the rent, breaking the law, wanting to sell or move into the house. Let them know how you will give notice and when, and how much time they have to move out.
In the end, make sure you finish with a clause that tells the tenant what laws this lease follows. State that if a clause goes against this law, you can replace it without voiding the rest of the agreement.
Add the Signature
To bind the lease, you must have all parties sign it. Both you and all the tenants who will live there need to sign. Make sure you have a section that includes everyone and sets out who has signed in print.
How to Write a Lease Agreement Made Easy
So, there you have it! Now you know how to write a lease agreement you’re ready to get started.
No detail is too small if you think it’s important to include it. But make sure you are clear, concise and leave no confusion over what to expect by both you and the person moving in. Follow local and federal law and be ready to explain the lease if the tenant has questions.
If you want more tips for landlords, check out our blog. At Reedy & Company, we’ve got the expert knowledge of rentals to pass on to any landlord who wants our help.