A lease or rental agreement is an important document that states all the terms and conditions of the agreement between you, and your tenants. Both you and your tenants should understand all the provisions of the rental agreement to avoid any problems during the tenancy.
Typically, a rental agreement includes all the rules and regulations of the lease, as well as the expectations and obligations of both the landlord and tenants.
As a rental property owner, knowing the important sections to include in a rental agreement is crucial. These sections may vary, but we at Pro X Property Management believe these basic terms of tenancy that you should cover in a rental agreement:
Full Legal Names
The rental agreement should include the full and legal names of all the tenants who will reside on the property. All adults who will occupy the rental unit should be named as tenants, and they all must sign the rental agreement.
By doing this, all occupants will be aware of the terms and conditions of the lease, and they will all be legally responsible for paying the rent and using the property properly.
This is advantageous you, as you can legally collect the entire rent from any of the tenants if the rent is not paid. Moreover, if one occupant violates an important provision of the lease, then you can legally terminate the tenancy for all occupants.
In addition, by including all the names of the occupants in the lease agreement, it will be more difficult for the tenants to sneak in unauthorized occupants or subletting.
Occupancy Limits
Most local ordinances have building codes that landlords need to comply with. Usually, these building codes indicate the maximum number of occupants allowed in a rental unit. To comply with these laws, you can also set a maximum occupancy limit that is lower than what is allowed in the building codes.
Make sure that your lease agreement indicates that only approved occupants are allowed to stay on the property, and tenants are prohibited from sneaking in additional guests, even temporarily. This clause allows you to evict your tenants if they move in a relative or friend without your approval.
Communicating these clauses clearly to your tenant shows you care about the condition of your property and are looking to build a relationship based on trust. All of which will, in the long term, improve the condition of your property.
Rental Rates and Tenancy Term
Your rental agreement should include the amount of rent that your tenants need to pay. You should also specify when it is due (indicate the day of the month), and how tenants can pay them (e.g., through a check, online transfer, bank deposit, or cash).
Avoid confusion by including all the necessary information regarding rent collection, such as:
- Acceptable payment methods (indicate if you are accepting check payments only)
- Authorized representatives to collect rent
- The amount of late fees in case the rent is not paid on time
- Grace period, if any
- Penalties in case of returned payments
In addition, your rental agreement should also include the terms of the tenancy—whether it will self-renew on a weekly, monthly, quarterly, or yearly basis. If the agreement is a fixed-term lease, make sure to indicate the date when the term will automatically end.
For a fixed-term lease, make sure to include how much notice you need should the tenant decide to renew their lease.
Deposits and Other Fees
In most states, landlords are allowed to request a security deposit from their tenants. If you do, make sure to include the amount of security deposit in your rental agreement, making sure that it is following the maximum limit allowed by your state law.
Also, indicate clearly how you will use the security deposit. State all the possible deductions, such as for damages that are not part of normal wear and tear. Make sure to also indicate whether you allow the security deposit to be applied to the last month’s rent or not.
In some states, landlords are required to include the bank location where the security deposit will be held. Moreover, it’s important to include when and how you will return the security deposit after the end of the tenancy.
If you have non-refundable fees, it’s crucial to specify them clearly in the lease agreement. A few examples of non-refundable fees are pet fees and cleaning fees.
Repair and Maintenance
Your rental agreement should include you and your tenant's responsibilities in maintaining the upkeep of the rental unit. List all the duties that you expect from your tenants, including maintaining the cleanliness of the property and keeping the rental unit safe. As part of your lease agreement, require tenants to report any issue that needs immediate attention or repair.
You should also include what is considered normal wear and tear versus damage caused by a tenant’s negligence or abusive behavior. In general, any repairs needed due to wear and tear should be covered by the landlord. On the other hand, if the repairs are needed because of tenants’ neglect or abuse, then the repair costs should be charged to them.
Landlord Entry
As a landlord, you have the right to enter the property for routine inspections, perform repairs, and in case of emergencies. But it’s essential to include a provision in the rental agreement specifying your legal rights to access the rental unit.
This is to avoid any claims of invading your tenants’ privacy or illegal entry. It’s best to include the number of days’ notice you will provide to the tenants before entering a property, except of course during emergencies.
Any Other Restrictions
Don’t forget to include provisions on certain restrictions that you want to include in the lease agreement. For instance, if you want to prohibit pets in the premises, it’s best to set this clear in the agreement.
You can also include provisions against excessive noise and partying. Also, make sure to include a provision against any illegal activities that may cause trouble with the authorities.
Bottom Line
Creating a rental agreement can be overwhelming, especially if you are not sure how to draft one. To ensure that all important information is included in the lease agreement, it’s recommended to hire a professional and experienced property manager who is knowledgeable with the federal, state, and local laws.
If you need a property manager in the Southeast Kansas area, contact Pro X Property Management LLC at 620-249-5767.
