“What You Need To Have In A Property Lease Agreement”
Are you having a hard time deciding what to include in your property lease agreement?
A lease agreement serves as an important document for property managers. And with every important document you have, you need to have the right set of information included in it. The information to be included should fit in with the needs of the property manager (and the tenant) for that particular lease agreement. That’s why you should take the time in consider what to put in the agreement.
If you are having a hard time deciding what information you will include in your property lease agreement, this blog post is for you.
Today, I will share with you all the information you’ll need when completing a property lease agreement.
Information Needed To Complete A Property Lease Agreement
When creating a legal document to determine responsibilities and terms it’s important to make sure that the lease contract addresses all the needs and specific responsibilities needed to live and run the property efficiently. When creating a property lease agreement you need to make sure that you receive all the necessary information on the property and the tenant renting the property for the lease agreement to be effective. The right information can help avoid misunderstandings between you and your tenant. It can also help both of the parties to completely understand the responsibilities and rules that they need to follow during the lease term.
Before focusing on what information is needed for your lease, let’s first understand what a property lease agreement stands for and why it is needed for rental properties.
What Is Property Lease Agreement?
A property lease agreement is also known as the lease agreement form, rental agreement, and rental contract. In essence, the property lease agreement is a legal document used to set the terms and responsibilities for renting a property.
A property lease agreement helps in organizing all aspects of the property you are renting, the tenant’s responsibilities and your responsibilities as a property manager into a single legal document. When signing and completing a new property lease agreement with a new tenant the new lease will help you to understand and protect all your rights as well as detail your obligations as a landlord or property manager.
A lease agreement is a useful tool whether you’re a tenant, a landlord, or a property manager. The property lease agreement will serve as the legal document that will help resolve all possible issues that could arise when leasing a residential or commercial property.
Property lease agreements can help minimize the possibilities of misunderstandings and have agreed upon terms and responsibilities for the property being rented. Having a lease agreement signed and authorized by both parties means that you will be able to start your landlord or property manager-tenant relationship on the right track.
All parties to the contract will have an understanding of their responsibilities while the property is being rented. Additionally the property lease agreement will serve as a legal written record where you can refer to or fall back on if you or your tenant has any questions regarding responsibilities and terms while renting the property. The agreement will serve as a legal reference to all the rules and responsibilities that were agreed upon by both the parties.
The Needed Information In Completing Your Property Lease Agreement
Since the property lease agreement is a legal document it is important to make sure that all details and responsibilities while renting the property are spelled out and detailed in the terms of the agreement. When creating your own property lease agreement you will need to gather specific data that will help you complete your agreement with the tenant renting the property. Having a comprehensive, legally reviewed document will also help to avoid any errors in your agreement if you have the right information that you need.
Information About The General Property
Understanding, identifying, and detailing the property being rented is one of the most important parts of the property lease agreement. When adding information regarding the general property it’s important that you have the complete address of the property. You should also consider having a written detail of the condition of the property as well as possible pictures of the property prior to renting the property. Adding additional information like the property’s floor plan or schematic diagram can also be included in the property lease agreement.
After listing details regarding the property it is important to identify who will be occupying the property. Get the names of the tenants listed, as well as the landlord or property manager that will be overseeing the rental of the property.
Information Regarding Maintenance
The property lease agreement will be used to detail who is responsible for the maintenance and repairs for the property. This is normally the landlord or property manager. As a property manager you often have 2 ways of dealing with property maintenance and repairs.
Some property managers will take care of the maintenance and repair requests themselves. But this is as long as the requests are within the scope of their capabilities. To complete this task correctly you may have to be a licensed contractor or handyman or have equivalent knowledge on how to do needed maintenance and repairs for the property.
Frequently property managers will choose the option to have building supervisors or a trusted contractor to call when needed to deal with all the maintenance and repairs of the property. This isn’t a bad idea since it will also lessen your workload a property manager. That means you can focus on other responsibilities in property management.
If that is the case, it’s important that you note who to contact when it comes to maintenance. You will need to add in their names, company name, phone number, email, and/or mailing address in your property lease agreement. When listing a contractor or handyman for maintenance and repairs make sure that is someone you agree to allow to do the work needed. Otherwise it is common to have the tenant contact the property manager directly so they can arrange, coordinate, and determine who is best to complete the maintenance and repairs when needed.
The property lease agreement is an excellent place to specify the damage or security deposit that will be withheld for any damages that could occur due to the tenants negligence while renting the property. Security deposits commonly amount to one to two months of rent. It’s a common practice to collect the fixed sum of the security deposit before your tenant moves into your property. In case they refused to pay the rent or destroy the property in some way, shape or form, the security deposit will serve to offset costs for the repair or act as payment for the repairs.
When agreeing to a security deposit it is important to discuss how the security deposit must be used to be fair with the tenants and to avoid any misunderstandings when the tenant vacates the rental property.
However, security deposits should be returned once the tenant moves out of the property and the tenant did not incur any damage to your property.
Information About The Tenant And Guest
Since the property lease agreement is a legally binding contract it is important to list all tenants that will be living at the rental property as to hold them all responsible for rents and any damages that could occur. Additionally, it’s important that you include the maximum amount of tenants allowed to live in a rental unit. Generally, this translates to one or two tenants per bedroom. However, depending on your lease arrangements and your property, you can include information regarding the maximum number of tenant per bedroom.
You should also set expectations when it comes to the tenant’s guests like how long they can stay in the property.
Schedule For Payments
The property lease agreement is the best place to detail how much rents are, when they should be collected, and what will happen if rents are paid late…
Collecting of rent is commonly done by property managers or landlords on a monthly basis. However, you can select when and how your tenant will pay you and it is important that you put in the agreed upon date for collecting the rent into the rental contract.
Make sure that all details regarding how, and to whom the tenant will pay is written. If you have three options (bank, mail, or personal) as to where the tenant can pay you then make sure that you provided them the right details.
Information regarding late payments is also important. Include how long will be your grace period for late payments and how much will be the fee for rents that were not paid on time.
A rental property can either come fully furnished or with no furnishings at all. The property lease agreement is the best place to detail what if any furnishings are present, the condition of those furnishings and terms that they should be left when vacating the property. Most commonly a property is rented with zero furnishings.
IF you are renting an unfurnished rental then you should note that all furnishings are the tenants responsibility. You also need to specify that the tenant is required to remove all furnishings or face a surcharge for any furnishings left when vacating the rental at the end of the property lease agreement.
If you are renting a fully furnished rental then it is important to make sure that you note in your property lease agreement which furnishings you have provided. This will serve as a written record for you to check on once the tenant moves out of your property.
Listing which furnishings were provided can also help the tenants in knowing what’s waiting for them in their rented unit. And when it’s time for them to leave, there won’t be any problems over who bought such furnishings.
Clause For Automatic Renewal
Typically, property lease agreements last for a year. If the lease has ended, an automatic renewal clause will state that the lease will remain the same. The tenant will then pay his or her rent on a monthly basis. Make sure your property lease agreement includes this clause to avoid any misunderstandings of how and amounts that rents should be paid when negotiating a new lease term agreement…
Some Provisions That You May Need In Your Property Lease Agreement
Depending on you and your property, certain provisions can be included in your property lease agreements. These provisions are the following…
Provisions When It Comes To Pets
Pet provisions are the most common negotiation point in leases. However, you are the one taking care of the property. That is why it is your decision whether or not to accept pets in the property.
If the tenant has a service do then your options are very limited. Pets for these tenants serve as their companion and guide. The pet is needed for the day-to-day activities of the tenant. That means you will most likely have to allow the pet.
Note that you may add additional pet deposit and/or increase the rent to help accommodate for the pet. Pet deposits may or may not be refundable: check with your local laws to make sure you comply.
A subletting clause is optional. Whether to include this clause depends on if you plan to allow or disallow subletting in your property. If you feel uncomfortable with tenants re-renting the unit to others you did not interview, or that they did not interview, then you may consider not allowing subletting for your property.
However, if you do allow subletting, make sure that you include in your property lease agreement the following:
- The tenant must have your signed written notice for subletting.
- The tenant has thoroughly interviewed the person that will re-rent the unit.
If your property is located in a crowded urban area, having a parking space for your tenant can be very desirable. Make sure that you spell out details regarding your parking space in your property lease agreement. Details like where it is located and what it looks like are important.
There are also other provisions that you can include in your property lease agreement. Here are the others that you may consider:
- The number of keys provided; to make sure all keys are returned to you.
- Whether there is storage space; how much can the tenant occupy and for how long can they use it.
- How to go about terminating the lease; to make sure that the lease agreement is right for you and your tenant.
- Lease agreement amendment; if you decide to allow pets or subletting in your property.
Responsibilities Of Both Parties During The Lease
A property lease agreement would not be complete without a list of responsibilities. This list should clearly define the responsibilities of both the property manager and tenant.
Here are some of the common responsibilities a property manager and a tenant or renter must follow during the lease.
Responsibility Of The Property Manager
The responsibilities of the landlord include:
- Providing heating, air conditioning, water service and waste disposal
- Arranging for repairs
- Maintaining common areas
- Notifying tenants of, and responding to health concerns (eg, mold, pests)
Responsibility Of The Renter
The responsibilities of the renter include:
- Paying rent on time
- Following the arrangements of the lease agreement (eg, no pets, no smoking)
- Keeping the property from being damaged or destroyed
- Paying for electricity and internet use (if there is any)
Final Thoughts On Information Needed For A Property Lease Agreement
In this blog post we talked about what to include in a property lease agreement.Â property lease agreement serves as a written record for you and your tenant to rely on when misunderstandings happen and clarifications are needed. Having an agreement will help insure that both parties will be clear in their responsibilities entail. This is why as a property manager, you should carefully consider the information you wish to include in the property lease agreement.
Please comment below with any questions or thoughts you may have on the property lease agreement.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.