Download a FREE Residential Lease Agreement

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In an ideal world, there exists a one size fit all residential lease agreement that protects the landlord’s interest from any unforeseen issues, but the truth is we don’t live in an ideal world and the perfect rental lease doesn’t exist.

As a legal binding document, the residential lease agreement is the most crucial instrument between the landlord and tenant.  Any missed terms or clauses in the lease may lead to open interpretation on agreements, whether spoken or written.  While it’s true you only need your name (the landlord), your tenant names, the rental property address, and the amount of rent, and the signatures for a valid lease agreement, but if that’s all you have in your lease terms, then you’re exposing yourself to unnecessary risk and damages.

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For example, one key item that I must include in any rental lease agreement is the “Limited Liability of the Landlord”.  This is important because this clause states that I as the landlord will not be liable for any injuries or harm to the tenant caused by a defective condition on the property, unless I knew of it before the tenants moved in.  While it’s not exactly an obvious one to include in your rental lease agreement, this term protects you from accidents on the premises such as if one were to slip and fall in the shower.   However in such an example, the landlord or property manager must do a thorough inspection of the premises prior to leasing the rental.   And in the case of the shower, the shower should not have a history of causing one to slip while showering.

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The other important aspect of the “Limited Liability of the Landlord” is that the landlord will not be held responsible for any theft or damages done to the tenant’s personal property, again, unless it’s due in part to the landlord’s negligence.  For example, if a burglary was committed and items were stolen, the landlord is not financially responsible for the missing items.  However, if you as the landlord entered the premises while the tenants were away and had forgot to lock the door once you were done, then in that regard because of negligence, you would be responsible.

Clauses like this are absolutely important to include in the lease agreement, because they not only limit the financial damages that you could and may incur, but they will also provide you with that peace of mind.  So while this is just one clause to consider, there are in fact several other key terms and clauses that should be included in your residential lease agreement.  Be sure to include these terms in your agreement and download a free template residential lease agreement.

Key Terms in a Residential Lease Agreement

Tenant names, landlord name, and the rental property address

  • These are the basic ingredients for a simple rental lease agreement

  • The crucial item here is all the names of the adult tenants, as each tenant on contract is legally responsible for the rent and terms of the lease agreement.

Contract duration length

  • Most contract durations are one year in length, however as a fixed term lease, you can specify however long you would like your tenants to live in your rental, be it month to month or a three year term.

  • Usually if it is not specified in the rental lease agreement, after the terms of the lease is complete, the default term will become month to month unless you request to resign the tenants for another fixed term.

  • For certain states, after the terms of the contract are completed, you can specify to have the option to take back a property for personal use.  Please check with your local and state rules.  For properties in counties that have rent control, this term is not applicable.

Security deposit and its usage

  • Depending on local or state rules and whether the rental is furnished, there are limits on the maximum amount of security deposit that can be collected upfront.  For state specifics, please click here to find out more information.

  • Usually the landlord will specify a minimum of one to two months of security deposit.

  • You may use deposit that is reasonably necessary to resolve tenant defaults: either to pay rent, to repair damages caused by tenant, or to clean the premises when the lease is terminated.

  • If the security deposit is used towards rent or damages during the tenancy, then you could require that the tenant reinstate the total security deposit within a certain time frame.  Typically this is within five days.

  • You need to return the security deposit back to the tenant within a certain time frame when the tenants vacates (surrenders) the rental back to you.  See your state regulations on when you need to return the security deposit.  Interest on the security deposit should be paid if it’s required by law.  California laws require deposits to be returned within 21 days.

Rent Amount and Collection

  • How much rent is to be collected per month and when it’s due. Click here to find out your rental market rate.

  • Typically rent collection is specified on the first of each month (it’s easier to remember that way), however if your tenant moves in during the middle of the month, you can assign rent to be collected on that day every month.  Otherwise, it’s suggested that you can prorate the rent collected on a 30 day basis with respect to the first month and then collect rent on the 1st of every month thereafter.

Where and to whom the rent is paid

  • In addition to when the rent is collected, you need to specify where the rent is paid, whether it be a echeck that’s deposited electronically or a physical check that is mailed to your address.

  • The payment method must also be specified.  Typical accepted forms of payment are personal checks, cashier’s check, or money order.  Tenants must not pay in cash, for obvious reasons.

Late Payment and Penalties

  • There is a grace period for which any late payments are made.  Usually this ranges from three to five days.  After this grace period, any delinquent rent is considered a late payment.

  • Late payments penalties range from $50 flat fees to 5% of the rent.  Penalty amounts should be fair and reasonable.

  • Bounce checks are separate charges and are typically $25 per bounce.

  • You, as the landlord, have the right to notify the credit agency when rent is usually delinquent.

Occupancy and use

  • The rental property is designated as a place of primary residence.  The tenant can not use the residence for commercial or professional use without landlord’s permission.

  • While it might be obvious, the tenant will not disturb, annoy, endanger or interfere with any other resident of the building.

Overnight Guests

  • No person other than tenant should be permitted to regularly or continuously to use or live in the premise.  While overnight guests are generally permitted, they may not continuously stay more than 7 consecutive nights without the landlord’s permission.

No smoking on premises

  • This includes tobacco, marijuana or other smoke producing products

Allowance of pets

  • Allowance of a dog, cat, bird or any other pet is strictly at your discretion. The only exception to this is service animals, otherwise any unauthorized pets is a breach of contract.

  • When allowing pets, requiring additional pet damage deposit may be necessary

Utilities and other housing services

  • Tenant are responsible for all the utilities supplied, including water and sewer, garbage, gas and electricity unless you state otherwise.

  • Use of laundry facilities located in the building (if available)

  • Use of parking space (if available)

  • Use of storage locker or storage facility (if available)

Assignment and subletting

  • Tenant may not assign the agreement nor sublet the whole or any portion of the premises without the prior written consent of the landlord.

Maintenance

  • Tenant is required to maintain the premises in a clean and sanitary manner and abide by all the house rules regarding the condition of the premises. On the other hand, you as the landlord will need to repair any conditions within a reasonable amount of time.

  • Tenant is liable to the landlord for the cost of repairing any conditions which resulted from the tenant’s unreasonable use or conduct. Damages such as burns, stains, holes, or tears in carpeting, window covering or walls are not considered normal wear and tear.

Entry and Inspection

  • Depending on the local civil code, the landlord may enter the premises at reasonable times, and upon reasonable advanced notice, normally 24 hours ahead of time.  Notices may be slipped under or tacked onto the front door of the premises.

  • These inspections could include checking on the smoke detector, replacing its batteries, or making any needed repairs.

Limited Liability of Landlord

  • As explained above, the landlord is not liable for injury or harm to any person or property caused by a defective condition of the premises unless the landlord knew of the condition before the lease began.

  • Landlord is not liable for any theft or damage to tenant’s personal property unless it’s due to the landlord’s negligence.  While it’s not necessarily required, you can require the tenant to get their own renter’s insurance.

Joint and Several Liability

  • If multiple tenants are leasing the one rental, then each tenant is individually and jointly responsible for each and every part of the rental lease agreement; this means that even when one of the parties doesn’t pay his or her share of the rent, everyone is responsible for it.

Tenant Default

  • What happens when there is failure to pay rent when due

  • What happens when there is a failure to comply to other provisions in the rental lease agreement

Termination of tenancy by tenant

  • Tenants need to provide a 30 day advance written notice when terminating the lease.  Rent is due and payable to the end of the notice period.

Other Disclosures (must comply to relevant state laws and rent control ordinances)

  • Certain disclosures are required by law when leasing a rental.  Please check your local and state regulations.
  • Megan’s law notice – landlord must provide information regarding specified registered sex offender within the neighborhood.

  • Hazardous materials disclosures – landlord must disclose materials including lead based paint, asbestos material, and mold.

Move out inspection

  • Prior to the tenants moving out, the tenants must agree to participate in a move out inspection with the landlord.  This is generally conducted no earlier than two weeks before the tenants vacate the premises.  If the tenant refuses or does not participate in the inspection, then the landlord’s written inspection reports will be conclusively presumed correct.  This is key because many security deposits disputes are a result of not having an agreed upon move out inspection.

Last, but not least – Name and signature of landlord and tenants.  It just wouldn’t be official and binding without.

Download a Free Residential Lease Agreement