A Lease Agreement is the basic backbone of all transactions between the landlord and tenants. There are residential leases and commercial lease agreements that are different but there are many essentials that every lease must include, no matter what the type. It lays out the terms and conditions of a lease outlining every minute detail to stop any misinterpretations and further legal hassle. And if problems do arise, all stakeholders can move the court to claim their rights as a tenant or as a landlord.
What are the terms of a lease agreement that you must include? Read this article to know them in complete detail.
The basics of a proper lease agreement
If you are a landlord or property manager and have properties to rent, then a proper rent agreement is a must as is outlined by the SEC lease agreement standards. If you have difficulty comprehending the basics of a lease agreement, then you can opt for lease abstraction services to shorten the terms of the lease and make it easy to understand. And if there are any misinterpretations and legal hassle involved with the tenants, then you can get a lease audit done from a neutral third-party provider to get an unbiased lease review.
10 Must-haves in a lease agreement
Here is a list of all the ten more essential things that you can not miss out on in your lease agreement.
1. Properly identify both landlord and tenants
Your lease agreement must clearly identify the parties who are getting the agreement. Providing the full name, permanent address, and identifying features of both landlords and tenants is a must. All tenants who are official adults must be clearly named in the agreement without any exceptions.
In case of any delay in rent payment by one tenant, you can easily ask for the money from other tenants mentioned in the agreement; that is why mentioning all names is vital, so landlords have a safety net to fall back on. You can also hold your tenants accountable in case someone stays on your property without legal notice or additional rent payment.
2. Rental terms and conditions are written in detail
Rental agreements are short-term contracts, but they can self renew until and unless one of the tenants or the landlords cancel it out for some reason. But lease agreements are not self-renewing; they usually have terms and conditions that last for a year until officially renewed by the landlord. These terms and conditions that make a lease agreement valid and binding need to be hashed out to the last detail.
3. Identity of the property being leased
The exact property that is being rented out needs to be appropriately identified. There should be no confusion about the building, the exact unit, or its available amenities. If you fail to mention these and your tenants end up assuming things then they can easily drag you to the court and make false claims.
4. Security deposit amount
There are multiple risks involved in renting out a property. Damages incurred by the tenants, accidental damages and of them are not covered by the insurance providers, these are covered by the security deposit. The terms and amount of the security deposit need to be previously agreed upon by both tenants and landlords before it is put on paper. But this amount needs to be paid in full and upfront to avoid any further discrepancies.
5. Rent amount and due dates
The rent amount and the due dates for each payment must be written in the lease agreement, but that is not all. You also need to mention the following,
The payment methods that you accept
If there are any fine amount for the delay in rent payment
If there is any grace period in late payment for special cases
6. Responsibilities of the tenants
Maintaining and keeping the premises of their rental unit clean comes under the tenant's responsibility, but the common area and the more significant building issues are the landlords’ headaches. Any damage they themselves cause to the property, be it accidental or intentional, needs to be repaired by themselves or their insurance company, and that needs to be underlined in the rent agreement.
Tenants also have the responsibility to inform you of any impending conditions in the property, like pipe leakages and sanitation issues that can cause significant damage if not repaired immediately.
7. Building policies, rules, and regulations
There are multiple common area building rules and regulations that tenants need to abide by when residing in a building. These need to be discussed and appropriately written in the lease agreement. Things like illegal activities, public use of narcotics, the conditions for pets, and disruptive behavior that might affect the whole community need to be put in proper words.
8. Important disclosures by the landlord
If your property had a bed bug history or has any lead-based paint, or had any otheruninhabitable living conditions in the past. In that case, the landlord needs complete disclosure to the tenant. Other things like antidiscriminatory regulations, rent control guidelines, and adherence to health and wellness codes.
9. Common Area Maintenance (CAM) responsibilities of the landlord
The Common Area Maintenance (CAM) is the landlord's responsibility, and what features of the maintenance fall under this can be put in detail in the lease agreement. The CAM maintenance comes with certain charges levied on the tenants and needs to be cleared out before signing the agreement.
10. Signatures of all parties involved
At KriyaGo, our team provides services like lease audits and lease abstraction to help make the lease filled with legal jargon become more comprehensible for the ordinary human. The strategy and leadership members in your organization need to understand the need for these and why you need to have the terms mentioned above in the lease to have a hassle-free tenant relation and onboarding.
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