10 Terms That You Need in Your Lease

Did you know that when you sign your rental lease, you’re actually signing a legally binding contract?

Like any other binding contract, you should read it very carefully before you sign. Ideally, if it’s not a standard tenancy agreement, take it to a specialist real estate lawyer to have the terms explained in plain language.

In this PropertyTalk post, we examine the standard terms commonly included in rental property lease agreements. You should also consider specific clauses relating to your region that are not mentioned here.

1: Parties

Every contract must identify the parties to it. In a lease, the parties are the landlord and the tenant(s). When the identity of the landlord and tenant is unclear in a lease, it is challenging to determine who has which rights and obligations, and a court may find the lease to be completely invalid as a result.

2: Property Description

A lease will be invalid if it fails to identify the property subject to it adequately. This can be less formal than a legal description from a plat map. Still, the lease should at least identify the property by its mailing address, ensuring there is little to no likelihood of confusion with another property.

3: Rental Amount and Method of Payment

Both landlord and tenant want to be clear about when the rent is due and in what amount. This clarity is best achieved by including the exact date and dollar amount in the lease.

The lease should also mention to whom rent is to be paid each month and which methods of payment are acceptable. This is also a good place to include the penalties and procedures for late rent.

4: Duration

Another essential term is the lease’s duration. If the parties wish for the lease to last for a specific period, they should state this explicitly in the lease. If the parties fail to include duration language, the lease may be interpreted as renewing automatically until proper advance notice is given.

5: Security Deposit (Bond) Terms

Tenants pay security deposits when they move in to guarantee that the landlord will be compensated for any damage the tenant causes during their tenancy.

The security deposit typically equals one month’s rent, but it can be any amount agreed upon by the parties in the lease. The lease will outline the conditions under which the tenant is entitled to a return of their deposit (also known as a bond) and how to obtain it under those conditions.

6: Pet Terms

It seems that everyone loves pets, but not all landlords are willing to have them in their investment properties. In some types of homes, like apartments, the Body Corporate may have a no-pets policy. The landlord can ban specific breeds and sizes.

Local laws can also dictate whether landlords are required to accept pets in their rentals. Whatever the pet rule is, it should be stated explicitly in the lease.

An additional fee is often required for pets, and this is also included in the tenancy agreement.

7: Maintenance

Landlords are legally required to maintain their rental properties to a minimum standard of habitability; however, other repairs and maintenance can be allocated among the parties in the lease. This section should carefully outline which party is responsible for which type of damage and provide remedies should either party shirk its responsibility.

8: Alterations and Improvements

When you move into your rental property, you’ll want to decorate it to feel like home.

Landlords vary in their approach to different types of improvements made by tenants, so be sure to discuss this during the negotiation phase and then abide by the provisions in the lease after you move in. Local laws also play a role in determining what is acceptable. For example, you may be able to paint a wall and hang up paintings and pictures.

9: Right to Sublet

With the advent of home-sharing apps like Airbnb, it’s appealing to supplement your income by letting some of your extra space out to others.

However, many leases ban this practice outright or require landlord approval of each sublet before it can happen.

There should be language describing whether you are permitted to sublet and, if you are, whether landlord permission is required beforehand. Failing to comply with these provisions can result in a lease violation and may lead to damages or eviction.

10: Right of Entry

Landlords should be able to enter and inspect the property, but tenants still have the right to occupy the property without intrusion during the lease term. Therefore, the landlord must provide the tenant with advance notice of the inspection, and this notice requirement should be memorialized in the lease.

Conclusion

While these are some of the most important lease terms, you may also want to include additional terms.

The additional terms in your lease will depend on the negotiations with the other party. Although specific terms vary between leases, most should include the terms mentioned here.