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Why Landlords and Tenants Need Lease Agreements

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Are you soon to be a landlord or a tenant for the first time? The lease or tenancy agreement is essential to owning or renting a property. This rental property guide covers the basics of why it’s vital to have a residential lease agreement.

What Is A Lease?

A lease is a legal agreement binding on the nation’s law. In the USA, lease terms may vary by State, so while you may use a generic lease with ten standard inclusions, you will also need a residential lease for your State.

A resident state protects the rights of the Lessor and the Lessee. For example, the lessee (tenant) wants to know if they can use the property of a stated address for a specific period. The lessor (landlord) wants to know if the tenant will pay an agreed rent amount at particular intervals, i.e., weekly, fortnightly, or monthly.

Leases offer security and peace of mind that both parties know all lease terms. However, like all legal documents, there is the fine print that laypersons struggle to understand on the first reading. If you find yourself in this predicament, take these steps. Tenants can ask for a copy of the lease agreement and request time to review it before signing it.

Landlords can either download a free lease template or ask a lawyer or property manager for an agreement applicable to the state where their property is located. Both tenant and landlord can seek professional advice to explain the clauses before signing a new lease.

There’s no shame in asking for help to understand the legal jargon. What’s vital is that the tenant and landlord know their obligations under the lease terms. There are consequences for failure to comply with the lease terms, and they may include:

  • Damage to credit rating for failure to pay rent
  • Legal proceedings to recover unpaid rent
  • Landlords could be fined or incarcerated

Most tenants and landlords are law-abiding citizens. However, there are criminals everywhere. Hence, the residential lease presents the terms of the agreement.

What’s In A Lease?

LegalZoom says there are ten terms or areas to cover in a residential lease.

All Parties and Property

List the full names of the parties to the agreement. Each tenant should be listed, along with their contact details. The landlord should also include their full name and contact details. The property’s full address needs to be listed in the agreement, too.

Term

The term is when the agreement starts and ends. Your lease may be month-to-month or for a fixed period, like 12 months.

Rent and Bond (Security Deposit)

Another clause is dedicated to the rent amount and when the payments are due. For example, $300 a week is paid fortnightly commencing from 1 January 2022. Also important is how the rent payment happens, e.g., online. Late payment may incur fees, and a security deposit will be collected. There are limits on both, so check with your local state authority.

List of Chattels

What comes with the property? A full property inspection will list all chattels and their condition. The inspection report is presented to the tenant and signed by both parties (tenant and landlord).

At the end of the tenancy or lease, the inspection report will be revisited and used to assess the state of the rental property. If there is damage beyond what can be deemed fair wear and tear, the tenant may have to pay for the damage—such a request being fair and reasonable.

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Pets

Not all rental properties accept pets. Some landlords allow certain types of animals, such as dogs, but not cats or any other type of animal.

Make sure the lease includes a statement about pets and that you fully understand the terms. Sometimes, pets are allowed, but they come with an additional fee or higher security bond payment to cover any damage caused by the pet.

Access to inspections and repairs

Ensure you understand your obligations when entering the occupied rental property or if you’re a tenant allowing access to the landlord or third parties for repairs.

Property Condition

There is an expectation that the rental property will remain clean and satisfactory throughout the lease. The final inspection will reveal any damage or cleaning requirements for the handover at the end of the lease.

Signatures

All parties must sign and date the lease. You may also prefer that all parties initiate each page.

Why Leases Work

Neither party should shy away from a residential lease. Know your rights and obligations, and make sure you are happy with each term. If you do not understand the legal jargon – get advice before signing.

Leases make renting a property or being a landlord more effortless. The law is on your side, and a lease protects your rights by law.