Why Landlords and Tenants Need Lease Agreements
Are you soon to be a landlord or a tenant for the first time? One essential part of owning or renting a property is the lease or tenancy agreement. 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 that is binding by the nation’s law. In the USA, lease terms may vary by State, so while you can use a generic lease that has ten standard inclusions, you will also need a residential lease for your state.
A residential lease protects the rights of the Lessor and the Lessee. For example, the lessee (tenant) wants to know they can use the property of a stated address for a specific period. The lessor (landlord) wants to know 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 are aware of all the lease terms. However, like all legal documents, there is the fine print that layperson’s 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 go over it before they need to sign it.
Landlords can either download a free lease template or ask a lawyer or property manager for an agreement applicable to the State the 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 are aware of 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 say there are 10 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 and their contact details. The landlord should also include their full name and contact details. The property’s full address needs to be listed on the agreement too.
When the agreement starts and ends is the term. Your lease may be month to month or 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 on a 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 – with such a request being fair and reasonable.
Not all rental properties accept pets. Some landlords allow some types of animals, for example, dogs but not cats or any other type of animal. Make sure there is a statement about pets in the lease and that you fully understand the terms. Sometimes pets are allowed but come with an additional fee or higher security bond payment to cover any damage caused by the pet.
Access for inspections and repairs
Make sure 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.
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.
All parties must sign the lease and also date it too. You may also prefer each page to be initialled by all parties.
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 is there to protect your rights by law.