A lease agreement is the most important document between landlords and tenants. However, not all leases are created equal. A good lease needs to be detailed, clear and contain a few fundamental elements in order for it to be binding and enforceable by law. Since the lease between you and your tenant provides guidelines for their tenancy in your property, you’ll want to make sure you draft a good lease on the first go. Here are seven fundamental clauses to include in your lease agreement.
1. Identify all parties
Every good lease agreement must identify all parties involved in the contract. If you’re leasing a rental property, you should identify all tenants over the age of 18, as well as the landlord or the landlord’s agent. The address of each party should also be included as part of the lease. Identifying the parties involved in a contract is the first step to creating a binding agreement.
2. Property description
Since the property being rented is the focal point of a lease agreement, providing an adequate description of it is important. Your lease should include the property’s address, unit/apartment number, the province and town it is located in as well as its postal code. You can also include any features or details you think makes the property unique from others.
3. Rental term
Another important clause to include in your lease is the rental term. This is the amount of time the lease is valid for. Here, you want to avoid general terms. Don’t state that the lease is valid for six months or a year. Instead, mention the exact dates that the agreement begins and ends. This ensures that the tenant knows exactly when to move in and out of the property.
4. Terms of rent
This section should provide the tenant with all the necessary information regarding their rent. Here, you should state the amount of rent to be paid and when its due. It’s also important to state where the rent should be sent and how it will be accepted – by cheque, direct deposit etc. Terms governing late rent should also be laid out in this section.
5. Security deposit
Most landlords require a security deposit before tenants move in, so, providing a security deposit clause is crucial. This should include the amount of security deposit required, how and when it should be paid, as well as the terms surrounding its return. You should also provide the tenant with reasons why deductions can be taken from their deposit. This is helpful in the case that he/she does not receive their full deposit back at the end of their lease.
6. Tenant responsibilities
Just as landlords have a responsibility to their tenants to provide a liveable space and fix problems around the home, tenants have the responsibility of taking care of the rental while they live there. They must follow all building and housing codes and must not cause excessive damage to the property. In addition to these, this section of your lease agreement should also include the specific tenant responsibilities outlined in your state’s landlord/tenant laws.
7. Renewal and termination
Finally, renewal and termination clauses. If you give your tenant the option of renewing the lease agreement, it should be stated clearly in the document. This also goes for lease termination. You should provide details about how and when both the tenant and landlord can terminate the lease.
A good lease agreement is the foundation of every landlord-tenant relationship. It helps each party know what they can expect from one another for the period of the agreement. With these seven fundamentals, you’re sure to draft the perfect lease for your next tenant.
Need to get your rental property off the market? Visit our website to see how we can help you!