Terms to Include in Your Lease

A residential lease agreement is a type of contract between someone who owns housing and someone who wants to live in it. Your lease agreement is the best place to lay down a solid foundation between you and each of your tenants: clarify what's allowed, what's not allowed, and give tenants instructions for handling common situations.

How do lease agreements work?

Just like with any other legal contract, both parties to the lease are bound by its terms and face a lawsuit if they violate any of the contract's terms. Local laws about lease agreements often explicitly clarify that both parties are entitled to damages if the lease is violated, and may provide more instructions regarding the amount of damages and processes for claiming them.

What are illegal lease terms?

The only exception to the binding nature of lease contracts are terms that are illegal or unenforceable under federal or state laws. Although a lot of what’s in a lease is up to the individual landlord, certain provisions will be voided by state law if you try to include them. While this varies by state, some common examples of illegal lease terms are:

• A term waiving the landlord's responsibility to keep the unit habitable
• A term waiving landlord entry laws

If you include an illegal lease term in your lease you shouldn't expect a tenant to adhere to it.

What are essential terms to include in your lease?

Including certain essential terms in the lease agreement can help protect the interests of both parties and prevent potential disputes. Below are the standard clauses that belong in a bulletproof lease agreement.

1. Rental property address

   Begin with the address of the unit that the tenant is renting from you, including the unit number if applicable.

2. Property description

   Provide a detailed description of the rental property including any specific features or amenities.

3. Parties to the lease

   Clearly state the names of the landlord(s) and tenant(s) involved in the lease agreement and their contact information.

   Local laws about lease agreements often require landlord contact information to be shared with tenants and kept up-to-date.

4. Term

   Specify the lease term, including the start and end date. Indicate if it is a fixed-term lease or a month-to-month lease.

5. Renewals

   Lay out instructions for what will happen when the lease runs its course. State whether the lease will automatically renew or not and instructions for both parties if they wish to end the lease early or renew the lease.

6. Terminations

   Outline the terms and conditions for early termination of the lease by the landlord or early termination by the tenant. You can include:

   • Notice periods to end the lease
   • Any penalties or fees associated with early termination
   • The actions that may be taken by the landlord in the event of a tenant's default, such as non-payment of rent or violation of lease terms, in order to legally begin an eviction proceeding
   • Outline any remedies available to the tenant in case of a landlord's failure to meet their obligations.

7. Rent payments

   Outline the amount of rent, due date, and acceptable payment methods. Specify any late fees or penalties for late or bounced payments. Also state when rent increases can happen and by how much.

8. Security deposit

   Clearly state the amount of the security deposit, where it will be held during the tenancy, and the conditions for its return at the end of the tenancy. Include any allowable deductions, such as damages or unpaid rent - these will differ according to state laws about security deposits.

9. Utilities

   Clarify which utilities and services are the responsibility of the tenant and which are included in the rent. Specify if the tenant is responsible for setting up and paying for utilities in their name.

10. Landlord and tenant responsibilities

    Clearly state the landlord's responsibilities, such as the maintenance and repair items that you are responsible for, that you are not responsible for, and that must be paid for by tenants.

    Clearly state the tenant's responsibilities such as maintaining the property, reporting any damages promptly, and notifying the landlord of any changes in contact information.

11. Use of the property

    Specify how the tenant is allowed to use the property, such as for residential purposes only or any restrictions on business activities or subletting.

    State whether the tenant is allowed to make any alterations or modifications to the property and if so, what kind and with prior written consent from the landlord.

12. Maintenance

    Specify that you are not responsible for any conditions created or caused by the negligent or wrongful act or omission of the tenant, a member of the tenant’s family, or other person on the premises with the tenant’s consent. You can also clarify the maintenance and repair items that you are not responsible for and that must be paid for by tenants. Examples include such as lawn care, snow removal, or HVAC maintenance.

    State laws may prohibit the landlord from providing in the rental agreement that the tenant is obligated to pay costs or charges for things like repairs, garbage removal, water, fuel, or utilities.

13. Repair requests

    Specify which party should be contacted for any repairs or maintenance issues.

14. Landlord access rules

    Specify the landlord's right to access the property for inspections, repairs, or other necessary reasons. State the amount of notice required for such access.

    When can the landlord gain entry to the unit and when can the landlord take possession of the unit. Detail the amount of advance notice required for the landlord to enter the property for non-emergency purposes, such as inspections or repairs.

15. Additional rules

    Outline any other rules or building policies that the tenant must abide by, including noise restrictions, pet policies, smoking policies, and any other specific rules of the property. Examples include:

    • Parking and Storage: Describe any designated parking spaces or storage areas, including whether they are included in the rent or subject to an additional fee.
    • Pet Policy: Outline any restrictions on pets, including allowed pet types, sizes, and any additional pet fees or pet rent.
    • Insurance: Recommend or require the tenant to obtain renter's insurance to protect their personal belongings and liability.

16. Boilerplate terms

    • Governing Laws
    • Severability: Include a clause stating that if any provision of the lease is unenforceable under the law, the remainder of the lease will still remain in effect.
    • Disclosures and riders: Many residential lease agreements will be presented to the tenant along with mandatory disclosures in the form of a lease rider. The only federally mandated disclosure in the U.S. is the lead paint disclosure law, but many states require more disclosures to be a part of every residential lease.