Residential Lease Agreement

A lease agreement is a contract between a landlord (lessor) and tenant (lessee) stating that the tenant shall occupy the property for a specific time in exchange for compensation for the landlord.

Business and residential landlords utilize lease agreements; however, this article will focus only on the residential side.

Keep in mind that lease agreement laws vary between states; therefore, be sure to research local and state laws pertaining to your specific situation.

Why are leases important?

The simple answer to this question is that leases rule out the likelihood of misunderstanding between landlords and tenants as far as renting a property is concerned.

Additionally, a lease agreement reduces the possibility of litigation between landlord and tenant.

Residential leases also create benefits to both landlord and tenant -- landlord is assured income on the property, and the tenant is insured a place in which to reside.

What should be included in a residential lease?

There are five requirements of a valid lease:

1. names and signatures of lessor and lessee
2. lessor and lessee must be legally able to enter into a contract
3. consideration (amount of deposit required upon signing as well as the amount of rent payment)
4. the exact period of time that the lessee will occupy the property
5. exact description of property to be occupied

Residential lease agreements should include due dates for rent payments (when each payment must arrive in the lessor's mailbox) and method of payment.

Leasehold agreements should contain information regarding who will be paying utilities. Sometimes, utilities are covered either completely or partially by the landlord.

Additionally, agreements should include details regarding which parties are responsible for normal upkeep of the property, for example, landscaping and pest control.

Lease agreements should also contain particular details regarding the lessee's property privileges, such as pool, spa, and exercise room. Many lease agreements include strict rules as far as drug use is concerned.

Additionally, lease agreements may or may not allow pets. If pets are allowed, there is usually a higher deposit involved, and, in some cases, a higher rent payment is required.

Some states require that the manner in which a security deposit is held must be stated in the lease. Many states require that security deposits are held in bank accounts specifically for that purpose.

Residential lease agreements must contain provisions regarding early termination by either party, including any applicable fees and terms for any unpaid rent due to early vacating of premises.

Lease agreements need to state whether the lessee is permitted to sublet the property.

Is an attorney really necessary?

Everyone knows that attorney fees can be expensive; however, consider the importance of paying an attorney in order to avoid costly errors later.

The money used to pay an attorney today can save even more money down the road.

An experienced real estate attorney knows state laws, rules, and regulations, and knows how to draw up a suitable lease for any specific situation. Although several templates are found online, they are written based on general situations.

Landlords who hire attorneys to draw up their leases are more protected as far as litigation is concerned. Why take the added risk? Protect yourself and hire an experienced real estate attorney.