Renting out your home can be a great way to earn extra income, but it definitely comes with its fair share of responsibilities. Creating a solid leasing agreement is one of the most important steps in this process. This document is the easiest way to get you and your tenant on the same page before, during, and even after their stay is up. But what exactly do you need to include to protect yourself?
To learn what you should include in your leasing agreement, take a look below:
Basic Information
If you’ve ever signed a leasing agreement or any official document, it always starts with the basics. A proper tenant contract should include the full names of both parties—you and your tenant, the address of the rental property, and the start and end dates of the lease. Not having this can lead to confusion and, in serious cases, legal complications down the road.
Rent Details
Next up, rent. This is one of the biggest causes of contention between landlords and tenants. Clearly outlining the rent details to prevent future problems is always a good idea.
Be sure to talk about the amount of rent due, the due date, and how it should be paid. For example, will you accept checks? Direct bank transfers? Or maybe all of the above?
Keep in mind that having tenants pay their rent late doesn’t happen. So, the idea is to cover your bases and specify any late fees and when they will be applied in the contract.
Security Deposit
Transparency is of utmost importance when it comes to security deposits. It can save you a lot of headaches when your tenant moves out.
To cover your bases, specify the amount of the deposit, how it will be held, and under what conditions it will be returned. Remember, no one likes hidden fees, so don’t forget to discuss any deductions you might need to make for damages or unpaid rent.
Maintenance Responsibilities
Generally, the landlord is responsible for major repairs and ensuring the property is livable. On the other hand, the tenant is in charge of the day-to-day upkeep. To ensure everyone is on the same page, lay out these expectations in your lease to keep everything running smoothly.
Property Rules
Don’t forget this is your property, so it’s important that your tenants are respectful of it. Here are some things your contract should cover to ensure your property is cared for:
- Noise levels
- Smoking
- Pet policies
- Pool safety
- Restrictions on decorating or modifications
Setting these expectations upfront will help maintain harmony between you, your tenant, and your neighbors.
Entry and Inspection Rights
As a landlord, you have the right to enter your property for inspections, repairs, and emergencies. However, while this is true, tenants also have a right to privacy.
Rather than just walking into the place unannounced, outline the circumstances under which you can enter the property and how much notice you’ll provide. Not only does this give your tenant a heads-up, but it also builds trust between you.
Lease Termination
Sometimes, tenants have to end their lease earlier than expected. When this happens, it’s nice to have policies in place to fall back on.
When covering early termination, specify the conditions under which you or the tenant can end the lease early, plus any penalties for doing so and how much notice is required.
Pro Tip: In rare cases, some tenants will just up and leave without warning. To play it safe, include a clause about what happens if the tenant abandons the property.
Subletting
If you allow subletting, ensure your lease includes clear guidelines on the process. Specify whether subletting is permitted, and if so, under what circumstances.
This keeps you informed of who’s living on your property, protecting you from unexpected tenants.
Signatures
Last but certainly not least, ensure your lease is signed and dated by you and your tenant. This may seem like a no-brainer, but it’s an essential step in legally binding the agreement.
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