Just like a bank wouldn’t give a loan to someone without any contract, so should landlords not rent out their property without a lease!
Most, if not all, of the tenants you’ll have will be strangers. And as a savvy landlord, it’s a smart business move to ensure there is a contractual agreement between you and them.
After all, buying a rental property is often a significant financial undertaking and a long-term strategy for property appreciation in real estate. The last thing you want is to rent to someone who will trash it.
A lease agreement can help you establish the ground rules. That is, each party’s rights and responsibilities, helping minimize any potential conflicts or misunderstandings.
Now, there are two ways to go about the drafting process. You can either draft it yourself or hire an expert property management company.
If you’re a first-time landlord, the latter option should be a no-brainer. Keep reading to learn more!
Names of all the Parties
Just like any other contract, a lease agreement must contain the names of all the parties involved. In this case, the legal names of the tenant and landlord.
If the tenant will be living alone in the unit, then you should only enter their names into the contract. However, if the tenant will be living with anyone aged 18 or above, then include them as well.
The Property Address
The address of the property must be specific and complete. Make sure to include the following details.
- Full street address, including street name, city, state, and zip code.
- Unit number, especially if the property is part of a larger building like an apartment complex.
- Cross streets or landmarks, especially if the unit is difficult to find.
Rent Details
Mentioning the rent amount isn’t enough when it comes to a lease agreement. You need to be specific about other details as well, including when and where rent is due, grace period, and late rent fees.
The following are the key rent-related details to include for clarity.
- Rent amount – state clearly the monthly rent amount in both words and figures.
- When rent is due – usually, this is on the first day of every month. An exception is where there is a grace period. Some states mandate grace periods while others don’t. Therefore, make sure to check with local landlord-tenant laws on this for legal compliance.
- Acceptable rent payment methods – specify how the tenant will pay rent. Will you require them to pay cash, deposit a check, do an online transfer, or any other method?
- Late fees – clearly state the amount of late fees (if any) the tenant will be liable for for late rent payment.
In addition, also let the tenant know when they should expect a rent increase. Outline the frequency and maximum percentage increase the tenant can expect.
Clear communication about rent collection timelines, alongside these details, helps avoid confusion or disputes. And again, make sure to check for any rent control rules in your local municipality.
For example, in Idaho, landlords must comply with the following rules when it comes to rent and related fees.
- Landlords aren’t mandated to provide tenants with a grace period.
- There is no rule on how much late fees a landlord can charge. But if you charge one, mention it on the lease.
- You must provide tenants with a notice of at least 30 days before increasing their rent. And speaking of rent raises, they must not be borne out of a federally protected class or arise as a retaliatory tactic.
Security Deposit Details
Do you require tenants to pay a security deposit as part of the initial move-in costs? If so, then make sure to let the tenant know of all the important nitty-gritties. Including the following:
- Amount of security deposit – specify the dollar amount of security deposit the tenant must pay before moving in.
- Specify the method of payment the tenant must use. For example, by cash, check, or online transfer.
- State the reasons that can lead to withholding of the security deposit. For instance, if the tenant fails to fix damage exceeding normal wear and tear at the time of moving out.
- Outline whether you’ll be doing a walk-through inspection of the property at the end of the tenancy.
- After how long the tenant can expect a refund of the security deposit after moving out.
Make sure to comply with all applicable rental laws in this regard. For example, under Idaho landlord-tenant laws, landlords have up to 21 days to return the tenant’s deposit, or whatever remains after legitimate deductions.
Property Access
Barging in unannounced, even to say ‘hi’, can land you in legal trouble.
After establishing a lease with a tenant, you must be mindful of their privacy. As such, in the lease, make sure to address the following issues.
- The minimum notice requirement you’ll need to give them before entering their rented premises. This is typically at least 24 hours.
- Legitimate reasons for entry. For example, to inspect the unit, respond to a repair request, or show the unit to prospective tenants or buyers.
- Time of entry. This should be during normal business hours or as agreed.
Lease Termination
Let the tenant know that they cannot just pack their things and leave without notifying you first.
As such, make sure they know the minimum notice requirements they must meet before moving out.
You can also let them know their rights to break the lease early under certain situations. For example, when starting active military service, or if they are a domestic violence victim.
Conclusion
A detailed lease agreement is key in preventing potential future conflicts between you and your tenant.
And aside from ensuring you create a detailed, clear lease, also make sure to enforce it fairly.
If you have a question or need help in drafting a solid lease agreement, look no further than Realty Management Associates, Inc. We are a reliable and reputable property management company in the Greater Boise Metro Area. Get in touch to learn more!