Key Terms for the Lease Agreement
The lease agreement is the cornerstone of any landlord – tenant relationship. In the almost fifty years that we have been providing property management services, we have prepared thousands of lease agreements on behalf of our clients.
Since the lease agreement is the contract that will govern any future disputes between the landlord and the tenant, it is an extremely important document. Whenever a new property management client engages our services and their property is already rented, the first thing we do is request a copy of the current lease agreement and any addendums thereto.
In most cases, after reviewing their lease agreement, we identify issues that are significant enough to require us to prepare an entirely new agreement. We, as do many other companies, utilize a residential lease agreement that is drafted and designed by the California Association of Realtors (CAR). The CAR form is a great template and contains most of the key terms needed by a California landlord. In addition to using the CAR form, we have our own one page addendum that clarifies certain other expectations that we as the property management company believe are important in a landlord tenant relationship.
If you are a landlord who has decided to forgo the services of a professional property management company and manage your rental on your own, then you must be careful to ensure you have a well drafted lease agreement. If you decide you want to prepare your own lease agreement, you should review it to make sure that at a minimum it contains the following items.
|1. Name of all parties to the agreement2. Rental property address
3. Lease term start and end date
4. Security deposit amount
5. Monthly rental rate
6. Address to where rent payments are to be sent
7. Date rent is due
8. Grace period for rent payments
9. Late fee amount
10. Signatures of all parties
In addition to these basic items, you should consider adding any specialized terms you would like your tenants to abide by. As with all contracts, you are free to create almost any term you would like as long as it is agreed to by all parties.
For example, if you own a house and you would like to require the new tenants to sweep the roof off once per month, then you can simply make it a term of your lease agreement. As long as your tenants agree to the term, it will become binding on your tenants once they sign the agreement.
More likely than sweeping the roof, you may have agreed to allow your tenant to have pets. It will be important for you to clearly document the rules and expectations of all parties in the lease agreement. When we draft lease agreements for our property management clients, we will usually enumerate the specific quantity, type, and weight of any pets being allowed. It is also important for you to specify the actual amount of any additional security deposit you may require to protect you in the case of damage done to your property by the tenant’s pet.
Although you do not have to engage a property management company, there are benefits when it comes to their experience. If you decide to go it on your own, you should pay very close attention to the lease agreement you create for your tenants. It can save you a lot of headaches in the long run.