Before you get to the point where you can use a rental application sample, you must prepare a lease agreement for you and your tenants to sign. Still, you may not know which essential terms to include in your lease agreement. Fear not; in this article, you will learn the eight important terms you mustn’t forget when writing this vital document.

What Are Lease Agreements, And Why Should You Use Them?

Lease agreements are legal documents that serve as a tenant-landlord contract. You can use a lease agreement to stipulate the tenancy terms officially and outline which terms you would like your tenants to follow if they live on your property. 

Is a Lease Agreement The Same as a Rental Agreement?

You may have heard of a lease agreement referred to as a rental agreement. However, landlords use these for different situations or to stipulate other conditions. For example, a rental agreement offers a rental period of 30 days, while a lease agreement offers a rental period of between six and 12 months.

What Are The Advantages of a Lease Agreement?

Some of the advantages of a lease agreement include the following points:

• A lease agreement may offer you a stable or predictable income from a tenancy
• You can use a lease agreement to stipulate a long-term tenancy agreement with a tenant

What Are the Disadvantages of a Lease Agreement?

Some of the drawbacks or disadvantages of a lease agreement include the following points:

• It’s possible to miss out on extra income if the property market value goes up and you have a fixed lease agreement in place
• You cannot make changes to the rental cost with a fixed lease agreement until the agreement comes to an end

8 Terms to Include in Your Lease Agreement

There are eight essential terms you must include in your lease agreement. Here are the ones you shouldn’t forget.

1. 1. Precisely mention all of the tenants’ names and the property’s address

In your lease agreement, you must mention all the names of your tenants and ensure you’ve mentioned the property address. Say you’re leasing a bedroom. In that case, make sure you’re specific when describing which part of the home you’re renting out.

1. 2. Mention the length of the tenancy term

You may be leasing a property for three months. You may be renting the property out for six months. Alternatively, you may be offering a month-to-month rental. Whatever term you’re offering, ensure you mention the length or duration. At the same time, ensure you stipulate the amount of notice you will require from your tenant and the notice they will receive to end the tenancy.

1. 3. Outline the security deposit amount and the rent

Outline the monthly rent costs and the payment method you expect from your tenants. Don’t forget to state the security deposit amount and confirm the viable amount by checking the building department in your local area.

1. 4. State the utilities or appliances that come with the rental

Specify which utilities and appliances are available for your tenants as part of the rental and note which appliances are unavailable or cannot be used. For instance, you should mention the furniture your tenants can use if you’re establishing a furnished rental property.

1. 5. Mention the maximum number of occupants allowed on the property

For example, if you only want one tenant living in your rental, state this in the rental agreement. If no more than three people are permitted to occupy your property, explain this in your document.

1. 6. Stipulate the amount of notice you’ll give to complete repairs

Depending on the community requirements, this notice may vary from state to state. Stipulate the amount of notice you’ll provide, and while you’re focusing on these terms, let them know what they must repair themselves. 

1. 7. Outline the rules your tenant must follow

For instance, pets may or may not be allowed. Smoking may not be permitted. Illegal activities must be prohibited. Explain that if your tenant breaches these rules, this can give you grounds to terminate the lease.

1. 8. Include a section related to property damage

Outline that if the tenant damages the property, they will be responsible for the repair work. Explain that wear and tear are normal but that the tenant will be responsible for severe damage.

Including the Right Terms in Your Lease Agreement: the Essential Points

A lease agreement can be a fundamental document that legally stipulates the terms you and your tenants must adhere to for a rental term. Ensure you state the eight vital sections in the document and include a section for signing the document. When in doubt, get the support of a lawyer or legal expert to help you draft the lease agreement. Lease your property without complications; include the correct terms in your lease agreement.