Your Online Legal Resource Center for Property Management
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Don't Lease a Home Without It
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Which
Is Better, a Lease or a Rental Agreement?
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A rental agreement establishes a tenancy for a short period of time, usually one month. A month-to-month rental agreement is automatically renewed each month unless you or your tenant gives the other the proper amount of notice (typically 30 days) and terminates the agreement. You may increase the rent, change other terms of the tenancy or terminate it on relatively short notice (usually 30 days) -- unless local rent control ordinances specify otherwise. Many landlords prefer to rent month-to-month, particularly in tight rental markets where new tenants can be easily found and rents are trending upwards. The flip side is that month-to-month tenancies almost guarantee more tenant turnover. |
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A lease obligates both you and the tenant
for a set period of time, usually a year. You can't raise the rent
or change other terms until the lease runs out, unless the lease
itself provides for modifications or the tenant agrees in writing
to the changes. In addition, you usually can neither ask the tenant
to move out nor prevail in an eviction lawsuit unless the tenant
fails to pay the rent or violates another important term of the
lease or state law. At the end of the lease term, you can either
decline to renew it or negotiate to sign a new lease with the same
or different terms. Landlords often prefer leases in areas where
there is a high vacancy rate or where it is difficult to find tenants
for certain seasons of the year -- for example, in college towns
that are often deserted in summer.
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Not only should a lease be thorough, it should also be legal. Be sure your lease or rental agreement complies with all relevant laws including rent control ordinances, health and safety codes, occupancy rules and anti-discrimination laws. State laws are especially key, setting security deposit limits, notice requirements for entering rental property, tenants' rights to sublet or bring in additional roommates, rules for changing or ending a tenancy, specific disclosure requirements such as past flooding in the rental unit and more. See your state's landlord-tenant statutes for details. Here are some of the most important items to cover.
Names of All Tenants
Every adult who lives in the rental unit, including both members of a
married couple, should be named as tenants and sign the lease or rental
agreement. This makes each tenant legally responsible for all terms, including
the full amount of the rent and the use of the property -- meaning you
can legally seek the entire rent from any one of the tenants should the
others skip out or be unable to pay.
Limits on Occupancy
Your agreement should clearly specify that the rental unit is the residence
of only the tenants who have signed the lease and their children. This
guarantees your right to determine who lives in your property -- ideally,
people you have screened and approved -- and to limit the number of occupants.
The value of this clause is that it gives you grounds to evict a tenant
who moves in a friend or relative, or sublets the unit, without your permission.
Term of the Tenancy
Every rental document should state whether it is a rental agreement or
a fixed-term lease. What's the difference between the two? Both rental
agreements and fixed-term leases cover basic details such as tenants'
names and rent provisions; they differ mainly in the length of the tenancy
they create. Rental agreements usually run from month-to-month and self-renew
unless terminated by the landlord or tenant. Leases, on the other hand,
typically last a year. Your choice will depend on how long you want the
tenant to stay and how much flexibility you want in your arrangement.
Rent
Your lease or rental agreement should specify the amount of rent, when
it is due (typically, the first of the month), and how it's to be paid,
such as by mail to your office. To avoid confusion and head off disputes
with tenants, spell out details such as: acceptable payment methods (such
as personal check only) whether late fees will be due if rent is not paid
on time, the amount of the fee, and whether or not there's any grace period,
and any penalties if a rent check bounces.
Deposits and Fees
The use and return of security deposits is a frequent source of friction
between landlords and tenants. To avoid confusion and legal hassles, your
lease or rental agreement should be clear on: the dollar amount of the
security deposit how the deposit may be used (for example, for damage
repair) and not used (such as for last month's rent) when and how you
will return the deposit and account for deductions after the tenant moves
out, and any legal non-returnable fees, such as for cleaning or pets.
It's also a good idea (and legally required in a few states and cities)
to include details on where the deposit is being held and whether interest
on the deposit will be paid to the tenant.
Repairs and Maintenance
Your best defense against rent-withholding hassles and other problems
(especially over security deposits) is to clearly set out your and the
tenant's responsibilities for repair and maintenance in your lease or
rental agreement, including: the tenant's responsibility to keep the rental
premises clean and sanitary and to pay for any damage caused by his or
her abuse or neglect a requirement that the tenant alert you to defective
or dangerous conditions in the rental property, with specific details
on your procedures for handling complaint and repair requests, and restrictions
on tenant repairs and alterations, such as adding a built-in dishwasher,
installing a burglar alarm system or painting walls without your permission.
Entry to Rental
Property
To avoid tenant claims of illegal entry or violation of privacy rights,
your lease or rental agreement should clarify your legal right of access
to the property -- for example, to make repairs -- and state how much
advance notice you will provide the tenant before entering.
Restrictions on
Tenant Illegal Activity
To avoid trouble among your tenants, prevent property damage and limit
your exposure to lawsuits from residents and neighbors, you should include
an explicit lease or rental agreement clause prohibiting disruptive behavior
such as excessive noise and illegal activity such as drug dealing.
Other Important
Rules and Restrictions
If you do not allow pets, be sure your lease or rental agreement is clear
on the subject. If you do allow pets, you should identify any special
restrictions such as a limit on the size or number of pets, or a requirement
that the tenant will keep the yard free of all animal waste. Any other
legal restrictions, such as limits on the type of business a tenant may
run from home, should also be spelled out in the lease or rental agreement.
Important rules and regulations covering parking and use of common areas
should be specifically incorporated in the lease or rental agreement.
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to Our Readers:
This article
provides information and general advice about the law. But laws and procedures
change frequently, and they can be interpreted differently by different
people. For specific advice geared to your specific situation, consult
an expert. No book, software or other published material is a substitute
for personalized advice from a knowledgeable lawyer licensed to practice
law in your state. Neither Property Automation Software Corporation nor
Nolo shall be liable for any errors or inaccuracies in the content, or
for any actions taken in reliance on the content.
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