5 Tips for a Top-Notch Residential Lease

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You've spent countless hours making sure everything is in place, and you're finally ready to rent out your property. Even if you have selected a tenant, you're not done yet! You need a residential rental lease to make sure that you are in the best legal position possible as a landlord entering the rental market.



Here are the top five must-haves for any residential rental lease:

1. Make sure your lease is in writing

It seems like a no-brainer, but some landlords never provide a written lease. Without a written agreement, there's no way to prove the terms that you and your tenant agreed to. A well-drafted rental lease between you and any tenant—even a friend or family member—can end up saving you money and stress later on. It also states clearly what is expected of each party, so there's no confusion or room for interpretation. Your lease should include everything that could possibly become an issue later, from payment due dates to which repairs are the tenant's responsibility and which are yours.

Landlord-tenant codes are constantly changing, which means the information is required in a lease may change as well; knowing your state and local laws is key. Items that may vary include your right of entry (laws differ on how much notice you'll need to give first) and a lead paint warning if your state requires it.

LegalZoom's rental lease provides state-specific clauses to make sure your needs are covered.

2. Clear payment and security deposit provisions

State laws are very specific about first month's rent and security deposit. Check what is allowed by your state. Some limit the amount of security deposit that can be collected or the penalty fee you can charge for late payment. It is essential to make sure your lease provides clear terms for all payment expectations, including:

  • Due date for rent
  • Frequency of payment
  • Form of payment
  • Place of payment
  • Penalties or fees for late or missed payments

Also, be clear about your security deposit return policy and, in particular, what will be considered damage to the rental unit.

Before you sign the lease, it's wise to screen your tenants to make sure they can actually pay you. Require an application from all potential renters, perform background and credit checks, and check references. Failure to do so could lead to a variety of problems later, including late rent payments and damage to your property. If you're concerned about the cost of performing credit checks, you may want to charge a small application fee to cover the expense of conducting the checks.

3. Stated policies on subletting, pets, and other activities

Let your tenants know your policies on subletting, pets, and other conduct you won't tolerate. If it's all spelled out in a lease signed by the tenant, he or she can't later claim ignorance of the rules.

4. Summary of other fees

Be sure to outline other fees or services for which the tenant will be responsible. Are there utility bills, connection fees, or other charges from you or outside providers? In a show of good will, be especially careful to mention any fees that may not be immediately obvious to a tenant. You don't want to strain the relationship with your renter because you withheld information on fees regarding parking privileges or key deposits.

You should also address the issue of maintenance—who is responsible for what types of maintenance and which costs. For example, will you or the tenant have to take care of lawn upkeep or snow shoveling? Is there simply an added fee, or will the tenant be responsible for contracting with a provider?

5. Penalties for breaking or breaching the lease

What if the tenant wants to break the lease? Will you require him or her to pay until you find a new tenant? Are there other penalties for breaking the lease?

What if the tenant breaches the lease in some way? Do you want to reserve the right to terminate the lease?

The key is to get it all in writing

No matter what rules you set, you can't enforce them without a written document. It is not enough to find a nice tenant and begin collecting rent. Before you begin collecting rent, it is essential to get your agreement down on paper in an official document.

If you are ready to draft a new residential lease for your property, click here to get started.