“7 Essential Points to Cover in a House Lease Agreement” written by Mike Marko
You’re probably here because you want to know what to put in your house lease agreement. If so, you might be new to the property leasing business.
Many new landlords are uncertain of what terms should be covered in their contracts. In fact, many of them just leave the job of producing such contracts to their lawyers.
While this is definitely a viable approach, you may nevertheless want to familiarize yourself with the elements of a proper house lease agreement. Doing so can help you learn more about the ins and outs of your new business.
To that end, this article may help. Today, we’ll go over 7 of the things you need to address in a well-made house lease agreement.
Terms to Address in a House Lease Agreement
One of the things to remember about your house lease agreement is that it’s supposed to serve as a guide for policies regarding tenancy of the house in question.
In short, it should help the person taking on the house’s lease figure out his duties and rights relative to that property.
If it’s a properly-made house lease agreement, it should help him figure out your duties and rights relative to the property too.
As such, there are a number of things that you absolutely have to cover in a house lease agreement. These are more or less universal concerns for both landlords and tenants in house leasing.
We’ll go over 9 of them here and describe what they mean. You can use this as a checklist when crafting your own house lease agreement for your property.
1) The Length of the Lease
This is important for obvious as well as legal reasons. You have to state the length of the lease for which the agreement is being made.
That means stating it in no uncertain terms, i.e. by specifying both start and end dates for it. That way, there can be no misinterpretation of the text, as there might be if you simply say the lease shall extend for X number of months.
When you state lease length or duration in your house lease agreement, you basically tell the tenant how long he can enjoy all of the rights to the property that his lease grants him.
It’s also a way of warning him when he will need to move out or renew the lease if he decides to stay.
2) The Leasing Fee
It’s pretty much a given that your house lease agreement should state what the fee is for leasing the property. It should state it in precise terms as well, i.e. in the full amount and with the currency provided.
But it shouldn’t stop at the amount. Your house lease agreement also needs to state how you expect that fee to be paid, as well as when.
If you have preferences for the payment methods, it’s particularly important to state them. This is to avoid running into issues like an inability to access the payment if the tenant uses a payment method inaccessible to you.
3) The Security Deposit
It’s always a good idea to specify all terms relating to the security deposit in your house lease agreement, if you do require a security deposit.
That means stating the amount required, the payment/deposit methods allowed, and the terms governing its use and return.
The latter point is of particular importance. Tenants need to know if their landlord is allowed to use their security deposit and whether or not they shall get the deposit back.
Keep in mind, however, that a good number of states have regulations pertaining to the security deposit. Some specify what amount landlords are allowed to request for it, as well as how they can use it.
For safety, review the laws in your area before covering this point in your house lease agreement. You may also ask your lawyer to help you with it.
4) The Areas of Responsibility
This means you should specify in your house lease agreement what the tenant is responsible for on the property. This serves to outline what repairs or maintenance costs fall within his purview and which ones fall within yours.
The general rule here is for tenants to foot the bill for all repairs on the property that are due directly to their activities (e.g. a faucet they break in an accident is usually one they have to repair themselves).
On the other hand, if a repair is due because of normal degradation or decay of some part of the property (say, if the earlier faucet broke simply because it was old and not due to reckless use), the landlords usually cover it.
5) The Prohibitions
This is just another way of saying that you need to list the sort of things you prohibit from the property in your house lease agreement.
For example, since the property is a home and thus residential, you are likely to state that operating or running a business out of it is forbidden.
Sometimes, you can be fairly general about your prohibitions. For instance, most house lease agreement examples will simply state that tenants may not carry out criminal activities on the property.
But depending on your needs, you may also wish to write more specific prohibitions in there. For instance, you might want to disallow a specific type of pet or subleasing of the premises.
What matters is that you specify these prohibitions in your house lease agreement. Otherwise, you won’t have a leg to stand on if you try to compel a tenant to observe a prohibition you want to implement.
6) The Consequences of Violations
This naturally follows when you put prohibitions or rules in a house lease agreement. The fact is, if you have rules in place, you need a way of enforcing them.
There are a lot of penalties that landlords typically use to enforce the terms they set out for their tenants. For example, many landlords impose a late fee for tenants who are late in paying rent.
Others supply “cure or quit” notices to tenants for breaking rules like the ones I described in the previous point (Point 5). Some may even provide outright “quit” notices.
Generally, if you’re willing to go to such trouble to enforce your rules, you should clarify that to tenants in the house lease agreement. What’s more, be sure that they know that you may initiate the eviction process for certain violations.
7) The Rights of Tenants
This is absolute vital to a house lease agreement. You should specify the rights tenants can enjoy for the duration of their lease on the property.
For example, assure them that they have the right to privacy, as set out by law. In line with that, promise that you shall only enter the premises under certain conditions, e.g. only after due notice has been provided and with their permission.
You may want to consult a lawyer or your state’s laws here too. That is because most states provide prescriptions on the rights tenants enjoy on their rented or leased properties.
As such, it would be better to see what the law says you should provide tenants before setting anything down in writing. It would be unwise to place something in your house lease agreement that violates those rights, particularly if you have no clause of severability.
That actually brings us to “bonus” entry in this list of crucial points to cover in a house lease agreement. That is, you should also have a severability clause for your agreement.
This is a clause that states that the presence of one invalid clause in the contract does not render the entire agreement null and void. For example, if Clause A in it turns out to be invalidated by state law, Clauses B, C, and D remain valid if there is severability.
This can be very important legal protection in case something is wrong with your house lease agreement and you don’t know it yet. As such, I strongly advise you to have it in your contract.
Final Thoughts on What to Put in Your Lease Agreement
That wraps up our discussion of crucial points to cover in your house lease agreement.
A house lease agreement obviously needs to go over a lot of ground for it to be effective, but with the checklist I provided above, you should find it a bit easier to make one.
Let’s recap the 7 points you need in your house lease agreement again:
- The length of the lease, or the start and end of the lease term.
- The leasing fee and the terms of its submission.
- The security deposit and the terms of its use as well as return.
- The areas of responsibility for both you and your tenant relative to the property.
- The prohibitions you wish your tenants to observe.
- The consequences of violating your rules or the terms of your contract.
- The rights tenants enjoy while leasing the property.
Keep the above things in mind when you make your next house lease agreement.
If you have more questions about what to put in a house lease agreement, leave them in the comments. I’ll answer you as soon as I can!
If you need help marketing your business online then check out IM Consultant Services.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.