“Things You Should Know In A Residential Property Lease Agreement” written by Mike Marko
Are you about to make your first residential property lease agreement?
Property lease agreements are a key tool for a property management company. For property managers, it’s a document that will help you to start and end the leasing process properly.
A good property manager should know the best way to create a property lease agreement. This will help protect the property from any potential tenant trouble. It’s best to develop a lease agreement that you can customize to the specific property.
This means creating a unique property lease agreement. As a property manager, you need to include specific information that you want your tenant to be aware of. This should also include certain actions that you, as a property manager, will do.
In this blog, we’ll guide you to understanding what’s in a property lease agreement.
A Guide to Understanding a Property Lease Agreement
Whether signing a property lease agreement for only 6 months or for years, it’s important to make sure the agreement contains all the vital information and clauses. You need to know exactly what you should have in the agreement before you start the lease.
A property lease agreement should be transparent to you and to the tenant. So, it’s really important to start off on the right foot to avoid common property manager mistakes. Some of the common mistakes are the failure to outline specifically tenant responsibilities, a missing cosigner, etc.
As it’s your first time to draft a lease agreement, we’ll talk first about what a property lease agreement is.
What’s a Property Lease Agreement?
A property lease agreement states the terms of a property lease. This includes the responsibilities and expectations of the property manager and the tenant.
Property lease agreements are legal documents. Each one serves as a contract between property managers and a tenant.
In other words, it’s a written and signed agreement between the two parties.
The property lease agreement can be used by the courts to determine responsibility and resolution for a dispute between parties if any should arise.
What Should a Property Lease Agreement Contain?
The lease agreement should contain all the leasing terms. It should be as specific as possible. This will help address possible issues that could arise or affect the property.
This agreement contains details such as the names of the tenants, the amount of rent, amount of security deposit, utilities, and maintenance. The agreement should also include the rights and responsibilities of the tenants and property managers.
Commercial property, on the other hand, follows different standards. The lease should detail all costs and requirements to return a commercial property to the original condition.
Types of Residential Property Leases
There are three types of property leases that property managers and tenants must know. Each lease is best used for specific types of tenants.
Knowing the type of property you are renting can help you in identifying which lease is best.
This type of property lease works through a fixed monthly rate for the entire lease period. It is ideal for tenants who will only need the property for a short time.
There are a number of situations why a short-term lease is put into effect. It could either be a vacation rental or a business rental. A vacation rental is where the property is put on lease for tourists. On the other hand, a business rental is where the property is put on lease for visiting executives.
This type of property lease follows a monthly fee agreement. The tenant must pay the rental fee on a monthly basis. The fees may also be subject to change at any time.
Should there be a need to change the rental fee, it is the duty of the property manager to release an advance notice on it. This type of lease is ideal for tenants who are unsure of how long they will occupy the property.
Also referred to as “sublet”, this is where the tenant rents property to another tenant. Instead of an agreement with the property manager, the declared tenant of the property will have an agreement with another tenant instead to lease the property.
For tenants who are thinking of subleasing, obtaining written consent from the property manager is important. The consent will state that the property manager is aware of the situation and he/she allows it.
Rights and Responsibilities of Tenants and Property Managers
The rights and responsibilities of both parties must be discussed before signing a property lease agreement. This helps property managers and tenants know their rights and responsibilities during their occupancy.
The terms of the agreement will help to resolve any lease issues. If not, the property lease agreement can be used by the court to resolve any issues that may arise.
The major responsibility of the tenant is to pay rent on time and to maintain regular communication with the property manager. They are also responsible for keeping the property in clean and good condition.
Any property issues such as repairs or damages must be immediately reported to the property manager. Tenants should provide property managers with proper notice in advance before moving out.
Tenants reserve the right to have a safe habitat and privacy. Leases can be negotiated to include or exclude certain rules. This includes the right to have a guest and the use of property utilities.
The rights of the tenant and the property manager are specifically written on the terms of the lease agreement. Once the property lease agreement is signed, both parties are obliged to comply with the terms.
The Property Manager’s Responsibilities
Property managers are responsible for providing a clean property, collecting and setting rent, and screening and approving tenants. They are responsible for handling complaints/emergencies and are usually responsible for maintenance and repairs.
They are also required to communicate and resolve issues that may arise during the tenancy. And if possible, resolve issues right away.
The Property Manager’s Rights
As negotiated and agreed upon in the lease agreement, the property manager has the right to receive the rental fee on the agreed date. They also have the right to terminate a lease.
Property managers reserve the right to evict tenants who violate a term of the property lease agreement. They have the right to charge the tenant for late fees and any other costs the tenant is responsible for based on the property lease agreement.
Final Thoughts on the Importance of a Residential Property Lease Agreement
In this blog, I provided you with insights into what a property lease agreement is. Property lease agreements are legally binding documents. A property lease agreement gives tenants the right to lease a rental property.
You need to know exactly what you should stipulate in the agreement before you lease a property. Whether it’s a short-term or a long-term lease, a property lease agreement is important.
If you have further concerns about property lease agreement, feel free to comment below.
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