A lease is a crucial component of renting real estate and is meant to ensure that both the landlord and tenant uphold their promises in the landlord-tenant relationship. As a landlord, you’ll definitely want to to be picky when it comes to who you choose to rent your unit out to. After all, a bad tenant can cause nothing but headaches and negatively impact your bottom line.
That said, a sound lease is an essential part of the puzzle and will help ensure that your tenant is up to speed on what is expected of them. That way, you have legal recourse with a written lease in hand if the tenant ends up breaching the contract.
When drafting up your lease, make sure the following items are included.
1. Names of All Tenants
The name of every adult who will be living in your unit will need to be included in your lease. The reason is that each person who lives there is equally responsible for all terms of the lease, including taking care of the place and paying rent on time. As a landlord, you have the right to go after any one of the named individuals stipulated in the lease should a problem ever occur.
2. Security Deposit Clause
As a landlord in California, you are allowed to ask for a security deposit to cover the costs associated with any damage incurred by the tenant. This amount can be the equivalent of two months’ rent for unfurnished properties or three months’ rent for furnished units. If the tenant has a waterbed (which is highly unlikely these days), you can tack on another half month’s rent on top of it.
3. Term of Tenancy
The standard lease term is usually an initial 12-month fixed-term, which means the tenant is responsible for paying rent for at least 12 months, after which the lease can be renewed or terminated by either party. Once this 12-month period is up, the lease usually takes the form of a month-to-month lease, unless other arrangements are made and another agreement is established.
That said, landlords and tenants can come up with their own unique lease term, as long as they both agree to it and sign off on it.
4. Start and End Dates
The date that the lease takes effect and when it expires should be clearly detailed in the lease contract. This will inform the tenant when they are expected to start paying rent and caring for the property and how long they will be required to uphold the terms of the lease.
5. Responsibility For Repairs
Who will be responsible for all repairs and maintenance? Maybe certain tasks will be handled by yourself, while others will be the responsibility of the tenant. Regardless, all repair and maintenance jobs should be clearly outlined, along with who is obligated to handle them.
A typical lease usually requires the tenant to keep the unit clean and cover the cost of any damage incurred by the tenant. If the property in question is a home, the tenant may also be responsible for cutting the grass and watering the lawn. Regardless of what you want your tenant to take care of, it should be clearly outlined in the release.
6. Rent Amount
Obviously, the rent amount will need to be included in the contract, along with when the rent is due (such as on the first of the month), and how it should be paid. You should also include information about late fees if the tenant misses the due date, as well as any charges associated with bounced checks for insufficient funds.
7. How You May Enter the Property
Tenants are entitled to privacy when they rent, which means you cannot barge into the premises whenever you feel like it, even though you’re the rightful owner. In order to protect yourself against any complaints from your tenant, make sure to outline your rights to access the property for reasons such as making repairs and showing the property to prospective buyers, and stipulate the amount of notice you will provide for such visits.
If you are open to allowing pets to live on the premises, the lease should specify any restrictions you may have, such as the number, type, and size of pets. It should also specify a requirement that the property will be free of pet waste. If you do not want any pets living on your property, your lease will have to specify a “no pets” policy, which is allowed in the state of California.
As a landlord, you have the right to reject applicants with a pet – or even just a specific type of pet. You can even evict a tenant who brings a pet to live on the property after having signed a lease that specifically states no pets allowed.
9. What the Tenant Can and Cannot Do
Your tenant will need to be clear on what is expected of them while they are living in your unit. If such behavior is discovered, your lease should also specify how the tenant will be dealt with. Whether it’s being excessively noisy, causing a disturbance in the neighborhood, causing damage to the property, or conducting illegal activity – such as dealing drugs or gambling – the lease should include a clause that strictly prohibits such behavior.
The Bottom Line
A lease is a binding contract, so you want to be sure that both you and your tenant are agreeing to a deal that has both your interests in mind. After carefully screening applicants for your property and choosing the one you feel is the right fit, you’ll still want to cover your back by ensuring they keep their end of the bargain, and a solid lease is the best way to do that.