“How To Do A Simple Lease Agreement” written by Mike Marko.
Are you looking to create a simple lease agreement? Or maybe improve your existing simple lease agreement?
There are some key things you need to include in a simple lease agreement. If you omit them, then you could be opening yourself up to future problems.
That’s why I want to take the time to give you advice on how to create a simple lease agreement for your rental properties.
Steps In Creating A Simple Lease Agreement
You’ve decided that a simple lease agreement is the way to go for the property you are renting. Before starting to create a simple lease agreement you need to know and understand what you want included in the simple lease agreement.
Creating a simple lease agreement can be easy, however it is best to be careful in choosing the information that you are going to include. Most written agreements include important information such as the property manager and tenant’s name, address, contact information, and everything about their agreement.
Before we go into the first step of writing a simple lease agreement, let me tell you first the advantages of having a written lease agreement.
Advantages Of Written Lease Agreement
Although it’s not required, having a written lease agreement with a tenant is still advisable. It’s always better to have a contract or document to refer to when there is a disagreement between parties of the lease or agreement. Having a signed document additionally shows you have created a legal document that represents everything you and your tenant have agreed during their interview or tenant screening procedures.
Here are some of the advantages of having a written lease agreement:
1) A formal agreement protects the property manager and the tenant and it also regulates the tenant’s use of the rental property.
2) A property manager can more easily recoup damages from the tenant damage deposit is a written agreement.
3) In some areas, the law still requires the property manager to provide the tenant with written details about the main terms of their tenancy within six months. So it’s advisable to just prepare the lease agreement and have it signed and authorized by all parties prior to the tenant moving into the property.
A written lease agreement can help protect you and your tenant from any disputes in the future. Most experienced property managers recommend that you to make a written lease agreement for every tenant.
If you’re ready to make your written lease agreement, here’s the first thing that you need to do.
Research Local Rental Laws
Knowing and understanding the rental laws of the area that the lease will be in place is the first thing you need to do whenever you are creating a simple lease agreement. Having enough knowledge about the rights of tenants and landlords could lessen or minimize the complaints of your tenants. Abusing your tenants with unlawful terms will surely cause disorder inside your property. Unhappy or unsatisfied tenants could leave your property, they could sue for unlawful termination of tenancy, and it could give your business a bad reputation. To avoid this scenario, learn your rights and also respect the rights of your tenants.
To become a successful property manager, you should know everything about the rental property business including what and how a simple lease agreement works.
Study The Rental Laws
The easiest way to make sure you understand and are following all rental laws in your State or area is to employ a real estate attorney to do this for your business. If you chose to do this on your own this is what we suggest…
When researching rental laws make a copies of specific laws to reference in future if needed. Study the laws carefully and know your limitations.
As the property manager, you’ll be surprised that you have a lot of privileges. But remember, you should not abuse your rights. For example, you have the right to get all the necessary information of a prospective tenant as long as the tenant has authorized to release this information to you. The law has given you the privilege to know the applicant’s credit history, rental history, and background. However, you are still required to respect the privacy of your tenant, and have tenant written approval when reviewing files and report generated in the tenant background processes.
Include The Law In Your Lease Agreement
To be fair, include the rental law in your lease agreement. Always include your rights as well as the rights of the tenant. An experienced property manager always includes the rental law along with their own terms whenever they are creating a lease agreement.
For example, I include a summary of the laws governing the return of the damage deposit in the lease agreement to help ensure the tenant is aware what they need to do in order to receive most or all of their damage deposit back.
Write A Draft
After studying the rental laws, the next step in creating a simple lease agreement is writing a draft.
Some states require a specific format for the lease agreement. Simply look for lease agreement templates online if you need a starting point. Some websites give guidelines for creating a lease agreement, though they often offer their services for a fee.
What To Include In Your Draft
In writing a draft, the first thing you need to write is the information about the tenancy of the new tenant.
Obviously, you have to include the basic information about the tenants such as their name, current address, and contact information in the lease agreement. Make sure you allow for at least two tenants on the simple lease agreement (I allow for up to four based on my past experience from renting to young adults).
Consider including the items below:
- Start date of the tenancy
- Amount of rent
- Number of tenants
- Forms of payment
- Due of payment
- End date of the tenancy
Lastly, you should also include the type of tenancy in the lease agreement (month-to-month or 12-month tenancy, for example).
Terms Of The Agreement
Apart from the information about the tenancy, you should also include the terms of the agreement. Responsibilities such as repairing and cleaning the rented property should be specified in the simple lease agreement. Additionally any other requirements for each party to the lease need to be spelled out to avoid any misunderstandings in the future.
Policies for renting the property and any restrictions should also be included. Before accepting the tenant, make sure that you both agreed on your terms and policies to avoid any conflict or misunderstandings.
Additional terms to the lease can include any of the following typical policies:
- Having pets in the property (number and types allowed)
- Conducting parties inside the property (specify end times if living in rental community for instance no parties allowed after 10PM)
- Sleepovers of friends or relatives (Specify if it is determined that an additional tenant has been unlawfully began to live at the property this could result in eviction or termination of the lease)
- Changing of locks (Who will be responsible at the end of the lease)
- Who will pay for utilities (If services are commingled with other tenants in an apartment building the property management firm would normally add a utility charge as part of the rental charge)
Your preferred terms and policies should always be included in your lease agreement. Spelling out the consequences for violating your terms and policies should also be included.
But make sure you follow a logical order in making the document. A logical order will make it look professional and easy to understand.
Finalize Your Draft
When you are done creating your draft lease agreement, be sure to check it and review it as many times as possible. Inform your existing tenants about any changes (if you are having them move to the new lease agreement after their present term expires). It is also advisable to consult a real estate lawyer to ensure that you are not violating any state laws.
Your lease agreement will become a legal contract between you and your tenant. Proofread your agreement as many times as you can and make it accurate to avoid any potential problems down the road. [I can’t even tell you how many revisions my own lease agreement went through to become what it is today.]
Final Thoughts About Simple Lease Agreement
There are a lot of advantages to making a simple lease agreement for your rental properties. Making a simple lease agreement starts with researching rental laws in your area. Remember to include the essential points we discussed in this article. Make sure to consult a rental lawyer before you finalize your draft to avoid any violations of laws in your area.
It’s relatively easy to make a simple lease agreement. Just be sure to follow the points I outlined and respect the rights of your tenants.
With this information, I’m sure that you can make a simple lease agreement in no time!
Have questions and want to connect?
Add me on Facebook then shoot me a message:
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.