All business agreements require a contract and renting out your property will also require the same.
A lease or rental agreement details the terms that the landlord and tenant agreed upon, which include clauses, property policies, and the rights and responsibilities of the landlord and tenant. It is a legitimate agreement once both parties sign.
Throughout the tenancy, many situations are bound to arise, so having a solid lease can be a reliable reference point for the residents. It can inform them about what to do in case they want to report a property maintenance issue or sublet the unit to reduce the rental fee.
Why Is a Lease Essential?
We now know that a solid lease contains the detailed terms and conditions set by the landlord. It will also reflect disclosures required under North Carolina laws.
Additionally, leases will provide more in-depth rental procedure information, such as the methods available for renters to pay the rent or the process of receiving back the security deposit after they move out.
Both tenants and landlords are expected to adhere to the contract and typically, the duration of a traditional lease lasts six months to a year.
Before allowing a renter to stay in your rental space, you need to create a lease to protect you in case there is a dispute and a tenant decides to file a lawsuit.
A signed lease will be your proof that the renter agreed to the conditions set and this document is also acceptable in court. It may take landlords time to craft a lease but in the long run, having this protection is better since conflicts are expected.
Preparing a written lease strengthens the relationship of landlords and tenants since terms and conditions are clearly discussed.
What Items Should You Include in Your Lease Agreement?
Leasing agreements may contain different property policies, but the basic information are often the same, such as:
Tenant and landlord name and the rental property name and address
Each lease must contain the full names of the landlord and the tenants. Property information, such as the property name, and the specific address down to the unit number for apartments or condo units are also expected to be included.
Rental due date
It is a good practice to spell out the complete date in the lease agreement to encourage the renters to pay on time. Otherwise, if you merely state that the leasing period is for a year, this can be used as a loophole and a reason to overstay their tenancy.
In your lease, your payment date must be in full, such as April 20, 2024.
Rental amount
Landlords are encouraged to write down the rent amount in words and figures to avoid confusion. If there are other fees that a renter must pay, then they should be included in other sections of the lease.
Rental term period
Similar to the rental due date, it is also advisable for landlords to write the full date of the tenancy period. Be specific and write down the full date, such as April 1, 2024, to March 31, 2025.
Signatures of all parties
It is critical that the signature of both the landlord and tenants must appear on the lease agreement to ensure that they fully understand the terms and conditions and are willing to comply with it.
What Clauses and Policies Should Be Found in Your Lease?
Given that clauses should adhere with state laws, they appear similar in a lease agreement. See the sample clauses below that you can include in your leasing agreement.
Subletting
When creating a lease, ask yourself if you will permit renters to accept other tenants to reduce the rent fee. This is known as subletting. You can be more flexible and require the renters to provide a written request before allowing a new resident to stay inside the unit.
Rights and responsibilities of the tenant
Most articles outline the responsibilities of landlords to provide renters with a livable space. However, it should be noted that tenants also have their fair share of duties in maintaining the rental in a good state, such as properly disposing of their trash, reporting property damage, and respecting the right to privacy and quiet enjoyment of other renters.
Rights and duties of the landlord
Landlord responsibilities are listed in this section and it includes specific actions, such as sending notices before inspecting the property and performing repairs. State laws are often specific with the notice period and landlords are expected to align with the set provisions.
Termination of the lease
Although breaking leases early must not be the norm, there are legal reasons to do so, in case a tenant is experiencing the following situations:
- Landlord harassment
- Called to do active military duty
- Domestic violence
In some cases, renters may need to relocate for a job assignment and if you allow this flexibility for early lease termination, then make sure to write it down in the lease, including other exceptions you allow.
Security deposit
Security deposits are collected before a renter moves in and state laws may require landlords to provide information on where they are stored, including the interest it will earn. If this is the case, then this should be reflected on the lease.
Disclosures
Landlords must disclose specific information under the law, specifically if the property is:
- In a flood zone area
- Populated with bed bugs
- Exposed to radon
- Built before 1978 and potentially has lead-based paint
Bottom Line
It takes considerable time to design a solid lease agreement but it offers more protection for the landlord and reduces potential conflicts. A clear guideline ensures renters are able to comply with property policies and procedures. This translates as more time-savings for landlords since they can limit answering repetitive questions.
Property management companies include crafting a solid lease agreement in their services, which benefits property investors.
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