Residential Lease Agreement

A standard residential lease agreement (or “rental agreement”) is a contract for a tenant to use a landlord’s residential property in exchange for paying rent. A rental agreement must include details like the amount of rent and the responsibilities of each party.

Residential Lease Agreements by State

Types of Residential Lease Agreements

A residential lease agreement allows a tenant to live in a rental property in exchange for a regular payment to the landlord. There are many different types of rental agreements, suited to different needs and rental situations.

1. Standard/Fixed Term – The most common lease agreement is a fixed term agreement. This is a lease for a period of time chosen by the parties (most often for one year). Rent payments come due every month in most fixed term leases. A fixed term lease can be as simple as one page, or detailed and complicated as desired by the parties.
2. Month-to-Month – This is a rental agreement which lasts for 30 days (or one month). In most cases a month-to-month agreement renews at the end of each month, unless the landlord or tenant provide a certain amount of advance notice.
3. Sublease – This is where a tenant on an existing lease rents some or all of the rental property to a new, third-party tenant. Landlords have an interest in controlling who rents their property, so subleases often need the landlord’s written permission, in advance.
4. Roommate – A roommate agreement is not a rental in the strict sense since it doesn’t add a tenant to the lease. It is a contract between a tenant and a roommate, to divide responsibilities like chores, rent, and utility payments. The original tenant keeps all the legal responsibility for things like damage or nonpayment of rent.
5. Short-Term (Vacation) – A short term lease typically lasts a few days. Signing a lease allows more responsibilities for the tenant than typical for a simple overnight rental like a hotel.
6. Land Lease – This is a lease where the tenant owns and operates the residence, but the landlord owns the plot of land underneath. Sometimes also called a ground lease, a land lease is most common in commercial situations.
7. Rent To Own – In a rent-to-own agreement, the tenant pays a fee in exchange for the option of buying the rental property at the end of the lease. If the tenant commits to buying, most rent-to-own agreements will credit part of the monthly rent to equity in the property.

Residential Lease Agreement Basics

A residential lease agreement lays out the basic rights and responsibilities that the landlord and tenant want as the rules for the rental.

What is the difference between a lease and a rental agreement?

All leases are rental agreements, but not all rental agreements are leases. To be specific, a lease is a fixed-term rental agreement. In practice, most people who aren’t lawyers will use the terms interchangeably.

• Rental Agreement – creates a tenancy in exchange for rent. Most residential contracts called “rental agreements” are for a month (or a 30-day period). These month-to-month agreements renew automatically in most cases unless either party provides advance notice to end the agreement. Since the entire agreement renews monthly, landlords have a lot of power to change terms from one payment period to the next.
• Lease – creates a tenancy for an extended, specific period of time, generally 1-2 years. Leases have advantages for both landlords and tenants. A lease guarantees an extended period of paid occupancy, which is good for landlords. It also provides stable, predictable terms for things like rent, which is good for tenants.

Can a tenant rent without a written lease?

Yes, a tenant may rent without a written lease in most states. This is called an oral lease and can be a big legal risk. Terms of an oral lease are hard to prove when it’s one person’s word against another’s. This is why many states require a written lease for rental contracts of one year or longer. Landlords using an oral lease may also have major limits on things like the amount of security deposit they can collect.

Can parties write their own rental agreements themselves?

Every state lets a landlord and tenant write their own rental agreement with their preferred terms. However, ignorance of the law is not an excuse. A rental agreement must comply with the law, whether or not a lawyer writes it. For maximum safety, a rental agreement must use a professionally drafted template and then have an attorney review before signing.

Typical Lease Terms

A typical lease or rental agreement outlines the rules and terms chosen by the landlord and tenant. These are examples of important information to include in every lease or rental agreement:

• Names of Tenants/Landlords – Names of all tenants, plus the landlord and/or the landlord’s agent authorized to manage the rental property.
• Means of Contact – Smooth and clear communication is the most effective way to reduce conflicts in rental situations. Almost all states require an address of record for written notice and rent payments. In addition, it’s important for a rental agreement to describe all alternative means of contact, like text or email.
• Occupancy Limits – Most residential property has a legal occupancy limit. Landlords also can limit occupancy on rentals if specified in the rental agreement.
• Type of Tenancy – For maximum security, a rental agreement must have a clear statement on what type of tenancy it intends to create (month-to-month, fixed-term, etc.). This should include a start date (and an end date, for a fixed-term lease).
• Payment of Rent – The landlord and tenant must agree on acceptable payment methods (check, online card payment, etc.), amount owed, and due date. The terms also must describe any late fees or charges for returned checks.
• Deposits and Fees – Local and state laws often set the allowed terms of any security deposit (amount, allowed deductions, return, etc.). The landlord and tenant must agree within the allowed limits. A lease also should clearly describe non-refundable fees like pet or cleaning fees.
• Repairs and Maintenance – Any rental agreement should describe the responsibilities landlord and tenant have to maintain the rental property. This includes repairs as needed, as well as regular maintenance like changing smoke detector batteries or cleaning. Many states have laws which set a landlord’s repair responsibilities.
• Landlord’s Access To the Property – Landlords have not only the right, but the responsibility to enter rental property for required legal purposes like making repairs. Many states have unclear access laws, so describing a landlord’s entry rights in the rental agreement is important to avoid conflict.
• Rules and Policies – A rental agreement must outline or clearly reference any rules, regulations, and policies the landlord sets for the property (smoking restrictions, pet rules, etc.). This helps limit a landlord’s liability and avoid discrimination claims.
• Disclosures – State or federal law may require various disclosures from the landlord to the tenant. Required disclosures can differ a lot, depending on location and specific rental situation.

Required Disclosures and Addendums

Required disclosures and addendums (a.k.a. addenda) vary by state and rental situation. These are the most common required disclosures:

• Lead-Based Paint – Federal law requires notice about the risks of lead-based paint in homes built before 1978. A landlord must provide a disclosure form and pamphlet, plus notice about known hazards in the building.
• Asbestos – For properties built before 1981, federal law requires notice of asbestos on the property.
• Bed Bugs – Several states require disclosures related to bed bug infestations and extermination. Also recommended for any rental unit with a history of infestation, even where not required by law. Failure to disclose increases landlord liability.
• Landlord’s Name and Address – Many states require rental agreements to have a specific contact name, and address of record, for things like notices and rent payments.
• Mold Disclosure – Some states have specific requirements for disclosing mold issues and treatment.
• Shared Utilities Arrangements – When rental units share utilities, there may be laws which require transparency on how they are shared, and how each party’s bill is calculated.
• Move-In Checklist – Some states don’t allow a landlord to collect or keep a security deposit without giving the tenant an inspection with an itemized list of property features. This clarifies the condition of the property at move-in, so that it’s obvious what the tenant has to pay for at the end of the lease.
• Refundable/Non-Refundable Fees – Non-refundable fees in most cases have to be described in the lease. If a fee isn’t marked as non-refundable, a tenant in most cases has a legal right to a refund when the lease ends.
• Smoking – By default, a landlord can set any smoking policy for a property. Some states and cities make some exceptions. In particular, places with medical marijuana programs may have special regulations on residential use policies.
• Late and Returned Check Fees – Many states limit fees for late rent payments or bounced checks. In most cases, these fees also have to be described in the lease for a landlord to charge them.

Illegal Terms in a Rental Agreement

There aren’t many general terms in a rental agreement which might be illegal. State contract laws give wide leeway for landlords and tenants to set their own rental terms and conditions. That said, every state does set some reasonable limits. A landlord who includes prohibited lease terms could be sued, or in extreme cases even jailed.

These are some examples of lease terms which often are illegal:

• Warranty of Habitability – Every state has minimum quality standards for housing, often called a “warranty of habitability.” Landlords have a legal obligation to repair rental property up to these minimum standards, unless the tenants themselves caused the damage from their reckless or deliberate actions. It’s illegal to try and waive a warranty of habitability.
• Using Fees To Punish – The lease or rental agreement must outline late fees and other nonrefundable fees. A fee can’t be designed to punish the tenant. Fees must reasonably reflect the actual costs related to a landlord inconvenience.
• Security Deposit – The most common rental disagreement is about deductions from the security deposit. Many states have strict laws about how a landlord handles a security deposit. In general, a landlord can only deduct for costs and damage the tenants created through negligent or deliberate actions. This does not include normal wear and tear on rental property.

How To Fill Out a Residential Lease Agreement

Below is a step-by-step process on how to fill out a lease agreement.

Section I. The Parties

1. Date – The date of signature for the agreement. The agreement will come into legal force upon signature.
2. Landlord’s Contact Information – The landlord’s name and address.
3. Tenant’s Names – The full name(s) of the tenant(s).

Section II. Location of the Premises

4. Property Location – The full address of the rental property, including any relevant descriptions of site or location.

Section III. Lease Term

5. Lease Term – A clear statement of when the lease begins and ends.
6. Termination Notice – Include the notice period required before terminating a month-to-month tenancy created after the lease ends.

Section IV. Rent

7. Monthly Rent Due – The price of rent due per month.
8. When Rent is Due – The date rent is due (typically, the first day of each month).
9. Late Fees and Grace Periods – Most states allow a late fee if rent is not paid on time. If there is a late fee, enter the fee details plus when rent is considered late.
10. Returned Checks – A fee for a bounced/returned check with non-sufficient funds (NSF). If there is a fee, enter the amount per returned check. Note that many states set a maximum cap on returned check fees.
11. Rent Increase – The effective date of any rent increase.

Section V. Security Deposit

12. Security Deposit – Most leases collect a security deposit, generally equal to one month’s rent. Each state’s security deposit law indicates what a landlord can use the money for and the maximum allowed amount.

Section VI. Use of Property

13. Occupants – List all tenants who will occupy the property (not including temporary guest stays). This section must include anyone living on the rental property for an extended period, including children.

Section VII. Subletting

14. Assignment – A check in the appropriate box allows or denies permission for the tenant to sublet the rental property. Note the specific amount of advance notice to which a landlord is entitled when getting details about an upcoming subtenant.

Section VIII. Right of Entry

15. Landlord Access – While state laws regarding landlord access vary widely, in general landlords may enter rental property for relevant purposes during normal business hours. In most cases, they must provide advance notice before a non-emergency entry, typically 24 hours.

Section IX. Non-Delivery of Possession

16. Non-Delivery of Possession – Provides a time limit for the landlord to deliver the rental property to the tenant. This protects the tenant’s rights in case there’s an issue like the previous tenant refusing to move out. This limitation on the start date may be required under some state or local laws.

Section X. Utilities

17. Utilities – Indicates which utilities and services the landlord provides for the tenants. Arrangements for any utility or service not mentioned in the lease are the tenant’s responsibility by default.

Section XI. Pets

18. Pets – Indicates whether pets are allowed in the rental unit, plus relevant restrictions on things like breed or weight. This section must disclose any nonrefundable pet fees. Landlords cannot charge any fees for lawful support and service animals, but can require relevant documentation before keeping them on a rental property.

Section XII. Default

19. Default – Provides terms for ending the lease due to a landlord or tenant violation. This section should include the amount of time after notice before termination, and how long it takes after nonpayment for formal default on rent. These notice periods may not be up to the parties, since state or local law often control here.

Section XIII. Notice

20. Notice – Landlords must make themselves easy to contact for things like rent payment and repair requests. This field provides an address of record for streamlined contact between the landlord and tenant.

Section XIV. Parking

21. Parking – Indicates whether the tenant receives a parking space as part of the lease. Also gives location and terms on which the space is provided.

Section XV. Early Termination

22. Early Termination – Indicates whether the tenant may break the lease early, as well as notice and cost. Some places regulate the maximum early termination fee. Note that termination fees don’t apply when landlord violations cause a tenant to end the lease.

Section XVI. Smoking

23. Smoking Policy – Describes the smoking policy for the rental property, including designated smoking areas.

Section XVII. Signatures

24. Signatures – The landlord and every adult tenant must sign the rental agreement to make it effective and binding on all parties. It’s custom for each party to get a copy of the lease when it’s signed. This also is a requirement sometimes under state law.