essential-lease-agreement-clauses

A lease agreement is an essential document of a contract between a landlord and a tenant. This important document states that what the tenant will pay monthly for rent and for how long. All lease agreements are not created equal and may vary based on various factors.

A basic understanding of what is included in a lease agreement is good for both parties – landlord and tenant. A good rental contact will help the landlord and tenant avoid unnecessary disagreements or expenditures during or after the lease is over.

There are certain clauses a good rental lease agreement must include. Here are seven fundamental contract clauses every landlord should understand and include in the lease agreement.

1. Mention the Parties of a Lease Agreement

A good rental lease agreement must include who the contract is between. Speaking of a lease for rental property, the lease agreement should be between the landlord and/or the landlord’s property manager, and the tenants that will be occupying the property. The contract must include the names of all the tenants over the age of 18. Besides, the lease should also clearly include the address of each party.

Example of clause identifying the parties of a typical lease agreement

“This lease agreement is made by and between the TENANT(s) NAME whose address is FULL ADDRESS of the rental property referred to as the “TENANT’s Name” and the LANDLORD’S NAME whose address is FULL MAILING ADDRESS referred to as the “LANDLORD’s name”.

2. Include the Property Name

A landlord or rental property owner must include the name of the property if there is a specific name for it. Besides, include the full mailing address of your rental property. Consider including these points –

  • House Name
  • House Number
  • Street Name
  • Apartment Number the Tenant is Renting
  • Town Name
  • State Name
  • Zip Code
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Example of a lease agreement clause that states about the property information

“The (first-party) landlord agrees to rent to the second party (tenant) and the tenant agrees to lease from the landlord, Apartment #5 with 3 bedrooms and 2 bathrooms, located at 209 Aquahart Road, Glen Burnie, MD 21061. This rental unit will be referred to in this lease as the “Apartment”.

3. Mention Rental Term

It is one of the most important clauses a good rental lease agreement must include. The rental term clearly states that for how long the lease agreement is valid. While preparing the lease agreement make sure to include the exact dates. You must avoid the general terms such as this lease agreement is valid for 1 year or 5 years.

Include the exact dates that clearly state month, day, and year. For example, this lease agreement begins on “Exact Date: month, day, and year” and ends on “Exact Date: month, day, and year”.

Example of a lease clause for the rental term.

“The lease begins on April 7, 2021 and ends on April 7, 2021.”

4. Rent Amount and Due Date

Your lease agreement is incomplete without including the exact rent amount and due date. A good rental lease agreement must include what the rent amount is and when it is due. Keep in mind, the clause should state the full amount of rent due over the entire rental term. Then include the breakdown of rental due per month. Also, include the charges for late payment of rent.

Example of a rent amount & due date clause

“The tenant consents to pay $24,000 as rent fee for the term. The tenant will pay the landlord a rent of $2,000 on the 1st day of every month during the term. A late fee of $100 will be charged if rent is not paid on time that is more than five (5) days late. “

5. Security Deposit Terms

A good lease agreement must include a security deposit clause. This clause should include:

  • Amount of security deposit collected
  • Date of the security deposit collected
  • Name and address of bank when the security deposit is held
  • Interest rate, if applicable
  • Procedures for returning the security deposit
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6. Tenant Responsibilities

This is an important clause in a lease agreement. This clause clearly states the tenants’ obligations and responsibilities. According to landlord-tenant law to maintain the rental property, tenants have certain responsibilities. Key responsibilities of tenants are:

  • To keep the property free from safety or sanitary hazards
  • To not causing cause damages to the rental property
  • Must follow all building and housing rules and codes
  • To not engage in any objectionable conduct

The tenant will be liable for any damage occurring to the Premises and any damage to or loss of the contents thereof which is done by the Tenant or Tenant’s guests or invitees. Other specific tenant responsibilities should be also included in the lease to avoid further disagreements.

7. Landlord and Tenant Signatures

A rental lease agreement is not valid unless it is not signed by both parties. The signatures of the landlord and tenant acknowledge that both parties agree to follow the mentioned terms of the lease agreement.

Example of a lease acknowledgment clause

By signing this rental lease agreement, the parties hereby acknowledge and understand the terms herein outlined in this Lease. The tenant acknowledges that they agree to comply with all rules, terms, and conditions in this Agreement.

Signed on this {day} day of {month}, {year}.

Signature of Landlord/Lessor: __________________________

Signature of Tenant/Lessee: __________________________