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Real estate lease agreements are lawfully binding contracts that define the terms and conditions for renting a property. These agreements generally cover the lease term, rent payments, security deposits, and maintenance obligations. A well-crafted lease contract can protect both the owner and the lessee and help to prevent misunderstandings and disputes.

Tips for Creating an Effective Lease Agreement

An effective lease agreement is comprehensive, clearly outlines the obligations of both parties, and guarantees that the property is well-maintained throughout the lease term.

  • Clearly Define the Rental Period: The lease agreement should define the start and end date of the rental period, along with any renewal options. It will ensure that both parties are clear about the duration of the lease and any options for extending it.
  • Be Clear with Property Details: The lease contract should comprise the specific property being leased, including the address, unit number, and any special attributes or amenities. It will help avoid confusion or disagreements about the property being rented.
  • Define the Security Deposit: The lease agreement should comprise the security deposit amount and any prerequisites for its return at the end of the lease. It will help avoid conflicts over the security deposit and ensure that it is returned promptly at the end of the lease.
  • Include Rent Amount and Payment Terms: The lease agreement should clearly state the rent amount and how it will be paid, including the due date and any penalties for late payment. It should also specify the payment method, such as online or by check.
  • Describe Landlord Obligations: The lease agreement should also clearly explain the landlord's obligations, such as maintaining the property and making required repairs. It will guarantee that the property is well-maintained throughout the lease duration.
  • Specify Tenant Obligations: The lease agreement should clearly define the tenant's obligations, such as maintaining the property and paying for any impairments caused by their actions. It should also specify any limitations on the use of the property, such as no smoking or pets.
  • Include Termination Clause: The lease agreement should specify the circumstances under which either party can end the lease, such as a breach of an agreement or non-payment of rent. It will help avoid conflicts and ensure both parties understand their rights and responsibilities.

Types of Real Estate Lease Agreements

There are numerous real estate lease agreements, each with unique features and advantages. Below are some prominent types of real estate lease agreements.

  • Periodic Lease Agreement: A periodic lease agreement, also known as a month-to-month lease, is an agreement that renews automatically after a specified period. This lease agreement is flexible, as the tenant can move out at any month's end. However, the landlord can also terminate the lease with proper notice.
  • Fixed-Term Lease Agreement: A fixed-term lease agreement, also known as a lease for a specific term, is an agreement that specifies a fixed duration for the lease. This type of lease typically lasts for a year, but the duration can vary depending on the agreement between the landlord and the tenant. This type of lease provides security and stability for both parties, as the terms and conditions of the lease cannot be changed until the lease expires.
  • Gross Lease Agreement: A gross lease agreement is an agreement where the landlord pays all the property's operating expenses, such as property taxes, insurance, and maintenance. This lease agreement is commonly used in commercial real estate and provides simplicity for tenants, as they do not have to worry about additional costs.
  • Net Lease Agreement: A net lease agreement is an agreement where the tenant is responsible for paying for some or all of the property's operating expenses in addition to rent. This lease agreement is commonly used in commercial real estate and provides flexibility for both parties, as the lease terms can be negotiated to fit the needs of the tenant and the landlord.
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Components of a Real Estate Lease Agreement

Below are some essential elements of a real estate lease agreement.

  • Property Description

    The lease agreement should clearly define the property, including the address and specific details, such as the number of bedrooms, restrooms, and square footage. Those should also be identified if the lease includes a parking spot, storage unit, or other amenities.

  • Parties Involved

    Another section of a lease agreement should determine the parties involved, including the owner and lessee(s). This section should comprise their full names, addresses, and contact details. If there is more than one lessee, the contract should define if they are jointly or severally accountable for the lease.

  • Lease Term

    The lease term is the duration of the lease, and it should be clearly stated in the agreement. It could be a fixed term, such as 12 months or a month-to-month lease. The agreement should also state the start date and end date of the lease.

  • Rent Payments

    The lease agreement should outline the amount of rent the tenant is required to pay and the payment schedule. This section should also include details on late payment fees and the consequences of non-payment. The agreement should specify the payment method and the address where the rent should be sent.

  • Security Deposit

    The security deposit is a sum of money paid by the tenant at the start of the lease to protect the landlord from any damages or unpaid rent. The lease agreement should specify the deposit amount, how it will be held, and the conditions under which it will be refunded at the end of the lease.

  • Maintenance and Repairs

    The lease agreement should outline the responsibilities of both the landlord and the tenant regarding maintenance and repairs. It should specify who is responsible for minor repairs and maintenance, such as changing light bulbs and mowing the lawn, and who is responsible for major repairs, such as fixing a broken appliance or repairing a leaky roof.

  • Use of the Property

    The lease agreement should outline the permitted use of the property. For instance, if the property is a residential unit, the agreement should specify that it is for residential use only and that no commercial activities are allowed. The agreement should also specify any restrictions on activities that could be considered a nuisance, such as loud parties or excessive noise.

  • Renewal and Termination

    The lease agreement should specify the conditions under which the lease can be renewed or terminated. This section should include details on how much notice is required for both parties to terminate the lease and what happens if the tenant needs to move out before the end of the lease.

Key Terms for the Real Estate Lease Agreement

  • Title: A statutory paper that proves ownership of a property.
  • Property Management: Managing a rental property, including maintaining the property, collecting rent, and handling tenant matters.
  • Easement: A legal privilege to use another individual's property for a specific purpose.

Final Thoughts on the Real Estate Lease Agreement

To summarize, real estate lease agreements are a crucial aspect of the real estate industry. Several types of lease agreements exist, each with unique features and benefits. Picking the right type of lease agreement is essential for both the landlord and the tenant, as it can provide security, flexibility, and predictability. It is essential to consult with a real estate professional when drafting a lease agreement to ensure that all terms and conditions are lawfully binding and mutually beneficial.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Commercial Real Estate

Real Estate Lease Agreement


Asked on Jan 24, 2022

What is the best type of commercial lease?

I am a landlord and am wanting to consider which types of commercial lease agreements I would want to use. I own a small strip mall and am looking to sign tenants that would be retailers.

T. Phillip B.

Answered Feb 5, 2022

Much of that depends on the tenant and the agreement they are willing to enter into. Personally, I would want my tenants responsible for as much of the maintenance and upkeep of the property as possible. The same goes with the property taxes. You could calculate out what property taxes are / would be per square foot and allocate to them which will permit you to adjust rent annually to accomodate changes in the property taxes.

Read 1 attorney answer>

Real Estate

Real Estate Lease Agreement


Asked on Mar 14, 2022

Can I break a commercial lease if landlord stops providing heat?

I have been renting a commercial space for more than ten years. There have been consistent issues with heating and AC, as well as a leaking roof. For two weeks now there has been a major issue with the heater—it is not working. I have filed two maintenance requests, the first of which said the issue was handled. I just found out today (14 March) after reaching out a lot that the heater needs parts that are back ordered and won’t be available until 7 April. This is the last straw for me. I am wondering what the chances are of getting a letter about breaking the lease and being given time to find a new space. Any advice is helpful, and if this is possible I would love to get a quote.

Jane C.

Answered Mar 15, 2022

It depends on the terms of the lease. The apartment is not habitable at the moment, so you should at least get a rent abatement. You should have a Colorado attorney review the lease.

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Real Estate

Real Estate Lease Agreement


Asked on Jan 24, 2022

What questions should I ask for a commercial lease?

I am being asked to sign a commercial lease agreement and am interested to learn what types of questions I would want to ask the landlord before signing the agreement. Any thought or advice would be much appreciated!

Jane C.

Answered Jan 25, 2022

I suggest you consult with an attorney who handles commercial real estate transactions. I suggest you as what charges you will be responsible for - water, heat, electric; what alterations are allowed; what repairs will the landlord cover; if the landlord will abate rent for COVID shutdowns.

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