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What Is a Rental Agreement?
A rental agreement is a legal document describing the arrangement between the owner of real estate and another party who will pay rent in exchange for permission to occupy the property.
The owner of the real estate is also known as a "landlord" or "lessor." The party paying rent is known as a "tenant" or "lessee."
This type of agreement is a contract documenting the use of a space, either residential or commercial, for a fixed period of time in exchange for rent. The landlord and tenant can negotiate the terms of this contract. Once both parties sign the agreement, however, it is considered legally and mutually binding.
You may also encounter a rental agreement referred to as the following:
- Apartment lease
- House rental agreement
- Lease agreement
- Lease form
- Rental contract
- Rental lease agreement
What Is the Difference Between a Rental Agreement and a Lease Agreement?
Although the terms are often used interchangeably, a rental agreement and lease agreement can legally refer to distinct types of agreement documents. Both rental agreements and leases are legally binding contracts between a landlord and a tenant or tenants.
A rental agreement has the following characteristics:
- A rental agreement is usually month to month.
- Landlords can make changes to the rules of the property and rent, provided they give their tenants proper notice.
- Notice of changes must typically come 30 days in advance, although the required amount of time can vary among states.
A lease agreement has the following characteristics:
- A lease agreement states the amount of rent due for a specific amount of time.
- A landlord cannot make changes to the property rules or rent during the rental time.
- If landlords decide to make changes to the lease agreement terms, they must wait until the lease has expired to renegotiate new terms for the lease.
The biggest difference between a rental agreement and a lease is the period of time these documents typically cover. A lease generally covers a longer period of time, for example, six months or 12 months. A rental agreement covers a shorter period of residency, usually 30 days.
Terms to Include in a Rental Agreement
Whether you are creating a rental agreement for an apartment, home, or room, you should include certain terms in your agreement.
Names of All Parties
A rental agreement should list all parties to the agreement in the document, making sure to include all adult tenants. A rental agreement should list the landlord and main tenant as well as all other adults occupying the premises.
Including all names ensures that:
- All adults living in the rental property are responsible for obligations and duties outlined in the agreement, including paying rent.
- The landlord can terminate the agreement if any tenant violates the terms of the agreement.
If only one tenant is listed, the landlord has fewer options if one of the other occupants violates an important term of the agreement.
Term of Tenancy
This clause should describe whether the rental agreement is a month-to-month agreement (carrying over each month unless the tenant or landlord terminates the agreement) or whether it is a lease agreement covering a fixed term (typically for a year with the option for renewal upon expiry of the initial fixed period). The rental agreement should also address options for termination.
The rental agreement should include provisions for:
- The amount of rent
- When the rent payments are due
- When a rent payment is considered late
- How rent payments should be made
- What payment methods are accepted
- What happens if a rent payment is late or if a rent check bounces
Security Deposit and Other Fees
Security deposits can become a contentious issue between a landlord and tenant. The rental agreement should make all matters pertaining to the security deposit clear to avoid future disputes. The rental agreement should state:
- The amount of the security deposit
- When and how a landlord can use a deposit
- When and how the landlord will return the deposit
- Other fees that can be deducted from the security deposit, such as repair or cleaning fees
States may set specific requirements with which landlords must comply in terms of security deposits. Landlords should consult with state laws to ensure the terms of the rental agreement are valid.
Repairs and Maintenance
Both the landlord and tenant(s) should have their maintenance obligations set in the terms of the rental agreement. For example, tenants may be responsible for:
- Maintaining a clean premises
- Any damages they cause
- Informing the landlord of any repairs that need to be made for which the landlord is responsible
Alteration and Damage to the Property
The rental agreement should state who is responsible if damages to the property occur. The agreement should also set out what, if any, types of alterations a tenant may make to the property, as well as when a landlord must approve or grant permission to a tenant to perform an alteration.
Occupancy or Subleasing
If the landlord has limits on occupancy or subleasing possibilities, the rental agreement should define these terms. A landlord can place limits stipulating that only those who sign the lease and their minor children can live in the rental property. A landlord can also prevent a tenant from subleasing the property without prior approval.
The rental agreement should clearly state whether pets are permitted on the property. If the agreement allows pets, the document should describe:
- The maximum number of pets allowed
- Any restrictions to the types of pets allowed, for example, small dogs weighing less than 50 pounds
- The tenant's responsibility to keep the premises clean
Right of Entry
A rental agreement should specify the conditions that allow a landlord to enter a rental property. The agreement should also state what notice is required before the landlord can enter. State laws often regulate a landlord's right of entry, and provisions in the rental agreement should align with the legal requirements of a state.
Illegal Activities and Disruptive Behavior
The rental agreement should clearly state what constitutes illegal activities, such as dealing drugs, as well as what is considered disruptive behavior, such as excessive noise). The agreement should also prohibit such activities and behavior, stating that these activities and behaviors would be grounds for termination of the agreement.
Other Rules and Regulations
A rental agreement can cover other expectations for the tenant's behavior, including the following:
- Whether smoking is allowed
- Whether overnight guests are allowed
- If overnight guests are allowed, how long they can stay at the property
A severability clause will allow the rest of the rental agreement to remain in place if one particular clause is illegal, for example, because it doesn't comply with state laws for rental property.
Image via Flickr by hearingpocket
Local and State Laws
Before writing a rental agreement, landlords should consult with local and state laws to make sure that all included provisions comply with legal requirements. Local and state laws can regulate aspects such as subleases, notice requirements, and how a landlord can deal with a property if a tenant leaves without paying rent. These laws may vary from location to location.
If you are a landlord preparing to rent a property, a rental agreement can provide important protections. When you're drafting a rental agreement, consult with a lawyer to ensure your document covers all necessary aspects.
Meet some of our Rental Agreement Lawyers
Thomas Codevilla is Partner at SK&S Law Group where he focuses on Data Privacy, Security, Commercial Contracts, Corporate Finance, and Intellectual Property. Read more at Skandslegal.com Thomas’s clients range from startups to large enterprises. He specializes in working with businesses to build risk-based data privacy and security systems from the ground up. He has deep experience in GDPR, CCPA, COPPA, FERPA, CALOPPA, and other state privacy laws. He holds the CIPP/US and CIPP/E designations from the International Association of Privacy Professionals. Alongside his privacy practice he brings a decade of public and private transactional experience, including formations, financings, M&A, corporate governance, securities, intellectual property licensing, manufacturing, regulatory compliance, international distribution, China contracts, and software-as-a-service agreements.
Attorney of 6 years with experience evaluating and drafting contracts, formation document, and policies and procedures in multiple industries. Expanded to estate planning last year.
George is a lifelong Houston resident. He graduated from St. Thomas High School and then Texas A&M University. He obtained his Doctor of Jurisprudence from South Texas College of Law in 2007. He is experienced in real estate, estate planning & probate, civil/commercial matters, personal, injury, business matters, bankruptcy, general counsel on-demand, and litigation. He is active in the community serving as past-president of the St. Thomas Alumni Board, a current member of the Dads Club Aquatic Center Board of Directors, current member of the Dickinson Little Italy Festival of Galveston County Board of Directors, and former PTO President for Briarmeadow Charter School.
My clients are often small and medium size technology companies, from the "idea" stage to clients who may have raised a round or three of capital and need to clean up a messy cap table. I help with all legal matters related to growth that keep founders up at night - hiring people, allocating equity, dealing with shareholders and investors, client negotiations and early litigation counseling (before you need a litigator). I've seen a lot, and because I run my own business, I understand the concerns that keep you up at night. I’ve been through, both on my own and through other clients, the “teething” pains that will inevitably arise as you scale-up – and I’m here to help you. I have over 20 years international experience devising and implementing robust corporate legal strategies and governance for large multinationals. I now focus on start-ups and early/medium stage technology companies to enable a sound legal foundation for your successful business operations. Many of my clients are international with US based holding companies or presences. My 17 years abroad helps me "translate" between different regimes and even enabling Civil and Common Law lawyers to come together. Regularly, I handle early stage financings including Convertible Notes, Seed and Series A/B financings; commercial and technology contracts; international transactions; tax; mergers and acquisitions.
Sammy Naji focuses his practice on assisting startups and small businesses in their transactional and litigation needs. Prior to becoming a lawyer, Sammy worked on Middle East diplomacy at the United Nations. He has successfully obtained results for clients in breach of contract, securities fraud, common-law fraud, negligence, and commercial lease litigation matters. Sammy also counsels clients on commercial real estate sales, commercial lease negotiations, investments, business acquisitions, non-profit formation, intellectual property agreements, trademarks, and partnership agreements.
Brad is a business attorney with experience helping startup and growing companies in a variety of industries. He has served as general counsel for innovative companies and has developed a broad knowledge base that allows for a complete understanding of business needs.