Residential Lease Agreement

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What Is a Residential Lease Agreement?

A residential lease agreement, sometimes referred to as a lease or rental agreement, is a legal contract a tenant and landlord sign when a tenant decides to rent a residential property. It outlines the terms and conditions of the tenancy, including the obligations and rights of the tenant and landlord. Tenants and landlords can use residential lease agreements for a variety of residential properties, including townhouses, duplexes, condos, houses, apartments, and more.

What Are the Landlord's and Tenant's Obligations in a Residential Lease Agreement?

The landlord's most important obligations in a residential lease agreement include:

  • Giving the tenant access to the property
  • Obligations to maintain or repair the structure of the property
  • Allowing the tenant to enjoy the property undisturbed

On the other hand, the tenant's most important obligations in a lease agreement include:

  • Paying rent on the agreed-upon date
  • Not to cause damage to the property

What Does a Residential Lease Agreement Include?

The clauses included in a residential lease agreement vary depending on whether it is a standard residential lease agreement or a comprehensive lease agreement. A standard residential lease agreement typically includes the following:

  • Name of the landlord and tenants: A residential lease agreement must specify the name and address of the tenant and the landlord. All tenants over the age of 18 must be named on the lease.
  • Description of the property: The lease agreement should also specify the type of property being rented and its complete address, including the building or unit number, street name, town, state, and ZIP code. It should also specify any specific parking spots or storage areas as well as the areas that the tenant is not allowed to access.
  • Term of the lease: This refers to the date the residential lease agreement is valid for, including the tenancy length, the start date, and the expiration date. Many yearly leases automatically convert to monthly leases once the original lease term ends.
  • Rent amount and due date: The lease agreement must specify how much and when rent is due. It must indicate the full amount of rent due over the period of the entire lease and the amount due per month. It must also specify acceptable payment methods, whether the landlord charges a late payment fee, and grace period (if any).
  • Security deposit terms: The lease agreement must also specify a security deposit clause, which includes the amount of security deposit collected, the date the security deposit was collected, interest rate, name and address of the bank where the security deposit is held, reasons deductions can be taken from the deposit, and the procedures for issuing a refund.
  • Repair and maintenance policies: The agreement should also clearly explain the repair and maintenance policies, including the tenant's responsibility to maintain sanitary and clean premises and to pay for any damage they cause, a requirement that the tenant notifies the landlord about dangerous or defective conditions, and restrictions on tenant alterations and repairs.

In addition to the clauses in a standard residential lease agreement, a comprehensive residential lease agreement can specify whether or not the property is furnished, appoint a property manager who acts on behalf of the landlord, and state whether or not the tenant can operate a home business on the premises. This type of residential lease agreement also allows the landlord to include a pet fee or deposit and includes information about a guarantor or surety. A guarantor is someone, such as the tenant's parent or close friend, who agrees to pay the rent if the tenant defaults on rent.

Here's an article that shares a few other essential clauses in a residential lease agreement.

Residential Lease Agreement Templates

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Who Can Live in the Property Under a Residential Lease Agreement?

Only the tenant and the people listed as occupants can live in the property. The difference between a tenant and an occupant is that a tenant is a person who signs a lease agreement, while an occupant is a person who lives in the property with a landlord's permission but doesn't have the same obligations and rights as a tenant. For example, an occupant is not legally required to contribute to a security deposit or pay rent but a tenant would.

Occupants can be both children and adults. Children adopted or born while the tenant lives in the property are automatically listed to lease as occupants. However, any state may limit the number of occupants/tenants in the property if that number violates safety or health regulations for housing. These regulations vary from one state to another.

Does a Residential Lease Agreement Have to be Notarized?

A residential lease agreement doesn't have to be notarized because a lease is usually considered a short-term contract. Lease terms are usually month to month, six months, or one year in length.

Some states consider leases that exceed one year to be long-term leases. In this case, the residential lease agreement has to be notarized. It doesn't usually cost much money to notarize a residential lease agreement.

If you want to learn more about how much you can expect to pay in notary fees, head to this article .

What Happens When a Residential Lease Agreement Ends?

If a tenant chooses a periodic term lease, the lease will automatically renew with the same terms and conditions as the initial lease, unless the landlord made some changes using the required notice period. Even after the initial lease period, notice from either the landlord or the tenant is required to end the lease agreement.

If a tenant chooses a fixed-term lease, however, the lease agreement between the tenant and landlord may continue if both parties agree. In some states, a fixed residential lease automatically becomes a periodic term residential lease. In other states, the fixed-term lease may become a "tenancy at sufferance" or a "tenancy at will" when it ends, which only lasts as long as the tenant and landlord want it to. This type of residential lease term usually occurs after an expired residential lease agreement and doesn't have as much legal protection as an unexpired residential lease.

If a tenant decides to terminate all rights under a fixed-term residential lease agreement as soon as it expires, they should serve notice before the end of the lease term, in accordance with their local requirements.

Image via Flickr by stu_spivack

What Happens If a Tenant Decides to End a Fixed-Term Tenancy?

If a tenant agreed to a fixed-term tenancy, they have to pay the rent during that period. If the tenant leaves the property before the term of the contract ends, they're still responsible to pay the rent for the entire length of the lease. However, if the landlord is able to re-rent the property before the end of the lease of the breaching tenant, they may no longer require the breaching tenant to pay rent. Landlords are not allowed to collect double rent, even if the previous tenant has left.

What Happens If a Tenant Violates a Term of the Residential Lease Agreement?

If the tenant breaches a term of the residential lease agreement, they're responsible for correcting it. This may involve paying money to repair any damages that the tenant or their guests may have caused. If they don't voluntarily pay to correct the breach, such as making a payment or repair, they can be evicted by the landlord or possibly face a lawsuit for damages sustained as a result of the breach.

If you are a landlord preparing to lease residential property, a residential lease agreement can provide important protections. When you are drafting a residential lease agreement, consult with a lawyer to make sure your document includes all necessary aspects.

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