Lease Or Rental Agreements: Ten Essential Terms

Before drawing up a lease or rental agreement, a good question to ask is what terms should be included in it. An agreement sets down rules for landlords and tenants to follow during a rental relationship. Rental agreements are not only legal contracts; they are also practical documents containing critical business details, such as, duration of the tenancy, monthly rental, and more. Lengthy or brief, professionally typed or brief, rental agreements should cover basic tenancy terms, including the following points:

1. Names of all the tenants. Every adult renting a unit, including both halves of a married or unmarried couple, should be named as tenants and made to sign the lease or rental agreement. This ensures each tenant is legally responsible for all agreement terms, including full rental amount and correct use of the rental property. This means, if one of the tenants is unable to pay rent or skips out; legal redressal for the entire rent can be sought from tenants that remain. As well, if one tenant violates an important lease term, the tenancy for all tenants on that lease or rental agreement can be terminated.
2. Occupancy limits. The agreement should clearly specify the rental unit is only to be occupied by those tenants, whose name and signature is on the lease, including minor children, if any. This guarantees a landlord’s right to determine who has the right to live on his / her property, as well as, allowing him / her to limit the number of occupants. This clause provides a landlord sufficient grounds to evict a tenant who allows an unauthorized person to move in, or even sublets the unit, without permission.
3. Tenancy Duration. All rental documents should state, whether they are rental agreements or fixed-term leases. Usually, rental agreements run month-to-month and automatically self-renew, unless and until terminated by a landlord or tenant. On the other hand, leases, typically last a year.
4. Rent: Each lease or rental agreement should specify the monthly rental amount, its due date (typically, the first of the month), its mode of payment, i.e. by mail or in person. Avoid unnecessary confusion and disputes by clearly specifying the minutest details, such as:
   1. Acceptable payment methods (e.g. personal cheques only)
   2. Whether, late fees will be charged for rent not paid on time, the fee amount, and grace period, if any.
   3. Charges for bounced cheques.
5. Security deposits and fees: Security deposits are a frequent source of friction between landlords and tenants, therefore, a lease or rental agreement should be clear on the following points, to avoid legal problems later on:
   1. The amount that is to be charged as security deposit, which should comply with the maximum amount set by state law.
   2. What the deposit will be used for i.e. damage repair, and what it may not be used for i.e. the tenant applying it to last month’s rent.
   3. When and how the security deposit will be returned after accounting for deductions, after a tenant moves out.
   4. Any legal non-returnable fees, such as, for cleaning or damage caused by pets.

   Details of where the security deposit is being held and, if interest incurred on the security deposit will be paid to the tenant, should also be included in the rental agreement.

6. Repairs and maintenance: Avoid problems resulting from rent-withholding by clearly setting out landlord / tenant responsibilities for repair and maintenance in the lease or rental agreement, including:
   1. Tenant’s responsibility to keep the rental premises clean and to pay for any damage caused by abuse or neglect.
   2. The tenant should be responsible for immediately informing about any defective or dangerous conditions on the rental property. And, the agreement should also contain the specific details on your procedures for handling complaint and repair requests.
   3. Specify your restrictions on tenant repairs and alterations without permission.
7. Entry to rental property: To avoid tenant claims of illegal entry or violation of privacy rights, the lease or rental agreement should clarify a landlord’s legal right of access to the property for making repairs, or if the tenant is moving out, for showing it to prospective tenants, by stating how much advance notice will be provided to the tenant before entering.
8. Restrictions on tenant illegal activity: There should be an explicit clause in the lease or rental agreement that prohibits residents from indulging in disruptive behaviour, such as excessive noise, including illegal activities e.g. drug dealing. This will help avoid trouble from other tenants, prevent property damage, and limit exposure to lawsuits from residents and neighbours.
9. Pets: A rental agreement should be clear on the subject of a landlord’s No Pets or Pets Allowed policy. If, pets are allowed, identify any special restrictions, such as, a limit on the size or number of pets, or that the tenant will keep the yard free of doggie poop.
10. Other Restrictions: Ensure the lease or rental agreement complies with all relevant laws, including rent control ordinances, health and safety codes, occupancy rules, and anti-discrimination laws. Comply with all state laws, such as, setting security deposit limits, notice requirements for entering rental property, tenant subletting or additional roommates rights, rules for changing or ending a tenancy, and specific disclosure requirements, such as, past flooding or lead / asbestos in the rental unit.

Other legal restrictions, such as, limits on the type of home business that a tenant can run from the rental property, including important rules and regulation governing parking and common area usage should also be specifically mentioned in the lease or rental agreement.