If you have ever leased an apartment or home, you will likely be familiar with the lease agreement that was signed by both you and the landlord.
Yet, have you ever thought about the actual components that make up a lease agreement?
If you have not, and are thinking about using your Harford County home as a rental property in the near future, maybe you should start.
Drafting a solid lease agreement, even if completed by your Bel Air property management company, is a crucial step when it comes to leasing out your rental property. It outlines important information, defines each party’s responsibilities, and becomes a legally binding document that can be relied upon if a landlord-tenant dispute ever arises.
Today we break down a traditional lease agreement into its most basic parts so that you will know what must be included should you decide to enter the rental property business.
Making sure that each of the following elements is clearly defined in your rental agreements will ensure that your lease agreement in legally compliant, that everyone is on the same page, and will hopefully prevent any problems from popping up unexpectedly after your tenant takes up occupancy in your Bel Air home.
The Main Elements in a Lease Agreement
Though every lease agreement that you draft will differ depending on the property, it is important to understand the basic framework that makes a lease agreement a legally binding contract. This is why many landlords hire a high-quality property manager in Bel Air to handle all aspects of their income properties, including drafting lease agreements.
Having a team of experts knowledgeable about state and local laws related to your income property is the best way to protect both you personally and your rental business.
Include the legal first and last names of all tenants that will be residing in your Bel Air rental property. These tenants will be held accountable for the terms outlined in the lease agreement, including but not limited to, rent payment, property maintenance, and damages incurred.
This section should also include your legal name and your Bel Air property management company, if applicable. This way, it is clear from the start who the contract binds together and which parties are involved.
It is important to include the length of time you would like the lease to be valid. In other words, how long the tenant is allowed to occupy your property before a new lease agreement must be agreed upon.
You should determine a start date (commencement date) and an end date (expiration date) so that both you and your tenants clearly understand when the occupancy of your property will begin and end.
It is not unusual to have your tenants agree to a one year lease. This allows for a consistent supplemental income to flow into your bank account, while also allowing you to raise the monthly rent amount fairly easily after the year is up.
This section is also a good place to include basic identifying info about your Bel Air property including its official name, if it has one, as well as its full address including any unit numbers.
Don’t forget to add the city, state, and zip code either. Although this may sound obvious, you want to be as thorough as possible to avoid any potential confusion.
Payment of Rent
It should already be agreed upon between you and your tenant how much the monthly rent will be. However, you must also include this in writing in the signed lease agreement. Include things such as:
- The total amount of rent due
- The exact date the rent is due (g. the first of every month)
- The forms of payment accepted and how to make said rent payments
- Where rent should be delivered if applicable
- The consequences for a late or non-payment of rent
Having all of these details in your lease agreement will ensure you that your tenant has willingly acknowledged and understood their financial obligations.
It also protects you in the event that you have to evict your tenant for non-payment.
If you are collecting any type of deposits from your tenant up front, you should outline this in the lease agreement. This way at the end of the lease term, when most people forget how much they paid and when, it can easily be referred to in the signed agreement.
Deposits can include things such as:
- First and last month’s rent
- A security deposit to safeguard your property
- Any cleaning or pet fees you may collect
If you do collect a security deposit, which is advisable, make sure you understand your state and local laws regarding that money so that you don’t land yourself in trouble later on.
Fees, Fines, and Charges
There should be a section in your drafted lease agreement that will detail any potential fees or fines the tenant may face. For example:
- Late rent charges
- Bounced check fees
- City fines
- HOA fees and fines
- Attorney and court fees
Oftentimes a tenant is unaware of basic maintenance or utility duties they are responsible for. And while providing your tenants with a tenant manual at the beginning of the lease term is definitely helpful, it is important that serious matters be included in the lease agreement too.
If you are paying for the properties water, sewer, and trash bill make sure that is included.
If you want your tenant to maintain the backyard pool maintenance, include that.
If you are prohibiting certain types of alterations to the property (such as painting the walls), you guessed it, include it. This way, your tenant can never claim they didn’t know.
It is also important to add how a tenant can call in a maintenance request or repair. After all, this is your Bel Air investment property.
The last thing you want is a tenant who has a pressing issue with your home’s plumbing and no way of contacting either you or your Bel Air property manager.
Include the process for making a maintenance request and include phone numbers that can directly connect your tenant with someone that can help.
Property Access Expectations
Here, you can outline when your tenant can expect you to enter the premises (with proper notice of course). This can be for inspections, to check on repair statuses, or even to show a rental property that is on the market to potential buyers.
Make sure you include what kind of notice will be given and what will happen if there is no response to said notices.
While you may not enter the premises whenever you want, especially with the intent to harass your tenant, your tenants are also prohibited from changing the locks on your property, denying you access.
Use of the Property
While most people have a general understanding that breaking the law is well, illegal, it is a good idea to state the intended use of your property as it applies to your tenants.
This may include provisions such as:
- The property is to be used as a residence.
- There is a limit on who can stay in the residence and for how long.
- No business can operate out of the property.
- No illegal activities will be permitted.
- Peaceful enjoyment of the other tenants and neighbors is required.
In this section, add in the potential consequences for breaking the rules.
After the lease has been drafted, discussed, and agreed upon by both parties, make sure everyone on the lease agreement signs their name. This proves everyone is in agreeance and confirms that a formal understanding of the terms and conditions of the lease agreement has been met.
Leasing your Harford County rental property starts with a solid lease agreement and high quality tenants. These two things will often lead the way, whether positive or negative, for the kind of lease term you and your tenants will experience.
If you are interested in hiring a property manager and have a rental home in the Bel Air area, contact Bay Management Group to help you.
Not only will we handle all things property management related throughout the lease term, we will also get you started on the right foot from the get-go with a thorough and legally compliant lease agreement.
Contact us today and see how we can help you draft your lease agreement, place quality tenants in your Bel Air home, and manage everything else that comes next, so you can have the peace of mind that you and your property are protected.