If you are developing a lease agreement for use with your rental properties, it is essential to include critical elements to guide the safety and maintenance of your unit. While many people assume that there is a pre-made standard lease agreement that they can use, the truth is that there are different types of lease agreements that should be tailored to each property in your real estate portfolio. Today our Baltimore property management experts discuss how to create a comprehensive residential lease agreement that effectively protects your properties!
What Is a Rental Agreement?
The lease or rental agreement documents the rules a renter must follow to live in your property. The lease also holds property owners accountable for delivering on their responsibilities in compliance with landlord-tenant laws.
Without critical elements, your lease could fall short of protecting your property and income. Ineffective leases without the right information and terms also leave real estate investors without the documentation they need to enforce the rules and collect the rent.
What Should Rental Property Owners Include in the Lease?
When creating your lease, think through every aspect of your property and address it in the document. A real estate attorney and a property manager can help you review the language and clauses to ensure your agreement is airtight before gathering tenant signatures.
Policies for Pets, Noise, and Smoking
Whether you allow it or not, a property owner should clearly spell out whether smoking is allowed in the property, and if so, where it's allowed. Also, specify the penalty if evidence of smoking is discovered during the lease term.
Property owners should also have a documented pet policy that specifies allowed breeds and sizes as well as the number of animals the tenant can have. Be sure to specify the pet deposit or pet rent fee amount. If you don’t offer pet-friendly policies, be sure it’s documented in the rental agreement.
The lease should also specify quiet hours and penalties for noise complaints. Include details about what you consider “noise” (such as loud music, late-night parties, or barking animals).
Names of Residents
It may seem obvious, but be sure to include the names of all parties who will be renting the unit and the terms of the tenancy. Make sure that all names are spelled correctly and that the lease includes their contact information.
Rent Rate, Security Deposit Amount, and Other Fees
The lease is the guide to when and how residents can pay rent and the monthly rental amount. The document should also document the security deposit amount and valid reasons why you might withhold the deposit based on the rental unit’s condition after a renter moves out. Also, be sure to specify any cleaning fees or other fees that will be charged at the termination of the lease.
Repair and Maintenance Policies
Every lease agreement needs details about how a renter should care for the property, including lawn care, changing the HVAC air filter, and taking out the trash. The rental contract should also be clear about when and how a renter should submit a maintenance request and the penalties for failing to report an issue right away.
Leases should also include the property owner’s schedule for preventive maintenance and inspections. If you don’t want tenants to attempt repairs on their own or make any cosmetic or structural changes to the property (like painting the walls), make sure that’s also noted in the lease.
Clauses About Illegal Activities
Include a clause that states that illegal activities are cause for immediate termination of the lease. Work with a property manager and your attorney to ensure that the language in this section follows all landlord-tenant laws while protecting you and your business from potential liabilities when tenants conduct illicit business in your rental properties.
Required Landlord Disclosures
If there are known problems with a property or legal disclosures required by Maryland state laws (i.e., lead paint or copper wiring), make sure to put them in the contract. This way, the tenant acknowledges that they have read the disclosures when signing the simple lease agreement before moving into the property.
Get the Signatures
Every tenant listed on the lease agreement should sign and initial where appropriate throughout the document. In addition, you or your property manager must sign the lease to make it a legally binding document. Without signatures and dates, the document can’t protect you when a renter breaks the rules.
Create Comprehensive Leases With a Baltimore Property Management Company
Investors shouldn’t rely on a free template when creating a standard residential lease agreement for rental properties. Instead, with guidance from an experienced property management company and a real estate attorney, investors can rely on rental documents that protect income and properties! If you’re ready to create a new lease or review your documents before it’s time for a new renter, reach out to Renters Warehouse BW Metro! Our residential property management services include lease creation and enforcement.
Learn more about creating solid lease agreements with the tips in our free resource, the “How To Create a Custom Lease Agreement Checklist.”