48+ Sample Lease Agreements

What Is a Lease Agreement?

Regardless of the industry, your business belongs to, you could not get away with paperwork—in fact, tons of them. These documents range from simple letters to comprehensive agreements. Also, you should note that running a rental business or leasing a property is not an exception to that. Aside from creating rent receipts to keep a record of every transaction, the lessor should also prepare a lease agreement for a systematized rental or tenancy period. But what exactly is a lease agreement? A lease agreement is a written contract that provides an outline of the responsibilities of both the lessor (landlord) and the lessee (tenant). Although it is commonly used for renting out a residential property or a dwelling unit, one can also write a lease agreement for other assets like vehicles and industrial equipment. This type of document makes it clear to both parties that the lessor will grant the lessee temporary ownership of a particular property, given that the lessee pays a specified amount on a regular basis.

Cars and housing units are the most rented properties all around the globe. For this reason, several business people decided to establish a leasing business to provide the market with cheaper and easier access to transportation and shelter. Data from Statista revealed that as of 2019, the revenue for the car rental market on a global scale was over $59 million. Analysts expect that the booming of the travel and tourism sector will create a positive impact in the car rental industry. On the other hand, statistics also showed that the global revenue for vacation rentals (e.g., apartment, holiday homes, rooms, etc.) during the same year was over $83 million. Being a part of this growing industry is not just a walk in the park, especially when you have to prepare legally binding documents for a smooth-flowing business process. In this guide, we will cover the fundamentals of a lease agreement so you will have a full understanding of the document.

The Tenements of a Lease Agreement

Rooms, houses, buildings, and apartments do not come with identical colors, dimensions, and overall structures. However, they all provide a roof over our heads and a ground beneath our feet. The same thing goes with lease agreements—writers of this document don’t follow a similar framework and wording, but they do have several features in common. Before we discuss the steps in writing a lease agreement for your business, it is important for you to have a basic understanding of its elements. By doing so, creating the agreement will be less of a hassle than you think it is. Listed below are the key elements of a lease agreement.

The Lessee and the Lessor: It takes two or more parties to come up with a mutually beneficial agreement. That is why it is essential for you to specify in your document the names of the lessee and the lessor. This section should come first before you present the terms and conditions of the agreement. If you are creating a lease agreement for a housing unit, you must indicate the name of the landlord and the tenants. Aside from the main tenant, though, the names of every person who will reside in the property should also reflect in the document. Doing so binds each occupant into an agreement; thus, assures the landlord that every tenant will abide by the agreed-upon terms.Length of Tenancy: The duration of the lease depends on the occupants’ length of tenancy—some last for a year, while others are only effective for six months or less. With a long-term lease, the landlord won’t have to constantly look for new tenants and as a result, the business will have a more stable cash flow. Regardless of the tenancy period, it is crucial to indicate in the document the exact starting date and ending date of the lease. Its purpose is to make it clear to the tenants the exact termination or expiration date of the agreement so they can decide whether they will renew the lease or vacate the property already.Property Description: Describing the rental property in full detail is not necessary when writing a lease agreement. However, noting down particular areas that concern the tenants would help set expectations for them. This applies when the property comes with a common or shared area like a parking lot, storage room, or restroom. In most cases, this section of the agreement solely states the complete address of the property, the name of the building, apartment or unit number, and the type of property.Payment Terms: The primary goal of most landlords when they started their rental business is to have a positive cash flow or generate enough money to keep the business afloat regardless of the eventualities. For the landlord to receive immediate payment, the lease agreement should clearly establish not just the policies and obligations of both parties but also the payment terms. This clause should specify the fixed amount the tenants should pay during a specific date. Moreover, it should also include information about the available payment methods, additional fees, charges for late payment, and security deposit. In this section, make sure to write down the exact amount to avoid misunderstandings and disputes.Rules, Policies, and Restrictions: To maintain the peace and order in the territory, you need to convey to the tenants the rules and regulations they need to follow during the tenancy period. In this clause, the tenants should be made aware of the activities that you permit and those that you don’t. Usually, landlords don’t allow illegal activities (e.g., drug dealing), pets, late-night parties, and excessive noise. Aside from keeping the orderliness in your property, setting a clear boundary will help you protect your property from damages. Failing to outline the rules, policies, and restrictions in your lease agreement might result in unwanted lawsuits from neighbors, damage to property, and other problems.Maintenance and Repairs: As a landlord, you should not neglect your obligation in maintaining the habitable condition of the rental property. On the other hand, tenants also hold the responsibility of keeping the premises clean. Given that both parties have their respective duties, the lease should be specific on these things. Moreover, you should note in your agreement that the tenant should request repairs from the landlord for the damages they have not caused. In return, the landlord should also respond to these requests. Aside from that, the agreement should also specify whether or not the lessor permits the lessee to make alterations in the property.Right to Enter the Property: Longer tenancy period calls for the need of the landlord to conduct inspections and check if the property is still in its livable condition. Therefore, your lease should have a clause that discusses your (or the handyman’s) rights to enter the property. It is crucial to include this in your agreement so that tenants will not sue you for violation of privacy or trespassing. Even though you are the owner of the property, you should bear in mind that it is also the tenants’ temporary residence and they should have the privacy they need.Termination and Terms of Renewal: In most cases, termination only takes place when the lease expires. However, there are circumstances in which a tenant is evicted even before the expiration date of the lease. In this specific clause, you need to specify what are the grounds for eviction. Landlords usually evict tenants who breach the agreement, fail to pay rent, or cause property damage. Also, you should keep in mind that you could not just evict the tenants without a legal basis. On another note, you should also indicate the terms of renewal in the event that the tenants want to extend their stay after the termination of the lease.

At Least, There’s a Lease!

Landlords have other things to deal with aside from writing a lease. However, they should not neglect the importance of having a written agreement. Although it is considered enforceable, verbal agreements are already a thing of the past. Problems and conflicts may also arise with this type of arrangement.

A written lease agreement protects the rights of both the tenant and the landlord. It guarantees the lessee the use of an asset as long as they follow the terms written on the document. In the event that they fail to adhere to the agreed-upon terms and conditions, the landlord can terminate the agreement provided that there is proper notice. In the United States, non-payment or failure to pay the rent is the primary reason why landlords send eviction notices to their tenants. The next reason was the violation of the lease and the use of the property for other purposes. This information has been revealed by a Statista study conducted last 2017. Having a lease agreement is one way to protect your business from tenants who fail to do their obligations like paying rent. Moreover, it provides both parties a tangible proof that there was an agreement between them. And when misunderstandings or controversies occur, both the landlords and the tenants can refer to the lease agreement and resolve the issue more quickly. That’s when you can say, “At least, there’s a lease!”.

How to Draft an Effective Lease Agreement

If you have no idea how to start working on a legal document, then how would you even finish it? Documents, especially those that are legally binding, may take a lot of time to write. One needs to have extensive background knowledge about the document he or she is going to write, or it may work against his or her favor. In this section, we have outlined a step-by-step guide in creating an effective lease agreement in case it is your first time to write such type of agreement.

Step 1: Read About the Landlord-Tenant Law

Ignorantia legis neminem excusat. Or in English, ignorance of the law excuses no one. As a landlord, you should uphold this legal principle to protect yourself and your business from unfavorable circumstances. Without having a clear understanding of the federal and state laws in relation to the tenancy, there is a tendency that your business will fail. That is why you need to read about the landlord-tenant laws in your country and state so you won’t find yourself in conflict with the law. Knowing your rights and responsibilities as the landlord enables you to provide the utmost convenience to the tenants, and in return, they will also do their part as a rentee. Aside from that, it gives you a clear idea of what you can include in your agreement.

Step 2: Include Every Crucial Provision

Your lease agreement needs to cover all the crucial stipulations for it to serve its purpose. As previously mentioned, the document should include essential information about the parties involved, terms of payment, policies, terms of renewal, and others. Also, make sure to include in your agreement every rule you want to implement during the tenancy period. Considering that a lease has different topics to cover, you must provide headings for every section. Aside from making your document look organized, doing so will help the tenants distinguish the rights and responsibilities immediately.

Step 3: Use Plain Language

Legal documents such as a lease tend to intimidate some people believing that this document is loaded with legal jargon—thus, making it less understandable on the part of the client (or the tenant). For this reason, you should keep your tenants in mind when drafting a lease agreement. One way to make the content of the agreement easily comprehensible is by making use of plain and simple language. If the lease mentions any legal jargon or technical terms, make sure to define these.

Step 4: Consult an Expert

This article will only serve as your guide as you create a draft of your lease agreement. Moreover, the details provided are only the basics of the subject matter. If you want to make sure that your agreement is in line with the law, the best thing you can do is to consult an expert or seek legal counsel. These professionals will help you have in-depth knowledge about the legal aspects of leasing. Apart from proofreading and reviewing your lease agreement for you, lawyers can also advise you so you can run your business smoothly.

Step 5: Discuss the Terms

Before the signing of the agreement, you need to discuss the terms with the tenants to ensure that it is mutually beneficial. If there are any changes as you negotiate with the lessee/s, make sure to put these into writing. Lastly, both parties should sign the lease for it to take full effect.