A good residential lease agreement should provide the parties with clarity, predictability, and solid legal protection for each part of the rental process. The following guide will walk you through the common questions and concerns when creating this agreement.

Fixed-Term vs. Periodic Tenancy

All lease agreements fall into two basic categories in terms of the rental period: fixed and periodic. A fixed-term tenancy is a tenancy with a set end date, usually one or two years from the start date. A periodic tenancy does not have a set end date and continues to renew for additional periods (weekly, monthly, or yearly) automatically until one or both parties decide to terminate the tenancy.

Some states provide tenants under fixed-term tenancies with slightly different rights than those with periodic tenancies. This difference is most apparent in terms of the tenant’s rights concerning eviction and ending the lease. Tenants must consult their leases and state law to know how to properly cancel the lease. Our agreement allows either party to terminate the tenancy by providing the appropriate advance notice according to state law.

If you select a fixed-term tenancy, then the agreement will automatically expire at the end of the term. If the parties wish to renew the agreement, then they can simply sign a new lease agreement on the same or different terms. In the event that the tenant continues to occupy the property without receiving an eviction notice, then the agreement automatically converts to a month-to-month periodic lease until terminated by one of the parties.

Rental Payments

Rental payments are typically due on a monthly basis, but you can choose to require payment weekly, twice per month, every two months, every six months, or once per year.

You can choose to allow multiple payment methods, such as by credit card, cash, check, money order, online, or wire transfer as a convenience to the tenant. You can also specify multiple payment locations where payment is accepted, such as in person, online, or mailed to a certain address. If payment is accepted online, you will need to include the URL of the payment portal.

Signing Incentives

Landlords often offer special deals in order to encourage new tenants to sign longer-term leases or agree to increased rental payments. You should include the details regarding any such incentives agreed to by the parties. Common signing incentives include rent concessions (e.g. the first month free), waived fees, or similar non-standard benefits.

Optional Fees and Deposits

You may wish to add fees to your agreement, such as for pet-related costs, past-due rental payments, or bounced checks due to insufficient funds. With LegalNature's agreement, you will be able to set legally sound fees that comply with state-specific requirements. Choose the fee structure that best suits your needs. Options range from simple fixed-amount fees to percentage-based fees. You can also include your own custom language for any fees or deposits you require.

Security Deposit

It is normally advised that landlords always collect a security deposit to protect against any damage to the property or delinquent payments. LegalNature's agreement takes the guesswork out of setting a compliant security deposit by providing state-specific guidance. Keep in mind that a good lease agreement will still protect the landlord in the event that the money owed by the tenant exceeds the security deposit.

The security deposit is commonly used to repair damages that go beyond normal wear and tear to any part of the unit or common areas. In practice, this means that the landlord is responsible for repairing normal deterioration that occurs over time to the unit not caused by the tenant’s negligence.

LegalNature’s agreement provides the tenant with a list of requirements that must be met in order to have their security deposit returned at the end of the lease. These requirements include the following:

• The lease term has expired or the lease has been properly terminated by the parties
• The tenant has paid all rent and outstanding fees or charges
• The tenant has paid the utility bills in full
• The tenant has returned all keys and other landlord property
• All of the tenant's personal property has been removed
• The unit has been thoroughly cleaned

Substitute Tenants

You can consider including an option to allow the tenant to leave in the middle of the lease term by presenting an acceptable substitute tenant to the landlord. This means that the substitute tenant will take over the current tenant’s legal obligations, releasing them from the agreement. The landlord is still free to reject a substitute tenant as long as there are reasonable grounds to do so. If the substitute tenant is accepted, the landlord can then create a new lease agreement.

Subletting

Our agreement prohibits the tenant from subletting the unit to a new occupant without first obtaining the landlord’s prior written consent. Violating this requirement is cause for the landlord to evict the tenant.

Lead-Based Paint Disclosures

For all properties constructed prior to 1978 (i.e. pre-1978 property), federal law requires leases to include a "Disclosure of Information on Lead-Based Paint." LegalNature includes this disclosure for you, and all parties must sign it. Landlords must store the original signed copy for at least three years. Tenants in these properties must also receive the federally approved lead hazard information pamphlet "Protect Your Family From Lead in Your Home" or a similar pamphlet approved for use in your state by the Environmental Protection Agency.

Maryland requires rental properties built before 1978 to be registered with the state and pass an inspection before each new tenant takes occupancy. For more information, visit the Maryland Department of the Environment (MDE) website.

In Vermont, landlords are also required to post a notice asking tenants to notify the landlord if they discover any chipped or damaged paint. Landlords must also attend a certified training program for lead paint maintenance each year. You can view an example of this notice on page 62 of this Vermont Rental Guide.

Move-In/Move-Out Inspection Checklists

Included with your agreement is a Move-In/Move-Out Inspection Checklist to help the landlord document the condition of the premises. We highly recommend completing this checklist at both move-in and move-out regardless of your state; however, the following states require you to complete a move-in checklist:

• Arizona – Tenants also have the right to be present at a move-out inspection (Arizona Revised Statute 33-1321(c)).
• Georgia – The move-in inspection checklist must be completed if the property is managed by a separate, third-party management service or if the landlord owns 10 or more rental units (O.C.G.A. 44-7-36). Tenants have the right to inspect the premises to verify the accuracy of the move-in checklist prior to occupying the unit. Both parties must sign the checklist. Tenants may refuse to sign the checklist if they disagree with it and instead sign a statement of dissent (O.C.G.A. 44-7-33a).
• Hawaii – Tenants also have the right to be present at a move-out inspection (HRS S. 521-42(6)).
• Kansas – The move-in inspection checklist must be completed jointly within five days of initial occupancy or delivery of possession to the tenant (Kann Stat. Ann. 58-2548).
• Kentucky – Tenants have the right to inspect the premises to verify the accuracy of the move-in checklist prior to occupying the unit (Ky. Rev. Stat. Ann 383.580(2)).
• Maryland – A move-in inspection checklist must be completed if the landlord collects a security deposit (Md. Code Ann. S. 8-203.1(a)(1)).
• Massachusetts – A move-in inspection checklist must be completed if the landlord collects a security deposit (Mass. Gen. Laws Ann. Cha. 186, Section 15B(1)(b)(iii)).
• Michigan – All leases are required to include an inspection checklist with the following language in 12-point, bold text at the top of the first page: "You should complete this checklist, noting the condition of the rental property, and return it to the landlord within seven days after obtaining possession of the rental unit. You are also entitled to request and receive a copy of the last termination inventory checklist which shows what claims were chargeable to the last prior tenants." (Mich Comp Law 554.608(4)). The lease may shorten the seven-day return window by agreement (Mich Comp Law 554.608(3)).
• Montana – A move-in inspection checklist must be completed if the landlord collects a security deposit (MCA 70-25-206).
• Nevada – NRS 118A.200(3)(k)
• New Hampshire – N.H. Rev. Stat 540-A:6(I)(b)&(c)
• North Dakota – The move-in checklist must be signed by the landlord (ND Century Code 47-16-07.2).
• Utah – Utah Code Ann 57-22-4(3)
• Virginia – The move-in checklist must be completed within five days of the start of occupancy, and any known presence of mold must be disclosed in the checklist (VA Code 55-248.11:1–2).
• Washington – A move-in inspection checklist must be completed if the landlord collects a security deposit. Both parties are required to sign the checklist, and the tenant must receive a copy.
• Wisconsin – A move-in inspection checklist must be completed if the landlord collects a security deposit (Wis. Stat. 704.08). The tenant must receive an opportunity to inspect the unit and prove the landlord with a list of defects. The landlord must also give the tenant an itemization of the damages charged to the prior tenant (Wis. Admin Code DATCP 134.06(1)).

Final Steps

To execute your agreement, have all parties sign and date it. All parties should also receive a copy for their records.

Ready To Get Started? Create a Residential Lease Agreement

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Frequently Asked Questions

• What is a residential lease agreement?
• When should I use a residential lease agreement?
• What needs to be included in a lease or rental agreement?
• What is the difference between a lease and a rental agreement?
• When may tenants make deductions from their rent?
• What is the difference between a deposit and a fee?
• What is the difference between a sublet and an assignment?
• How much notice is required before a landlord can enter a property?

What is a residential lease agreement?

A residential lease creates an agreement between a property landlord and one or more tenants that allows the tenants to occupy a residential property in exchange for payment. The agreement specifies the rights and obligations of all parties involved. It normally terminates after a fixed term, such as six months or one year.

A residential lease agreement differs from a residential rental agreement in that it lasts for a fixed term. A rental agreement continues as a periodic tenancy (i.e. week to week or month to month) indefinitely until one of the parties provides notice that it wishes to terminate the agreement.

When should I use a residential lease agreement?

These days, a thorough and well-written residential lease agreement is essential for ensuring that the rights of both landlord and tenant are upheld. It provides valuable recourse to parties whose rights are infringed upon. This dramatically reduces the likelihood of disputes between the parties in the future and helps ensure all parties fulfill their end of the bargain.

What needs to be included in a lease or rental agreement?

If you search around the Internet, you will find leases and rental agreements that vary widely in terms of length, thoroughness, and format. Every state has different laws as to what must be included. However, more states agree that, at a minimum, the following items must be included:

• The name and address of all parties involved: For residential leases, the address for the tenants will normally be the address of the unit being occupied. Additional details may be included, such as phone numbers and email addresses.
• The term of the agreement: Agreements may be for fixed terms, such as six months or one year, or they may be periodic, such as week to week or month to month. If it is a fixed-term agreement, it should indicate the move-in and move-out dates.
• Rental payment terms: These terms include how often rent will be paid, the payment amount, where payments may be made, and the permitted payment methods (i.e. cash, check, card, direct deposit, money order, etc.).
• Deposits and fees: Deposits are normally refundable whereas fees are not. Landlords should always specify when charges are nonrefundable. Many states set maximums on security deposits, usually at one or two months' rent. The agreement should state the circumstances when the landlord may make deductions from the deposit and the requirements tenants must follow for the security deposit to be returned. Deposits and fees are also commonly charged for pets, lost keys, non-sufficient funds (i.e. "bounced" checks), and storage and parking spaces.
• Utilities and maintenance responsibilities: The agreement must be clear as to who is responsible for paying each utility and should explain the maintenance and repair obligations.
• Prohibited uses and activities: Tenants are prohibited from engaging in illegal activities on the premises. The agreement normally includes a laundry list of specific prohibitions, including items that are not allowed on the property (i.e. hazardous materials, illegal substances, and potentially dangerous or destructive items like grills, space heaters, and waterbeds).
• Termination: The manner of terminating the agreement differs depending on the type of tenancy, preferences of the parties, and state law requirements. The agreement should also specify remedies for the landlord in case the tenant holds over occupancy beyond the term of the agreement or abandons the unit early without paying for the remainder of the term.
• Disclosures: Each state has specific disclosure requirements that must be met prior to signing the lease. For example, most states require landlords to disclose serious problems that impact the unit's habitability; housing code violations; mold or flood zone warnings; radon warnings; bed bug disclosures; carbon monoxide, asbestos, and other warnings; the presence of a methamphetamine laboratory or a flood at the unit prior to the tenant's occupancy; whether the property is located in a military zone; and local rent control rules. If you are ever in doubt, it is best to always disclose these and similar issues. You can find your local rules on your city or county website or by contacting the office of your mayor, city manager, county administrator, or a locally licensed attorney. Note that lease agreements for mobile home tenants often have very specific state requirements. LegalNature's agreement does not cover such leases, so be sure to research your state's specific laws on mobile homes to ensure that your agreement complies.

Recommended Additional Items

Additionally, for these agreements to properly serve their function and protect the interests of all parties involved, it is also a good idea for them to include language regarding the following items:

• Non-delivery of possession: If the landlord is unable to give the tenant possession of the property upon the commencement of the term, then the tenant will not be required to pay rent until, and starting from, the date they obtain occupancy.
• Right of entry: This section explains the circumstances that the landlord may enter the property and how much notice is required. Landlords normally must provide at least 24 hours' notice in order to enter the unit to make repairs or to show it to prospective tenants. No notice is usually required during genuine emergency situations.
• Tenant's right to withhold rent: Tenants are not allowed to withhold rent for making necessary repairs to the unit except in very narrowly defined circumstances and after giving landlords proper notice and a reasonable amount of time to make repairs (usually 30 days' notice).
• Insurance: Unless the parties agree otherwise, the landlord is not required to carry insurance to cover damage to tenant's personal property or loss caused by fire, theft, water, or any other causes. Tenants are responsible for carrying any insurance required by law. The agreement can also list other types of insurance coverage tenants are required to maintain.
• Property taxes: On residential leases, landlords are normally responsible for paying property taxes. However, for commercial leases, tenants may be held responsible for property taxes, building insurance, and maintenance (called a triple net lease).
• Adjustments: Rent may be increased only at the expiration of fixed-term leases. LegalNature's agreement requires at least 30 days' notice for such an increase. In most states, rent may be increased at any time during a periodic tenancy—such as month-to-month leases—after providing 30 days' notice. Additionally, landlords in most states may pass property tax increases through to tenants upon 30 days' notice.
• Assignment and subletting: Tenants may not assign or sublease their interest in the rental property without the landlord's prior written consent.
• Furnishings and appliances: The agreement should identify any furnishings and appliances being supplied by the landlord.
• Unique features: Since every rental property is different, leases should be tailored to the unique features of the premises. Common examples include provisions on keys, parking, pets, and smoking. Local and building ordinances may impact landlords' rules in this regard.
• Indemnification: This provision helps protect landlords from liability for claims related to the rental property. It states that the landlord may not be held responsible for any damage or injury that occurs on the property unless it arises from the gross negligence or willful misconduct of the landlord or the landlord's agents. 
• Notice: This provides the proper way to give written notice to the parties under the agreement and includes their contact information. 
• Move-in/move-out inspection: It is always a great idea to use a move-in and move-out inspection checklist to record any damage existing on the property. This will go a long way in preventing conflicts at the end of the tenancy and provide proof of damage or lack thereof should the conflict escalate to court.

What is the difference between a lease and a rental agreement?

While some people use the terms "lease agreement" and "rental agreement" interchangeably, technically a lease agreement is used to create a fixed-term tenancy (terminating on a set date; for example after one year), while a rental agreement creates a periodic tenancy (automatically renews until one of the parties decides to terminate it; for example a month-to-month tenancy).

When may tenants make deductions from their rent?

When landlords lease or rent residential property, there is an implied warranty of habitability. This means that they must provide a safe and habitable living space at all times. If landlords fail to provide this, tenants have the option of withholding all or part of their rental payment until the problem is fixed.

Note that certain elements must normally be present for tenants to legally make rent deductions. For this reason, it is advisable to consult a real estate attorney before making deductions. These elements include the following:

• The landlord must have knowledge of the defect or condition. It is recommended that the tenant save proof of multiple requests made to the landlord to fix the problem. Emails work best for this.
• The defect or condition must endanger or materially impair the health, safety, or well-being of the occupants.
• The defect or condition must not have been caused by the tenant or an agent or invitee of the tenant.
• The defect or condition must be present inside the rental unit or substantially interfere with the tenant's occupancy.

What is the difference between a deposit and a fee?

In the context of property leasing, deposits are normally refundable, while fees are nonrefundable one-time payments. Tenants must be notified if they are being charged a "deposit" that is nonrefundable.

For instance, security deposits are meant to protect landlords against tenants not paying for any damage they cause. At the end of the tenancy, deductions may be made from the deposit as permitted by state law, and the remaining funds must be returned to the tenant.

Examples of common fees include upfront fees for pets, administration costs, application processing, and cleaning fees.

What is the difference between a sublet and an assignment?

An assignment occurs when a tenant transfers its entire interest in a leased property for the remainder of the term of the lease to another party. A sublet occurs when the tenant transfers anything less than its entire interest. 

When an assignment occurs, tenants are normally released from all responsibility for the lease. However, it is important to note whether the terms of an assignment actually give a full release from all responsibility. Sometimes the language will keep the original tenant on the hook if the new tenant fails to pay rent or otherwise fails to fulfill its obligations.

On the other hand, with a sublease, the tenant remains ultimately responsible if the subtenant fails to uphold its responsibilities. This is because, technically, there is no agreement between a landlord and a subtenant. The landlord must seek recovery against the original tenant. Often, subleases are temporary in duration, with the subtenant moving out of the property before the term of the original tenant's lease agreement expires.

How much notice is required before a landlord can enter a property?

In most states, landlords may only enter a tenant's unit in an emergency or after providing sufficient notice, as defined by state statute or court opinions. Even after providing notice, state law often limits the reasons landlords may enter the property in order to protect tenants' privacy. Most commonly, landlords are required to provide at least 24 hours' notice, provide the reason for entry, and schedule the entry during normal business hours.

Under state law, landlords can normally enter the property for the following reasons:

• During a genuine emergency—for instance, to stop flooding or to provide access to medical personnel during a medical emergency
• To make repairs and conduct routine maintenance
• To show the property to prospective tenants
• When the landlord has reason to believe the property has been abandoned by the tenant

Ready To Get Started? Create a Residential Lease Agreement

Step 1: Gather Information

Begin by collecting basic information about the lease, including landlord and tenant addresses and contact information, when the lease will begin and end, and rent and security deposit amounts. Also determine at this point if any special work orders or repairs will be needed for the unit. It is often easier to use a rental application to collect information from your potential tenant.

Step 2: Answer Key Questions

We help you integrate the information you collected into an agreement adapted to your needs. As you complete our questionnaire, we inform you about your choices at each step and dynamically ask new questions based on your previous answers and the state involved.

Step 3: Review and Sign

You should always read your lease agreement thoroughly to ensure that you understand the terms and that it matches your needs prior to signing. Keep in mind that you can always make your own text edits after completing our questionnaire by downloading your document in .doc format and opening it in Microsoft Word or Google Documents. If you are satisfied with your agreement, you can simply download it as a PDF document and sign it.

Step 4: Distribute and Store Copies

Each party should receive a copy of the fully signed agreement. Store your copy in a secure location. We recommend that you store a digital copy as well.

Step 5: Periodically Review and Update

Periodically review your lease agreement as situations arise with the tenant. This will help ensure that each party is meeting its responsibilities. In order to renew the lease agreement upon completion of the tenancy, simply use LegalNature to update the dates and any other terms you wish to add or change in your agreement. Then have the parties sign your new agreement.

Step 6: Complete Related Documents

A rental application will help you vet potential tenants and collect information that you will eventually need for the lease agreement. We highly recommend that landlords create an LLC in order to shield them from common risks faced by sole proprietors.

Ready To Get Started? Create a Residential Lease Agreement