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A lease or rental agreement constitutes a legally binding contract between the landlord and the tenant; therefore, the landlord is required to draft it in a comprehensive manner.
Drafting a lease agreement can be daunting, as you must ensure that you cover all your bases and follow state and local laws.
One mistake can be costly and even land you in legal trouble. This guide helps you learn the lease agreement clauses to include to protect all parties involved.
Basic Elements of a Lease Agreement
Before adding clauses, you must first add the essentials that every lease document must have, which are:
- Landlord and Tenant Information: The most crucial part of the document is writing the names and addresses of both the landlord and tenant, as this information binds both parties to the legally binding agreement.
- Description of the Property: Specify the type of property, number of features like bedrooms and bathrooms, square footage, property address, and unique amenities.
- Lease Term: Include the length of the lease term to determine how long the lease agreement remains valid.
- Security Deposit: When applicable, state the amount you'll charge for the security deposit and what you'll use it for.
- Tenant's Responsibility: Enumerate the responsibilities of the tenant, such as rental unit upkeep and repairs.
Essential Lease Agreement Clauses
Severability Clause
A severability clause states that if one part of the lease is deemed invalid, the rest of the terms still apply. This prevents you from drafting another lease to accommodate the change.
It creates a legal safety net for both the landlord and the tenant, preventing legal misinterpretations in changing circumstances.
Liability Clause
A liability clause ensures that the tenant is aware of their obligations and financial risks, protecting you from negligence claims and potential disputes over legal responsibilities.
Specify how certain damages to the rental premises will be addressed if they were caused by a tenant's actions.
Rent Payments
The rental agreement must state the monthly rent amount and the payment terms, such as acceptable payment methods. Should they fail to pay last month's rent, specify the duration of the grace period, and the following late fees should they fail to address the unpaid rent.
If no rent control laws are in place, you can increase the rent when necessary, but be sure to outline the process.
Other Related Fees
If you have related fees, such as security deposits, you must add a security deposit clause that states how much you will charge and what you will use the deposit for.
Be as particular as you can when enumerating potential grounds for security deposit deductions to avoid legal disputes. This also applies to pet fees and other nonrefundable fees you may charge.
Maintenance
With tenants sharing the tasks for the rental property upkeep, you must include lease clauses that clearly separate your responsibility from theirs.
Include your own duties as the landlord, as state laws require them to have a habitable living environment.
The lease document should state how, when, and where they can submit maintenance requests, such as through tenant portals.
Termination of the Lease
Lastly, you should add a termination clause that outlines the process of terminating a lease at the end of the lease period.
It's necessary to include a proper notice period for termination and the option to automatically renew the lease.
A good lease agreement will also include an early termination clause stating that the landlord may terminate the agreement if the tenant fails to pay rent or violates lease rules.
Amenities
If you offer specific amenities such as parking spaces or laundry facilities, include a lease clause stating how and when guests can use them and for what purpose.
Some properties require a landlord's permission before shared amenities are used. If you intend to implement the same restriction, include it in the lease.
Laws to Consider
- Fair Housing Laws: This federal law prevents landlords from rejecting applicants based on race, color, religion, sex, national origin, familial status, or disability.
- Lease Form Requirements: While Tennessee accepts oral agreements for month-to-month leases, written agreements are required for rental terms lasting more than three years.
- Eviction: Even if you add an early lease termination clause, you must still follow the right process for eviction, such as providing written notices and adhering to landlord-tenant laws.
Lease Agreement FAQs
Are there limits on rent and security deposits in Nashville, Tennessee?
- There are no legal limits on the amount a landlord can charge for deposits and rental prices, but you should still limit it to the average amount to avoid deterring potential tenants.
Who can I consult for legal compliance?
- You can consult a landlord-tenant attorney to ensure you're not violating local or state laws or hire a property manager who has access to the necessary legal resources.
Can I draft my own lease?
- You can, but hiring or consulting a real estate lawyer would still be advisable, even for a simple lease agreement. They can review the entire lease and point out any mistakes that could lead to costly fines.
What restrictions can I enforce?
- You can add many restrictions, such as limiting the unit to residential purposes only or outlining consequences when they disturb other tenants. Tenants typically follow the rules if they are reasonable, so be sure to avoid adding unfair rules or ones that are way too restrictive.
Having a Professional Handle Lease Responsibilities
Hiring a property management company can significantly reduce the stress you experience as a landlord. Drafting an entire contract and ensuring you include all important clauses is stressful enough, and that's only part of your rental property management tasks.
Companies like Green Tree Property Management provide tenant placement services and help you draft lease agreements for all the tenants we find for your property. We will even help you find a new tenant for free if they do not fulfill their lease at least 10 months before it ends.
From applying legal knowledge to helping protect landlords, our services can help you draft a comprehensive lease agreement to avoid issues and remain legally responsible.
We can help you maximize the potential of your investment property, and all it takes to get started is to schedule a call! For inquiries, feel free to contact us and learn more about our full-service property management.
