What is a Rental Lease?
Think of the rental lease as your ticket to ride – or rather, your ticket to occupy a space in exchange for a bit of cash. In more formal terms, a lease is an agreement that grants you the right to use an asset, usually a property, for a specified period in exchange for payment.
The terms rental lease and rental agreement are often used interchangeably. The only difference between the two is that rental leases are for a longer period, i.e. one year or more. Rental agreements are for a shorter period, such as month-to-month contracts.
Things to Look For Before Signing Lease
Rental leases are a pretty lengthy document; don’t let the size of that lease document scare you off. Often drafted by real estate whizzes who speak fluent Legalese, these documents cover all bases, leaving no room for loopholes.
When you sign a rental lease, you are responsible for everything the lease covers. This makes it so important to read it thoroughly. We’re talking about the nitty-gritty, the fine print – the stuff that could make or break your lease. Unlike those pesky Terms & Conditions we all ignore, this one actually matters.
So, grab your trusty highlighter and zero in on these key points as you peruse your contract.
1. Parties and the Property
Before signing the lease, verify the names of all parties involved, including the landlord and tenant, and the property address. Errors or misspellings could lead to complications and potential liabilities.
Additionally, if multiple tenants will reside in the property, ensure all are listed. Unexpected exits by one tenant could leave the remaining tenants responsible for rental obligations.
2. Lease Term
Don’t breeze past this section assuming all leases are just one-year gigs. Take a closer look to see if your lease term aligns with your needs – whether it’s a full-year, six-month, or month-to-month arrangement.
And don’t forget about renewals. There are typically two types: fixed-term leases and automatic renewal term leases.
- Fixed-term leases are straightforward – they lock you in for a set period, one year or six months. Once signed, you’re committed until the end of that term.
- On the flip side, automatic renewal term leases operate on a more flexible basis. They roll over monthly or yearly, maintaining the same duration unless either party decides to call it quits.
So, whether you’re after stability or flexibility, make sure you’re clear on what type of lease term you’re getting yourself into. It could save you a headache down the line.
3. Rent
Rent is arguably the big game in your rental lease. This section lays out the nitty-gritty of how much you’ll be shelling out and when the check needs to be paid.
Pay close attention to the details: Is the rent amount what you agreed upon? Does the rent price have any special characteristics such as preferential rent, or rent-stabilized? Are you clear on the due date, any grace period, and the accepted modes of payment?
Oh, and don’t sleep on the late fees. Make sure the percentage matches up with your state’s regulations. For example, states like Idaho, Florida, and New York often cap late fees at 5%, so keep an eye out for any discrepancies.
4. Security Deposit
Ensure the lease specifies any required security deposit, typically equivalent to one month’s rent, for damages beyond ordinary wear and tear. The lease should also outline the process for refunding the deposit.
Additionally, you can also explore ways to avoid paying a security deposit entirely.
5. Utilities and Maintenance
This section of your rental lease covers everything from maintenance fees to who’s footing the bill for that sky-high electricity usage.
Typically, tenants are off the hook for maintenance tasks like fixing leaky faucets, replacing window panes, fixing mold situations, etc. It’s important to know who’s responsible for what expenses to avoid any surprises down the line.
As for utilities, expect to see items like water, gas, electricity, garbage and waste removal, cable TV or satellite service, and internet listed in your lease agreement. While tenants often bear the brunt of these costs, it’s crucial to double-check the specifics in your contract.
6. Right of Entry
Every rental lease has a right of entry clause. This little gem grants your landlord the right to pop in for a visit, but not without a heads-up first.
Typically, landlords are required to give notice before entering your place. Usually a notice window of 1 to 24 hours, and during reasonable hours (no midnight surprise inspections here!).
Reasons for a landlord’s visit can vary, from conducting repairs or maintenance checks to showing the place to potential buyers or future tenants.
7. Other Apartment Rules
Aside from the basics, your lease may address pet and smoking policies, move-in times, renter’s insurance, noise policies, and consequences for breaching the contract.
If your apartment doesn’t allow pets, but your landlord gave you the verbal A-Ok, get it into writing. Don’t just take their word for it.
Understanding the consequences of violating your lease terms, such as leaving early or breaking rules, is essential. Knowing these upfront can prevent future headaches and legal troubles.
8. Subletting and Guests
Landlords often restrict guest stays to prevent them from morphing into unofficial roommates. Some leases may cap guest stays at a specific number of days, like 10, while others might not address guests at all.
Subletting, however, follows different rules. Landlords often limit the number of tenants per apartment. It’s usually limited to two persons per bedroom. If you are considering subletting during holidays or finding a roommate, review your lease first. Some leases prohibit subletting without landlord approval, while others allow it under certain conditions. Understand your lease’s subletting policy to avoid potential conflicts or violations. Note that in certain states, landlords may not legally restrict your right to sublease, but obtaining their approval is still necessary.
Leasing with a Roommate
When considering leasing with a roommate, you’ll encounter three main options: signing the lease individually, signing a joint lease, or opting for a sublease agreement. Weighing these pros and cons is crucial before committing to a roommate arrangement.
Individual Lease: By signing individually, you’re only responsible for your portion of the rent. It means you’re not liable for any missed payments or damages caused by your roommate. However, you might not have control over who the landlord brings in as your roommate. Moreover, rent might be slightly higher as the landlord can’t pursue you for your roommate’s missed payments. Typically these leases are common at off-campus housing, colivings, individual owners, or other short-term accommodations.
Joint Lease: In a joint lease, all tenants have equal rights and responsibilities. It ensures fairness but also means that missed payments by one roommate can make all tenants liable. Additionally, the actions of one roommate, such as eviction, can affect everyone on the lease. This type of lease is more common, especially in bigger cities where you are dealing with a multi-property landlord or big management company.
Sublease Agreement: In a sublease arrangement, there’s a master tenant and a sub-tenant. This option offers the most flexibility. As a sub-tenant, you benefit from flexible lease terms but are subject to the sublandlord’s rules and could be evicted if they are. If you’re the sub-landlord, you have control over who you live with and rent distribution, but you’re still responsible for the full rent if the sub-tenant refuses to pay.
Regardless of the rental agreement type you are about to sign, there are a few things to watch for when you sign a rental lease with a roommate.
Documents Needed to Sign the Lease
What is due at the apartment lease signing? Whether you are just going to view the apartment or on your way to a signed lease, it is best to keep these documents handy.
- Photo ID: Your trusty driver’s license or another form of identification. If you are foreign you might also have to show your visa or work permit.
- Driver’s License and Vehicle Registration: Necessary if parking is part of the deal.
- Reference Letter: A glowing recommendation from a previous landlord or employer can work wonders.
- Proof of Employment: Showcasing payment stubs from the past three months assures the landlord of your financial stability.
- Guarantor or Roommate Paperwork: If applicable, documents affirming the financial backing of a guarantor or the agreement of a roommate.
- Renter’s Insurance: Sometimes a requirement, so have proof handy if needed.
- Checkbook or Cashier Check: The first month’s rent and security deposit are typically paid via a certified check (cashier’s check) or a personal check, with online payments or credit cards becoming the norm thereafter.
FAQS
1. Who signs the lease first?
The tenant signs the lease first. This is so that if the tenant missed anything of importance, such as misspellings on names, the landlord can have the tenant go back over it.
The last signature of the landlord gives the lease the final approval making it legally binding.
2. Can you back out of a lease before it starts?
Once the lease is signed, there is no cooling-off period to back out. However, you can negotiate with the landlord on a termination fee.
3. How long does it take to sign a lease?
The process may take anywhere between two hours to a couple of days. If any changes or revisions are required when the lease is reviewed, it may take slightly longer.
It’s always better to delay the lease signing till after the walk-through of the property.
4. Where do you sign the lease?
You can sign it at the property manager’s office for clarification or electronically, depending on your arrangement with the landlord.
5. What happens if you sign the lease but the landlord doesn’t?
The outcome varies by state law, but generally, if you’ve signed and the landlord hasn’t, you may have a verbal lease or tenancy-at-will. This may not afford you the same protections as a formal lease.
6. Who keeps the copy of the lease?
Both the landlord and tenant should retain original signed copies of the lease agreement.
7. What happens to your deposit if you don’t end up signing the lease?
If you paid a holding fee to secure the property, it’s typically non-refundable. However, if you already paid the full security deposit, the landlord cannot withhold it or impose penalties.