Your Guide to Making a Solid Lease Agreement for Your Rental Property

July 3, 2019 - Aaron DiCaprio

Having a comprehensive lease agreement is key to the success of your business. It can mean the difference between making large profits and losing money.

You can only penalize a tenant for something they know about. Without a clause prohibiting subletting, for example, your tenant may see no problem doing it. You can’t hold them accountable for doing it either.

It’s important that you have a lease that is as thorough as possible. Among other things, it should include rules on the lease term, pet deposits, security deposits, subleasing, and occupancy limits.

If you are looking to make a high quality lease agreement for your rental property, you are in the right place. In this post, we’ll share 7 items landlords must state in their lease or rental agreement.

Lease Term #1: The Term of the Lease

In the rare occasion, landlords fail to mention the term in the lease. If it isn’t stated, you may find yourself dealing with a “holdover tenant”.

A holdover tenant is a renter who stays in a property after the expiration of the lease. The eviction process for such a tenant is no different from others, they can be costly and time-consuming.

Two types of lease terms that are most often used are short-term and long-term. A short-term lease runs anywhere between a few days to a month. A long-term lease runs anywhere from 6 months to a year.


Knowing which type to use for your rental property usually depends on two things:

A) The amount of flexibility you want

B) The type of rental business you operate

Lease Term #2: Names of Tenants

When you’re drafting your lease agreement make sure to include the name of all occupants who are of legal age.

Doing this makes every adult occupant legally responsible for the terms of the lease. You’ll be able to demand rent from any of them should there be a nonpayment issue.

Lease Term #3: Occupancy Limits

Occupancy limits is an important clause to include in your agreement. You can define this clause depending on whether or not you permit subletting of your rental property.

If you allow subletting, make sure to name any restrictions you may have. For example, you can let your tenant know that they need permission before subletting your property.


This ensures that only tenants that have passed your screening test get to sublet your property.

If you don’t allow subletting, make sure your tenant is aware of it. Let them know that if decided by the renter to sublet, it is regarded as a serious violation of the lease agreement.

Lease Term #4: Pet Rules

Much like subletting, you can decide whether or not to allow pets. If you permit animals in your rental property, make sure to state any restrictions you may have as well.

You can put restrictions on the type and size of the animal. You can also require that tenants pay a fee or a pet deposit.

While landlords are free to choose whether or not to keep pets, research shows that Americans are a nation of pet lovers. This a big opportunity for landlords who allow pets as it opens up a large tenant pool to choose from.

In the case for landlords who do not allow pets, their tenant pool shrinks by a significant amount.

Lease Term #5: Security Deposit

The use and return of security deposits can sometimes lead to disagreements between landlords and tenants. A tenant may think that they have returned the property in good condition but the landlord may disagree.


These disagreements often end up in small claims courts.

To avoid security deposit issues, ensure clarity on:

  • The amount of security deposit.
  • The conditions that a tenant must satisfy for them to qualify for a reimbursement.
  • Any non-refundable fees you may have.
  • How you may use the deposit (for damage repair, for example) and how the tenant may not use it (like using it to pay for last month’s rent).

Lease Term #6: Rent Rules

Aside from security deposits, ensure clarity on rent. Rather than notifying your tenant on the amount of rent to pay and where to pay it, include details such as:

  • Where rent is due. For example, the business address of your office.
  • The amount of late fee, if applicable.
  • The amount of grace period, if applicable.
  • Any charges if a rent check bounces.
  • Acceptable payment methods.

Lease Term #7: Entry Rules

Landlords are not permitted to enter a tenant’s home without adequate notice.

States have different requirements regarding the amount of time needed to notify a tenant. Generally speaking, a 24 hour advance notice is the accepted length of time.


The reason for entry must be reasonable. For example, to conduct property repair and maintenance, to inspect the property, or to show the unit to prospective tenants.

Appropriate entry times are from 8.00AM to 5.00PM during weekdays and 9.00AM to 3.00PM during weekends.

These are the 7 key clauses that every landlord should include in their agreement. With that said, this article is only for informational purposes. If you need additional assistance, engaging a property manager or real estate attorney is recommended.

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