A lease agreement is a binding contract used by landlords for renting property to tenants in exchange for monthly rent. The tenant will have rights of possession of the property after the lease begins and may only be required to vacate either at the end of the term or if they violate any of the lease provisions.
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
Commercial Lease Agreement – For any type of non-residential use such as retail, office, or industrial space.
Condominium Lease Agreement – For a residential unit located in a condominium association.
Equipment Lease Agreement – To rent tools or heavy machinery.
Month-to-Month Lease Agreement – Also known as a “tenancy at will,” this rental arrangement continues until either the landlord or tenant gives notice (usually 30 days’ written notice required).
Rent-to-Own Agreement (Lease-Option) – A standard lease that allows a tenant to purchase the property under predetermined terms and conditions.
Roommate Agreement – Established the rules, regulations, and division of payments between individuals who share an apartment or house that is under a lease.
Simple (1-Page) Lease Agreement – Simple rental agreement between a landlord and tenant.
Standard Residential Lease Agreement – A fixed-term agreement for one (1) year which will usually gives the tenant the right to renew their lease.
Sublease Agreement – Allows a tenant who has a lease to rent (sublet) all, or a part, of their rental unit to someone else.
Short Term / Vacation Lease Agreement – A basic rental arrangement for short-term stays.
Weekly (Week-to-week) Rental Agreement – An “at-will” arrangement that can be terminated by giving seven (7) days’ notice.
A lease is a contract formed between the owner (or manager) of a property and the tenant that will be renting it. There are many types of leases, the most common being a fixed one (1) year term that does not allow either party to terminate until the end date.
- Tenant undergoes a credit check through a Rental Application;
- Security Deposit (see laws);
- Move-In Checklist; and
- State Disclosures (if any).
Before a lease can be signed, a tenant must be shown the property, negotiated with, and screened to know their credit and background. Below are the steps that should be followed to lease a property from start to finish.
- Step 1 – Marketing/Finding a Residence
- Step 2 – Schedule a Showing
- Step 3 – Screening the Tenant
- Step 4 – Approving or Rejecting the Tenant
- Step 5 – Negotiating
- Step 6 – Signing the Lease
- Step 7 – Taking Occupancy
- Step 8 – Paying Rent
- Step 9 – Renewing/Terminating the Lease
- Step 10 – Returning the Security Deposit
Depending on the location, the landlord should begin marketing the property by posting online and in any local classified publications. In 2017, 37%1 of the US population (43.7 million) were renters and 83%1 of them used the web to find a rental. In addition, 31%2 of renters felt the largest issue in their search was finding accurate information about a particular property.
Therefore, it is important to disclose all details of the property while taking clear photos of each part of every room.
Property for Rent (top 5 websites)
When a tenant asked to view the property, it’s best to make a time that is when the current tenant is not home and that the premises are clean. It’s also recommended that the property is shown during the day advised to promote as much outside light as possible.
- Move-in Date – Before setting up an appointment, ask the potential tenant their move-in date. Many tenants start their search too early and should only meet with tenants if they are looking to rent within 60 days.
- Rental Application – At the showing, make sure to obtain the applicant’s information and consent to run a credit and background check.
After obtaining the tenant’s credentials through the application it’s time to run a credit and background check to ensure creditworthiness. There is a cost to any background check, between $15 to $45, and is usually passed on the applicant.
Screen a Tenant (top 5 websites)
Income Verification – In addition, it is helpful to obtain the last two (2) years of tax returns (IRS Form W-2) and the last two (2) weeks’ paystubs. If the applicant is self-employed then to have the last three (3) months’ bank statements.
Landlord References – The best reference is always past landlords. Be sure to contact the applicant’s current or previous landlord to ask if they paid rent on time, if they are a loud or quiet tenant, and if they left any damage on the premises.
After reviewing the tenant’s credit report, criminal history, and verifying references it’s time to make a decision: (choose one)
If approved, the tenant will go on to negotiate and sign a lease agreement in the next steps.
If rejected, the landlord will be required to send the applicant an adverse action (rejection) letter stating the reasons for refusal and where they can get a copy of their credit and background check.
After the landlord is aware of the tenant’s financial background, it’s time to negotiate. The monthly rent is the most common item that is debated and if they did not attempt to negotiate at the time of applying, they probably will not request a discount.
If the tenant has bad credit the landlord can request the following:
- Additional Security Deposit – In accordance with State laws.
- Increased Monthly Rent – Due to the elevated risk of a tenant with bad credit, some landlords may increase the monthly rent.
- Pre-Pay Rent – In case the tenant loses their job or income. This is always applied to the last months of the lease, not in the beginning.
- Request a Co-Signer – This requires the tenant to find someone else to act as a “guarantor”. A guarantor agrees to pay for any unpaid debts or damage by the tenant in the chance of defaulting on their lease. Use the Guarantor Addendum.
After writing the lease (see How to Write) it’s time for the landlord and tenant to get together and sign with the real estate agent (if any). Furthermore, it is recommended for any lease for it to either be signed with at least one (1) witness or a notary public. If the landlord or tenant would rather electronically sign, the lease can be uploaded via our Homepage and sent to the other party.
After the lease has been signed, all payments including the security deposit, 1st month’s rent, and any other fees must be paid to the landlord. Upon successful payment, the landlord will issue access to the tenant in the form of keys, fobs, or access codes. All entry keys must be given to the tenant, which includes any common areas or mailboxes. Upon taking occupancy, the tenant should go through the property to look for any signs of damage. Any issues should be recorded on a move-in checklist.
During the course of the lease, the tenant will be obligated to pay rent on a monthly basis. It is recommended to convert tenants to pay online or automatically via ACH. In a 2019 study3, consumers made 74% of their transactions with non-cash payments and 85%4 of tenants that pay rent online successfully pay rent the next month. Therefore, it’s best to obtain the tenant’s ACH details or use an online service to collect rent on behalf of the tenant.
Accept Rent Online (top 5 websites)
- Cozy.co (Free ACH, 2.75% cc fees)
- Zillow (Free ACH, 2.95% cc fees)
- Avail.co ($2.50 ACH, 3.50% cc fees)
- RentPayment.com ($4.95 ACH, 2.95% cc fees)
- PayYourRent.com ($2.50 ACH, 2.75% cc fees)
At the end of the lease term, the landlord and tenant must decide whether to move out or renew the lease. If renewing, the landlord can send the tenant a Lease Extension Amendment that keeps all the terms of the current lease while extending the date. If the landlord decides to change any other terms, such as increasing the rent, it can be added as well.
If the tenant decides to move out of the property or the landlord decides to not renew the lease, the landlord will send a Notice Not to Renew Letter that will inform the tenant to vacate the premises on the lease end date.
After the tenancy has completed, the landlord will be required to return the deposit paid at the beginning of the lease term in accordance with State Security Deposit Laws. The deposit must be returned to the tenant, less any damage left on the property, to the forwarding address given by the tenant.
If the landlord deducts any amount from the security deposit, an itemized list of the damages must be given to the tenant.
The following are the state by state security deposit laws with accompanying sources:
|Alabama||1 month’s rent||60 days after the lease terminates||§ 35-9A-201|
|Alaska||2 months’ rent||14 days if proper notice is given; 30 days otherwise||§ 34.03.070|
|Arizona||1.5 months’ rent||14 days after the lease terminates (does not include holidays/weekends)||§ 33-1321(D)|
|Arkansas||2 months’ rent||60 days after the lease terminates||§ 18-16-305(a)|
|California||2 months’ rent unfurnished; 3 months’ rent furnished||21 days after tenant(s) move out||§ 1950.5|
|Colorado||No limit||1 month; up to 2 months if stated in the lease||§ 38-12-103(1), § 38-12-104|
|Connecticut||2 months’ rent if younger than 62; 1 month’s rent if older||15 days after receiving tenant’s new mailing address, or 30 days after lease termination (whichever is later)||§ 47a-21|
|Delaware||1 month’s rent for 1-year leases only||20 days after the lease terminates||§ 5514|
|Florida||No limit||15 days if no deductions, otherwise 30 days||§ 83.49(3)(a)|
|Georgia||No limit||30 days after tenant(s) move out||§ 44-7-34(a)|
|Hawaii||1 month’s rent (not including pet fee)||14 days after the lease terminates||§ 521-44(c)|
|Idaho||No limit||21 days if not stated in the lease; 30 days otherwise||§ 6-321|
|Illinois||No limit||30 days if deductions; 45 days otherwise||765 ILCS 710|
|Indiana||No limit||45 days after the lease terminates||§ 32-31-3-12|
|Iowa||2 months’ rent||30 days after the lease terminates||§ 562A.12(3)(a)|
|Kansas||1 month’s rent unfurnished; 1.5 months’ rent furnished||30 days after the lease terminates||§ 58-2550(b)|
|Kentucky||No limit||60 days after the lease terminates||§ 383.580|
|Louisiana||No limit||1 month after the lease terminates||§ 3251|
|Maine||2 months’ rent||30 days for fixed-term lease, 21 days for periodic leases||§6032, §6033|
|Maryland||2 months’ rent||45 days after the lease terminates||§ 8-203|
|Massachusetts||1 month’s rent||30 days after the lease terminates||Ch. 186 §15B|
|Michigan||1.5 months’ rent||30 days after the tenant(s) move-out||§554.602, §554.609|
|Minnesota||No limit||3 weeks after the lease terminates||§ 504B.178|
|Mississippi||No limit||45 days after the lease terminates||§ 89-8-21|
|Missouri||2 months’ rent||30 days after the lease terminates||§ 535.300|
|Montana||No limit||30 days if deductions, 10 days otherwise||§ 70-25-202|
|Nebraska||1 month’s rent (not including pet fee)||14 days after the lease terminates||§ 76-1416|
|Nevada||3 months’ rent||30 days after the lease terminates||NRS 118A.242|
|New Hampshire||1 month’s rent / $100 (whichever is greater)||30 days after the lease terminates||§ 540-A:6 & § 540-A:7|
|New Jersey||1.5 months’ rent||30 days after the lease terminates||§ 46:8-21.2 & § 46:8-21.1|
|New Mexico||1 month’s rent||30 days after the tenant(s) move-out or the lease terminates||§ 47-8-18|
|New York||1 month’s rent||14 days after the tenant(s) move-out||576/74 § 6, § 7-108(e)|
|North Carolina||2 months’ rent (1.5 months rent for leases at will)||60 days if deductions, 30 days otherwise||§ 42-51, § 42-52|
|North Dakota||1 month’s rent (2 months’ rent for pets)||30 days after the lease terminates||§ 47-16-07.1|
|Ohio||No limit||30 days after the lease terminates||§ 5321.16|
|Oklahoma||No limit||45 days after the lease terminates||§ 41-115|
|Oregon||No limit||31 days after the lease terminates||§ 90.300(13)|
|Pennsylvania||2 months’ rent||30 days after the tenant(s) move-out or the lease terminates||§ 250.511a, § 250.512|
|Rhode Island||1 month’s rent||20 days after the tenant(s) move out or the lease terminates||§ 34-18-19|
|South Carolina||No limit||30 days after the tenant(s) move-out or the lease terminates||§ 27-40-410|
|South Dakota||1 month’s rent||45 days if deductions, 14 days otherwise||§ 43-32-6.1, § 43-32-24|
|Tennessee||No limit||30 days after the tenant(s) move-out, or 7 days after a new tenant moves-in||§ 66-28-301(g)(1)|
|Texas||No limit||30 days after the tenant(s) move-out||§ 92.103(a)|
|Utah||No limit||30 days after the tenant(s) move-out||§ 57-17-3(2)|
|Vermont||No limit||60 days if the unit is a seasonal/vacation rental, 14 days otherwise||§ 4461(c)|
|Virginia||2 month’s rent||45 days after the lease terminates||§ 55.1-1226|
|Washington||No limit||21 days after the tenant(s) move-out||§ 59.18.280|
|West Virginia||No limit||45 days if the property is re-rented, 60 days otherwise||§ 37-6A-2|
|Wisconsin||No limit||21 days after the lease terminates||§ 134.06(2)|
|Wyoming||No limit||15 days after the landlord receives the tenant’s new address, or 30 days from lease termination (whichever is lesser)||§ 1-21-1208|
The following are three (3) mistakes commonly made by landlords during the leasing process:
1. Negotiating BEFORE the Rental Application
Until the landlord conducts a thorough background check of the tenant, there is no reason to begin the negotiating process on either side without knowing the financial background of the tenant.
2. Move-in Date Beyond 45 Days
The landlord should never agree to a move-in date beyond forty-five (45) days. Otherwise, the landlord runs the risk of losing more than a month’s rent.
3. Not Requiring the Tenant’s Social Security Number (SSN)
Due to the rise in identity theft, landlords have been hesitant to require the tenant to write their social security number on the rental application. This must be a requirement in order to view all available public records on an applicant.
How much does a Real Estate Agent get paid?
A real estate agent is paid the amount due as stated in their listing agreement. This may either be from the agent representing the landlord or tenant. For rental properties, this is commonly between 10% to 15% of the lease term (usually 12 months) multiplied by the monthly rent.
If there is co-agency, both agents will share the commission amount.
Does a residential lease need to be witnessed or notarized?
While doing so can help prove the validity of the lease, doing so is not required.
What is Prorated Rent?
Prorated rent is when the landlord only charges their tenant for the portion the tenant actually spent living in the rental. It is most commonly done when a tenant is moving in or out in the middle of the month. The easiest way to calculate this is by multiplying the monthly rent by twelve (12), dividing it by 365, and then multiplying the result by the number of days the tenant will be occupying the unit (out of a month).
Example: If the tenant will be living in the rental for only ten (10) days out of thirty (30) and their monthly rent is $1,200, the calculation would be:
(($1,200 X 12) ÷ 365) X 10 = $394.52
- Prorated Rent Calculator: www.jsjsss
Note about colors:
- Red – Mandatory information. The landlord must complete all red sections.
- Yellow – Information that is optional, or is only required if a certain checkmark is selected.
- Blue – Also optional information. Used in conjunction with yellow to show varying options.
Steps 1-4 (The Parties)
This section is used for identifying the name and address of the landlord (the person that is in charge and/or owns the rental) and the tenant(s). The landlord will need to type the following in this section:
1) – Date. The date the lease is being completed (the current date);
2) – Landlord name. The full name of the landlord. This is the person that owns and/or manages the property;
3) – Landlord’s address. Includes the street, city, state, and ZIP code; and
4) – Tenant name(s). The name(s) of the tenant(s) that will be renting the property.
Step 5 (Property Address)
5) – Property address. The full address of the rental property. This should include the street, unit # (if any), city/town, state, and ZIP code.
Example: 123 Rental Ave, Suite 9A, ABC City, Texas 78701.
Step 6 (Lease Type & Term)
This area is for specifying the length of the lease. The landlord can choose one of two (2) options. The first (and more common) option is “Fixed Lease”, which refers to the agreement being established for a pre-determined length of time (such as 1 year). The second option is a “Month-to-Month Lease”, which is a type of periodic contract that has no end date and renews automatically on a monthly basis until either party wishes to terminate it.
6) – Lease type. Check one (1) of the two options shown. If “Fixed Lease” is selected, complete the fields marked with yellow. Type the starting and ending dates and select whether the lease will continue as a “month-to-month” agreement after the term ends OR if the tenant(s) will be required to move out.
If “Month-to-Month Lease” is selected, enter the starting date of the lease followed by the number (#) of days either party has to give in order to terminate the contract.
Steps 7 – 9 (Rent)
This provision allows the landlord to set the monthly rent ($) the tenant(s) will be required to pay.
7) – Rent amount. Type the total amount ($) of rent the landlord will collect from the tenant(s).
8) – Rent due day. Enter the day of the month the rent will be due. This is typically the first (1st) of every month.
9) – Payment instructions. Describe how the tenant should go about paying rent (e.g. “Mail via check to [Address]” or “send via PayPal”.
Step 10 (Late Fee)
A late fee is a monetary penalty that is billed to the tenant(s) if they are late on rent.
10) – Late fee (Y/N). Select whether or not the tenant(s) will be charged a fee if they are late on rent. If the first option is selected, complete steps 10a and 10b by typing the amount ($) of the late fee, followed by the number (#) of days that must pass (after the due date) before a late fee can be issued.
Step 11 (Proration Period)
A proration period is any time the tenant will be living in the rental that doesn’t fall within one (1) payment period (e.g. “1 month”). For example, if the tenant wanted to move into the property a couple of weeks before the official start of the lease, the landlord could require them to pay two (2) weeks’ worth of rent (known as “prorated rent”).
11) – Proration period (Y/N). Place a checkmark in one (1) of the two boxes shown regarding the proration period. If the first box was selected, type a) the starting date of the proration period, followed by b) the amount ($) the tenant will be paying.
Note: Many states consider rent that is received upfront to be a security deposit. Because many states restrict security deposits to one (1) or two (2) months of rent, the landlord could be breaking rental laws by accepting pre-paid rent on top of a security deposit.
Step 12 (Security Deposit)
Enter the dollar ($) amount of security deposit the tenant(s) are required to pay at the start of the lease. Enter the full value of the deposit, not the amount each tenant would be required to pay. Specify the number of days the landlord has to return the deposit (less any deductions) at the end of the lease.
12) – Security deposit (Y/N). Check the box corresponding to whether or not the tenant(s) will be required to pay a security deposit. If the first (top) box is checked, enter a) the amount ($) of the security deposit that will be collected, followed by b) the number (#) of days the landlord will have to return the deposit once the lease term expires.
Step 13 (Returned Checks)
A “returned check” occurs if a tenant’s check bounces due to insufficient funds in their bank account. To prevent this from occurring, the landlord can charge a fee.
13) – Returned check fee (Y/N). If the landlord will require a fee ($) for bounced checks, place a checkmark in the first box and type the amount ($) of the fee. If a fee will not be required for bounced checks, select the second (2nd) box and proceed to the next step.
Step 14 (Additional Occupants)
14) – Occupants (Y/N). If the tenant(s) will have additional person(s) living in the rental, check the first (1st) box and type the name(s) of the other occupants in the provided field. If the tenant will not be introducing other occupants into the rental, check the second (2nd) box and head to the next step.
Step 15 (Move-in Inspection)
15) – Move-in inspection (Y/N). If the landlord and tenant(s) will be completing a move-in checklist together, select the first (1st) box. Otherwise, check the second (2nd) box.
Note: Conducting a move-in inspection is highly recommended to avoid charging the tenant(s) for the damage they didn’t cause.
Step 16 (Furnishings)
16) – Furnishings (Y/N). If the rental is furnished, check the first (1st) box and list the furnishings that will be included (e.g. “Living room couch, TV set, dining table, etc.). If it is not furnished, check the second (2nd) box and head to Step 17.
Step 17 (Utilities)
17) – Utilities. List any utilities that the landlord will be responsible for (if any). Any fees not included will be the tenant’s responsibility.
Step 18 (Parking)
18) – Parking provided (Y/N). If the tenant(s) will be provided one (1) or more parking space(s), check the first (1st) box. Then, a) type the number (#) of spots provided, b) check the box corresponding to whether or not a fee is required, c) type the amount ($) of the fee (if any), followed by d) selecting the option that corresponds to how often the fee will need to be paid. If the tenant(s) will not be given parking, the second (2nd) box should be checked.
Step 19 (Pets)
Due to pets being a potential liability for landlords, many choose to restrict (or deny) the number and types of pets tenants can have.
19) – Pets allowed (Y/N). If pets will be allowed on the premises, check the first (1st) box. Then, the landlord will need to a) type the number (#) of pets that the tenant(s) can have, b) list the type(s) of pets that are permitted, followed by c) the deposit the tenant(s) will need to make to cover any damage caused by their pet. If pets are not allowed on the premises, the second (2nd) box should be checked.
Step 20 (Smoking Policy)
20) – Smoking (Y/N). If smoking is permitted in certain areas on the premises, check the first (1st) box and specify exactly where tenants can smoke. If smoking is not allowed, check the second (2nd) box.
Step 21 (Sale of Property)
In the event the owner of the property sells the rental, the landlord can specify whether the new owner would have the power to terminate the rental agreement.
21) – Right to terminate lease (Y/N). Check the first (1st) bix if the new owner would have the right to terminate the rental agreement. Then, enter the number (#) of days’ notice the new owner would need to provide the tenant. Check the second (2nd) box if the new owner would not have the right to terminate the lease agreement.
Steps 22 & 23 (Notices)
22) – Landlord notice address. Type the full address the tenant(s) can use to send the landlord notices and other important information.
23) – Tenant notice address. Type the address that should be used for sending the tenant notices (most likely the same address as the rental property).
Step 24 (Governing Law)
24) – State name. Enter the name of the state the rental property is located in.
Step 25 (Lead-Based Paint)
25) – Property built before 1978 (Y/N). If the property was built prior to 1978, check the first (1st) box. The landlord will need to complete (and attach) a Lead-Based Paint Disclosure Form. If the property was built after 1978, check the second (2nd) box and proceed to the next step.
Step 26 (Additional Provisions)
26) – Additional provisions. If there are any additional sections the landlord wishes to include in the agreement, they can be written in the text box provided. Alternatively, the landlord can attach an addendum if more room is required.
Step 27 (Signatures)
At a minimum, the landlord and one (1) tenant need to sign the lease.
27) – Landlord name, signature, & date. The landlord will need to sign their name (with eSign or by-hand), type the date (mm/dd/yyyy) they signed, and write their full name beneath their signature.
28) – Tenant name, signature, & date. At a minimum, at least one (1) tenant will need to sign, date, and print their name on the contract.
29) – Second (2nd) tenant name, signature, & date. If a second tenant will be on the lease, they will need to sign, date, and print their name on the form.