Even though misunderstandings between tenants and property owners might seem ordinary and petty, they can easily escalate into costly legal suits and court battles. It’s for this reason many landlords chose to invest in hiring a property management company to take care of this form. However, experienced landlords have in place a strong rental agreement to define the rental relationship.  If you own a rental property, you too should protect your investment by crafting an agreement that includes the following essential elements.


What You Should Include in a Rental Agreement

Parties Included in the Contract

Your lease agreement should specify explicitly who the parties to the contract are. Naturally, being the landlord, one of them will be you or your agent, while the other member should be the tenant. If more than one person wishes to lease the property jointly, as is the case with housemates or roommates, include all their full legal names, and their addresses on the binding contract.

Identification of the Property

Next, you need to include an accurate description of the asset under consideration. That includes providing the name of the building, its physical location, and mailing address, which should incorporate the house number, the name of the street, city, state and postal code. Moreover, you must clarify the type and size of the property. For example is it a serviced apartment, a studio apartment, a condominium or a single family rental unit.

Terms of Tenancy

Since a tenancy agreement can be a rental or a fixed-term lease, it is prudent to clarify the nature of your contract. Spell out clearly whether it is a lease arrangement that runs from one month to the next or if it is the standard one-year contract. Include the precise date, month as well as the year on which the contract begins and when it ends. Look to clarify move in dates and whether they will be moving in on their own or if they’ll employ a local moving company. It is also far-sighted to state whether the agreement auto-renews at the expiry of the lease period or if the tenant needs to sign a new deal. By being this specific, you are preventing any possible room for confusion.


The rent is the primary return on your investment. You should, therefore, take the time to provide guidelines about it. Articulate the exact amount of rent the tenant ought to pay, as well as the due date, and mode of payment. A smart way to go about this is to break down the full lease amount into monthly figures to determine the due sum. Mostly, the due date for rental contracts is the first day of the month. However, you could set it to be in any period you prefer. Also, choose the payment method you fancy such as personal checks, bank transfers, or mail, and clarify what happens in the event of late payment or returned checks.

Security Deposit


Another element you must address in your tenancy agreement relates to the use and refund of the security deposit. State the precise amount of security deposit which the tenant ought to put up. In most states, the deposit shouldn’t exceed three month’s rent. Clarify what the deposit is for, plus when and how you will go about refunding it. Include the factors that might make the tenant not get a full refund, such as damages, unpaid utility bills and so on, and specify how you will treat the interest earned on the security deposit. Will you give it all to the tenant, keep all of it or split it with the tenant?

Subletting and Limits of Occupancy

Although the renter has presumed ownership of the home, it still is your property. Decide whether you wish to limit the type and number of people living in the home and the kind of activities you allow in the premises. Also, define the boundaries of the tenants. For instance, can they sublet the property, have pets, conduct commercial activities, or invite other people besides a spouse, children and immediate family members to reside in the property. It would be prudent to state in the rental agreement that if the tenant wants to do any of the above acts, he or she must seek your written consent.

Repairs, Maintenance and Your Right of Entry


Since the tenant got the premises well-maintained, it is only fair to clarify to him or her that it is their responsibility to take care of the property. They should keep the premises clean, safe and in good conditions at all times. The rental agreement should further clarify the course of action in the event something gets damaged or needs repair as well as the responsibilities of each party in as far as property maintenance goes. For instance, can the tenant carry out repairs by themselves or should they inform you so that you can facilitate the maintenance? Lastly, the contract must include a clause that guarantees you the legal right to access your property be it to inspect it or carry out the said repairs.

Termination of the contract

Even though you may wish for the tenancy agreement to go on indefinitely, circumstances might force it to come to an end. It is, therefore, prudent to include a clause that facilitates a relatively smooth termination of the rental arrangement. Specify the conditions that might compel either party to terminate the agreement, how much advance intent to terminate notice each party should give, how to serve the notice, as well as how to handle issues relating to the security deposit, property repairs, and outstanding utility bills.


The only way the contract becomes legally binding and enforceable by law is if the tenant appends his or her signature to it. Therefore, include a section for the tenant to verify that he or she commits to abide by the rental lease terms.

If you would like help drafting a rental agreement you can always contact a local property management company to help you out or a real estate lawyer.