A legally binding contract between the landlord and the tenant provides the necessary protection for both parties. However, it's not as simple as scribbling a few rules and responsibilities on a piece of paper. There is crucial information that needs to be included, along with the local and state laws you need to follow.
Firm but fair is where you want to be, as it keeps both the landlord and tenant in check. If you plan to write your own lease agreement, read ahead to ensure you don't miss a step and foster a healthy landlord-tenant relationship.
Key Highlights:
- A legally binding lease agreement must include all essential details, such as parties involved, property information, lease term, rent, and utility responsibilities, to clearly define expectations.
- Important clauses like tenant responsibilities, landlord entry rules, occupancy limits, and renewal or termination procedures help avoid misunderstandings and maintain smooth landlord-tenant relationships.
- Security deposits should be set fairly and used appropriately, with Tennessee requiring landlords to return unused deposits within specific timelines and provide itemized deductions when applied.
- Pet policies, including limits, breed rules, screening, and fees, help control potential damages while ensuring compliance with laws regarding service animals
- Clear consequences for lease violations, along with legal compliance in all clauses, protect both parties, making legal guidance or professional support crucial when drafting your own lease agreement.
The Basics for a Lease Agreement
First things first, you need to include all the necessary information in the rental/lease agreement. These are the specifics that point to the tenant, landlord, and rental unit. Make sure to outline the following:
- Names of All Involved Parties: Write down the tenant's full name, as well as yours or your property management company. If there are several tenants, include all the adult occupants in the lease agreement.
- Property Details: Indicate the full address of the property location, the property type (single-family home, multi-family home, etc.), and the included amenities in the rental.
- Lease Term: Specify the start and end dates of the lease so your tenants are aware when they can pursue lease termination should they want to. It should also state the lease type, whether it's a fixed-term or a month-to-month lease.
- Rent Amount: To avoid potential disputes, include the exact rent amount and the due dates for rent payments. Make a list of the accepted payment methods, along with the consequences for late rent payments (late fees, grace period, and returned payment fees).
- Utilities and Services: The tenant should know who foots the bills for utilities, as this sometimes varies between rental properties. Mention the utilities that are included in the rental, such as water, gas, electricity, internet, and trash.
- Tenant Responsibilities: While it's your duty as a landlord to conduct regular maintenance, the tenant is still responsible for things like basic cleanliness, reporting damages, and lawn care. Inform them of repair request procedures and when they can expect services for issues.
- Property Access: It's important that the tenant agrees to your schedules, emergency entries, and inspections before you do them. Note that even with prior written consent, you still need to provide proper notice before conducting any inspections or repairs.
- Occupancy Limits: Indicate that the lease agreement is only applicable to a certain number of residents, and that exceeding that number may result in penalties or eviction.
- Renewal and Termination Terms: Some tenants opt for automatic lease renewals while others don't, so this must be clarified in a residential lease agreement immediately. You should also inform tenants about the notice period for lease termination, early termination fees and conditions, and the lease renewal process.
Security Deposit
After the basics, you can start adding clauses for other matters in your rental business, such as security deposits, amenity fees, pet deposits, and more. There are no local laws setting a security deposit limit in Nashville, nor in Tennessee, but you should still set a fair amount.
With residential or commercial properties, landlords typically charge a fee worth the monthly rent for unfurnished rentals, and two months for furnished rentals. This will cover damages beyond wear and tear, excessive cleaning costs, unpaid utility bills, and last month's rent.
When not used, the security deposit amount must be returned 30 days after the tenant has vacated the premises, or seven days after a new tenant moves in. When used, you need to include an itemized list of all the charges you made.
Pet Policies
If your rental property is pet-friendly, pet policies are advised to avoid damage and disruption for other tenants. Set a limit in the lease agreement for how many pets a tenant can have per unit, along with which types and breeds are allowed.
Normally, landlords allow domesticated pets like dogs, cats, and small birds, but restrict certain breeds that may cause distress. Even with these restrictions, pet screening is advised so you can assess the pet's behavior.
You may also charge a pet fee or pet rent per animal, which can cover damages caused by the pets. To make sure the lease complies with the necessary rules, educate yourself on state and local laws that may also apply to animals. For example, service animals override any "no pet" policies in rental properties.
Consequences for Lease Violations
While screening prospective tenants can prevent lease violations, they sometimes still do. Tenants may fail to pay rent, damage the residential property, or violate landlord-tenant laws.
The rental agreement should clearly state what the potential consequences for particular violations are, from financial repercussions, such as deductions from the tenant's security deposit, to eviction.
How Can I Draft a Legally Sound Lease Agreement?
Rental contracts are still governed by law, and both the tenant and the landlord can still face legal issues when either one breaks it. If you create even just one illegal rule, the tenant can immediately file a lawsuit, which can be costly and damage your business's reputation.
If you're unsure which landlord-tenant laws you may be breaking by creating your own lease agreement, it's best to consult a legal professional or a property manager. Remember that you cannot simply change the contents of a signed lease, so a proactive approach is best.
Lease Agreement Drafting FAQs
Can I use lease agreement templates?
- While you can, it's always better to draft your own lease or rental agreement, as it will be tailored to your rental business. You can specify matters like access to amenities, consequences for lease violations, and required fees. At best, you can use a sample lease agreement as a base and add to it to suit your needs.
What to do when a tenant violates the written lease agreement?
- It is one of your many landlord obligations to enforce lease rules, whether it's unpaid rent, ending the lease early, or severe damage to the property. Keep in mind that the written agreement is legally binding, so the landlord may enforce it while backed by the governing laws.
Does the lease agreement only cover the rental unit?
- No. It also covers shared spaces in the rental property, especially if rules are specifically stated in the lease contract, such as use of amenities and pets in common areas.
You Don't Have To Do It Yourself
The beauty of being a rental property owner is that you have the option to still earn from it and not lift a finger. Green Tree Property Management offers services that will not only cover the drafting of lease agreements, but also handling daily operations.
You get to earn passive income and not worry about unintentionally violating any laws. Our team of experts can cover every aspect of property management, such as marketing, leasing, and legal matters.
Be a hands-free landlord now, and contact us!
