Preparing to Write a Lease 

Before you write and enter a formal lease agreement with an incoming tenant, it’s important to make firm decisions about the policies you will establish for your tenancies and rental property. These policies form the basis of every lease agreement. If you are a property owner getting started with your rental business, this article and our free lease worksheet will help you determine the kind of parameters and decisions you should implement before drafting your lease agreement.  

The Benefits of a Lease Agreement 

Before you undergo the very important task of laying the groundwork for and deciding what to include in a lease agreement, let’s talk about why creating one is beneficial both for you and your tenants.  

Cover All of Your Bases 

Much of the content of a lease agreement concerns the foundational operations of your residential property. Finalizing some of the essential elements in our lease worksheet will help you ensure you’ve thought of everything. These elements include policies like the distribution of utility costs, your late rent procedures, monthly rent charges, and many others. Understanding these lease terms is crucial to ensure clarity in the lease agreement, whether you own a residential or commercial property. 

Rental businesses cultivate very worthwhile investments, and this worksheet is one way to ensure that you’ve done the necessary preparatory work to make the most of those investments. If you haven’t established the basics, you are likely to encounter problems or disputes down the line that will interrupt the smooth sailing of your property management.   

Attract the Right Tenants 

Deciding what will go into a lease agreement is also a way to filter through tenants that may refuse to meet your terms. Being clear and explicit about your parameters and how your business will operate in your rental agreements makes certain that tenants who would infringe upon them are less likely to want to sign on in the first place.  

For instance, if you don’t want pets living in your rental properties, you have the power to make this decision and outline it in the lease agreement. Likewise, if you don’t want month-to-month tenants, you should state that up front and avoid tenants looking for those arrangements. In a way, you have a chance to conduct a certain level of tenant screening by making sure that anyone who signs your lease agreement is prepared to follow the terms that you’ve decided on. Tenants who align with your goals and meet your expectations regarding your rental properties are a huge factor in the perpetual success of your rental business.  

Protect Yourself Legally 

As we previously mentioned, preparatory work determines how effectively your business avoids problems down the line, including legal ones. Having a lease agreement means that the rights and responsibilities of both landlord and tenant are not only clearly defined, but also backed with legal protection. When you have a valid lease agreement reflecting your desired terms that is signed by both parties, you have the leverage to bring explicit violations forward against a tenant through the appropriate legal systems. If a tenant violates the lease agreement, the first step towards legal actions like eviction or small claims is producing the legally binding agreement that establishes the validity of that violation. 

Important Disclaimers 

It is important to note that certain parameters that may seem as though they are under your discretion, such as how many days you might allow for a grace period, are partially determined by law in certain states. Some state laws require a minimum grace period, while others do not. The same can be said for whether certain states may enforce rent control or different disclosures on lease agreements. It is of the upmost importance to stay up to date with federal, state, and even local laws and their potential implications for your lease agreements.  

In that same vein, it is important to keep in mind that both laws and markets can change over time. Once you have done the preparation necessary to write a thorough lease agreement, your work of keeping track of laws and markets should not be over. You should maintain both the awareness and the willingness to update your lease agreement templates accordingly. While preparation can ensure that your tenancies start off on the right foot, vigilance and intention keep it lucrative and successful over a much longer period of time.  

Conclusion 

Learning how to write a lease agreement is key to not only an effective relationship with your tenants but also for setting the standards that will define the type of rental business you want to run. We hope that you take advantage of this free resource to ensure that you have everything in order for your residential lease agreement and are ready to start your journey as a successful landlord.