Rental Lease Agreement


What is a Rental Lease Agreement and How is It Used?

  • A Rental Lease Agreement is also known as:

    • Residential Lease Agreement

    • Rental Agreement

    • Rental Contract

    • Lease Contract

What is a Rental Lease Agreement?

A Rental Lease Agreement is a legally binding contract for a rental property that spells out the rights and responsibilities of both Landlord and Tenant. A Landlord is the person or company that owns or manages the rental property, the legal term for which is “Lessor.” A Tennant is the person who is renting the property, the legal term for which is “Lessee.”

A Residential Lease Agreement is used for properties where people live, in contrast to a Commercial Lease which is used for business properties.

  • A Residential Lease Agreement applies specifically to living spaces and arrangements, including:

    • House, Apartment, Condo

    • Townhouse, Duplex

    • Mobile Home, Trailer

    • Room, Basement, Attic

    • Guest House, In-Law Suite

    • Vacation Rental

Why should you use a Rental Lease Agreement?

Unlike a verbal agreement which may be misunderstood or difficult to recall, and even more difficult to enforce, a written Rental Lease Agreement is a legal Rental Contract that clearly specifies the rules and conditions for the rental, whereby both parties agree and are accountable, and the terms can be upheld in a court of law.

A Residential Lease Agreement is usually prepared by the Landlord, but can also be prepared by a Tenant. Both parties sign the Rental Lease Agreement, and each should keep a copy of the signed Rental Contract for their personal records.

What is included in a Rental Lease Agreement?

  • A simple Residential Lease Agreement includes at least the following information:

    • Names and contact info of Landlord and Tenant

    • Address and type of property being rented

    • Whether the property furnished or unfurnished

    • Start and end dates of the lease

    • Does Tenant have option to renew lease or to purchase property (rent-to-own)

    • Amount of rent and when it is due

    • Any fees charged if rent is late or for missing a rent payment

    • If the rent can be increased

    • Deposits paid (security/damage deposit, pet deposit, etc.)

  • A Residential Lease Agreement may also include other information about the following:
    Utilities and Upkeep

    • Who will pay for electric, water, gas, garbage, cable TV/Wi-Fi, lawn care, etc.

    • Who is responsible for maintenance and repairs to the property

  • Policies and Permissions

    • Alterations to the property such as hanging pictures, painting walls, gardening, outdoor décor, etc.

    • Pet policies

    • Occupancy restrictions

    • Rules for use of common areas: pool, clubhouse, fitness center, etc.

    • Storage areas

    • Guest policies

    • Parking instructions

    • Noise policy

    • Is subletting allowed

    • Any fines related to breaking policies/rules

  • Access

    • Number of keys given to Tenant and fees for lost/additional keys

    • Landlord’s right to entry with advance notice

Finalizing the Rental Lease Agreement

PRINT— print 2 copies of the Rental Agreement.

SIGN— both parties sign both copies of the Rental Agreement

SAVE— give a signed copy of the Rental Contract to the Landlord and a signed copy to the Tenant for their records

You may also create a PDF file of the Rental Contract to e-mail for electronic signature. Be sure to save and send the signed version of the Rental Contract.

Questions related to a Residential Lease Agreement

What is a security deposit?

It is common for a Rental Agreement to include a security deposit (also known as a damage deposit), which is money paid by the tenant to the landlord to ensure/secure that the Tenant will meet the responsibilities and conditions of the Rental Agreement, such as pay rent on time and not damage the property. Deposits are usually paid at lease-signing, but a Landlord may allow the Tenant to make payment installments toward the security deposit amount—all of which should be stipulated in the Rental Agreement. When the lease is over, the Landlord has the right to deduct monies from the security deposit if the Tenant owes for unpaid rent or damages beyond normal wear and tear. The Landlord then returns the balance of the deposit to the Tenant.

How much can a Landlord charge for a security deposit?

The amount can vary depending on where the property is located. Generally. the security deposit amount can be from 1 to 2 months’ rent. In some jurisdictions, there may be a limit on the amount that can be charged for a security deposit. In some cases, there may be additional deposits required, such as a pet deposit. It’s important that the Lease Contract clearly specifies the amounts and terms of all deposits.

What does the term “First/Last/Security” mean In a Lease Contract?

This term is often used for the total amount of move-in money required. It refers to the amounts of the first month’s rent, the last month’s rent and an amount for a security deposit.

What happens when the Lease Contract ends?

At the end of the Rental Contract, unless stated and signed otherwise, the Tenant may continue to rent the property, but both Landlord and Tenant are exposed. An expired lease has no legal standing and cannot be enforced. Depending on jurisdiction, when a 1-year Rental Contract expires, it automatically becomes a month-to-month lease or similarly, it may become an “at-will” arrangement in which the rental relationship lasts only as long as both parties want it to.

What is an Option to Purchase in a Residential Lease Agreement?

An option to purchase arrangement (also known as rent-to-own), may be considered when the Landlord wants to sell the property yet the Tenant cannot qualify for a mortgage loan. For example, the Tenant is unable to come up with a large down payment and/or has a low credit score. An option to purchase gives a Tenant a way to purchase the rental property. Typically, the Tenant pays an option fee at the beginning of the lease for the exclusive right to purchase the property for a set price within a certain period of time. The option fee is non-refundable. If the Tenant purchases the property, the option fee paid is used towards the purchase price of the property. If the Tenant does not purchase the property, the Landlord can keep the option fee.

What if a Tenant wants to end the Lease Contract early?

If, during the course of the Lease Contract, the Tenant terminates the lease early, the Tenant is still responsible for the total amount of rent due through the end-date of the Lease Contract. If allowed by the Rental Lease Agreement, a Tenant may be able to sub-lease the rental to another person(s) who will pay the rent or a portion thereof, directly to the Tenant, who then continues to make rent payments to the Landlord in accordance with the Rental Lease Agreement. If the property can be re-rented to someone else before the end of the lease, it is possible the former Tenant will not have to continue making rent payments, because a Landlord cannot collect double rent for a single property.