What Should be Included in a Residential Lease: The Basics
When leasing a residential property it is important to ensure that both you and the tenant know exactly what is expected from you and what to expect from the other party.
While some oral leases can be legally binding, a diligent landlord will stick to the more traditional written format. This not only helps to protect both parties, but also makes it much easier to recall what exactly was agreed upon later down the road when questions may arise.
But what items should be addressed in the lease? Some of the most basic items to include are:
The Commencement and Expiration Dates:
One of the most important items to include in a written lease is the commencement and expiration date. This allows both parties to prepare themselves and the property for the move in date while also preventing either party from ending the occupancy earlier than expected. If either party attempts to end the occupancy prior to the expiration date stated in the lease that party could be held responsible for the damage caused to the other party (depending on the other lease terms).
The Rental Rate & Due Date:
Another major point to ensure is included is the expected rental rate and due date. This sets financial expectations for both landlord and tenant and allows each party to budget accordingly.
When determining the desired due date keep in mind that, to say compliant with the Texas Property Code, you can not start charging late fees until the rent has remained unpaid for two full days after the original due date.
Even though the expectation on timely payment will be set by providing a due date it is best to include details on what will happen if that due date is not met.
Providing late fees amounts ahead of time can be an excellent deterrent for late payments. If the tenant knows that they will incur extra cost by paying late they will be more likely to ensure that the payment is received on time.
Keep in mind that, if you fail to put late charges in the lease, you will not be able to charge them to the tenant if they fail to pay timely.
In addition to the rental rate and late fees, another fee that should be included in the residential lease is the security deposit. A security deposit helps protect the landlord from incurring the cost of tenant caused damage and helps deter the tenant, who hopes to receive all of the deposit back at the end of their occupancy, from causing any damage above and beyond normal wear and tear.
While these basic terms should be included in every lease there is much more to be considered when signing a lease with a tenant.
One (out of many) reason to hire a professional property management company is that each company will have a lease that has been typed by a legal professional. Frontline Property Management, Inc., for example, uses the Texas Association of Realtors (TAR) Residential Lease, which is only available to Realtors and is written by TAR lawyers.