How to create a lease agreement
Want easy, stress-free access to a lease agreement? PandaDoc’s lease agreement template is a great place to start.
Whether you’re a landlord or a tenant, a lease agreement is essential.
Done properly, both parties can feel protected. But too often, lease agreements are rushed and poorly thought through.
This can leave one or both parties without the security they need.
This article will look at how to create a lease agreement.
We’ll guide you through the different steps of building one and put your mind at ease.
What is a lease agreement?
A lease agreement establishes a legal agreement between a landlord and a tenant.
The document differs from a rental agreement in that it tackles long-term renters.
Lease agreements apply to both commercial and residential renters.
The contents of an agreement vary depending on the situation and unique requirements of each landlord and tenant. Broadly, a lease agreement will include the following areas.
- The cost of renting.
- A description of the property.
- Any penalties incurred for breaking the agreement.
- The length of the contract.
When a contract ends, a tenant will typically have the option to renew.
Why do you need a lease agreement?
There are many reasons why a lease agreement is essential.
From a landlord’s perspective
Let’s start by looking at it from the perspective of a landlord.
Perhaps most importantly, making a lease is a legal requirement in some areas. Not having documentation in place can land you in hot water.
There are, however, additional reasons why a lease agreement is crucial for landlords. Some downsides of not having an agreement include:
- Loss of rent.
- Expensive bills due to any damage to your property.
- Liability if any Illegal activity takes place on your premises.
From a renter’s perspective
The process of renting a property can be stressful.
Renters will be keen to avoid hidden costs and seek clarity going forward. An effective lease agreement provides some of the following information:
- A clear description of tenant responsibilities.
- Information about whether a renter can have pets.
- Whether a renter requires insurance before moving in.
- The cost of renting and the contract duration.
How to make a lease agreement for a rental property
Are you a landlord unsure how to write up your lease agreement?
The best place to start is with a template for lease agreements.
For instance, a rental property lease agreement template can ensure that key clauses are included in your document.
However you make your agreement, ensure you factor in the steps listed below. Here’s how to create a lease agreement.
Step 1. Planning your agreement
There is a lot of information to include when making a lease agreement.
Without thorough planning, you may end up missing key elements.
Start with a basic outline of what you want to have in your agreement. A lease agreement form should include some of the following sections:
- Parties involved.
- The property.
- Commitments of the renter.
- Commitments of the landlord.
- Lease duration and termination.
- Property utilities.
Step 2. Add clauses
With a clear outline, it’s time to break sections down into clauses.
Remember, each clause should be highly comprehensive.
Above all, clauses should be legally correct and enforceable. It’s essential to involve a professional at this stage to ensure the document is legally correct.
Step 3. Consider local laws
Ensuring that your clauses are legally enforceable is extremely important.
But it’s equally necessary to consider local legislation.
You might find that a particular clause in your agreement is illegal.
To avoid this, it’s important to ensure that a document is watertight from the early stages.
Again, it’s helpful to seek external assistance. Local legislation is notoriously tricky, and laws can vary from state to state.
Step 4. Add the finishing touches
It’s time to double-check every aspect of your document.
Have you missed any essential provisions? Once you’re satisfied with a document, you can add formatting aspects.
This includes a section for signatures and titles. Make sure that both you and your tenant know how to sign a lease online.
What should always be included in a lease agreement for a rental property?
You can fine-tune an agreement to your needs.
There are, however, certain pieces of information that always need to be included. These are:
- Information about the property – Who will be staying at the property?
- The cost of rent – How much does a tenant need to pay to rent, and how often is rent required?
- The duration of the agreement – How long will the lease agreement be in effect?
- The rights and obligations of the tenant – What can a tenant do or not do? What is expected of the tenant in terms of upkeep?
- The rights and obligations of the landlord – What are the landlord’s requirements? For example, do they have to pay for and manage certain repairs?
- Delayed rent – What is the procedure if rent isn’t paid on time?
Remember, a simple lease agreement template makes this process much easier.
For example, a residential rental agreement template ensures no key elements are overlooked.
Create your lease agreement with PandaDoc’s lease agreement template
Creating a lease agreement can take time.
And, as we’ve discussed, there are many important clauses. If you miss any aspects of your lease agreement, you might not get the protection you need.
Why not simplify the process by using PandaDoc’s templates for lease agreements?
The template ensures that key clauses are included.
This gives you the peace of mind of knowing that you haven’t missed any essential ingredients from your document.
Templates are also customizable, giving you the freedom to add the information you need.
Why not take a look and see how the residential lease agreement template can help you?