It is particularly important not to just rely on a handshake when it comes to leasing agreements, it is all about documentation! A leasing agreement specifies the terms and conditions that must be strictly adhered to by both Landlord and Tenant.
Key Elements of a Leasing Agreement
In the agreement, you’ll want to address the following 10 items:
1) Names of all residents and occupants.
Every adult (person over 18 years old) who lives in the rental—including both members of a married or unmarried couple—should be named as residents and sign the leasing or rental agreement. Each resident is legally responsible for paying the full amount of rent and following all other terms of the leasing or rental agreement. This means that if one resident skips out and fails to pay rent, you can legally seek the entire rent from any of the residents. In addition, if a resident sublets the unit without your permission, you have the right to initiate eviction procedures.
2) Contact information.
Request that residents contact you in writing via email. Although texts and instant messaging might work for some discussions, you want to be able to keep a reliable and printable record of all communications with your residents.
3) Description of rental.
Include the complete address of the property (including building and unit number, if applicable). You’ll also want to note any specific storage areas or parking spots that are included.
4) Term of the tenancy.
Rental agreements create short-term (usually month-to-month) tenancies that renew automatically until the landlord or residents terminate. Leases, on the other hand, create tenancies that terminate after a specific term (usually a year). Whichever you use, be specific: note the start date, the tenancy length, and the expiration date.
Don’t just write in the amount of rent—spell out when (typically, the first of the month) and how it is to be paid, such as by mail to your office, e-transfer, etc. To avoid confusion, spell out details such as:
- Acceptable payment methods (for example, personal cheque only)
- Whether you charge a late rent fee, the amount of the fee, and the grace period (if any)
- NSF charges
6) Repairs and maintenance.
Your best defense against rent-withholding hassles and battles over security deposits is to clearly explain your repair and maintenance policies, including, but not limited to:
The residents’ responsibility to maintain clean and sanitary premises and to pay for any damage they cause (excluding normal wear and tear).
A requirement that the residents alert you to defective or dangerous conditions, with specific details on your procedures for handling complaints and repair requests.
Restrictions on resident repairs and alterations (for example, prohibit any painting of the unit unless you approve it in writing).
7) Entry to rental property.
To avoid resident claims of illegal entry or violation of privacy rights, your leasing or rental agreement should clarify your right to access the rental. It’s acceptable to have different policies for different situations. For example, you might provide 24 hours’ notice before you enter to make repairs or show the unit to potential renters, but you might not be able to provide advanced notice in an emergency.
8) Deposits and fees.
Deposits are non-negotiable. Other fees might include parking or utilities.
9) Your rules and important policies.
If a rule or regulation is so important to you that you would want to remove a resident who violated it, be sure to include it. Other not-so-vital rules can be written in a separate rules and regulations document or addendum to have them sign and acknowledge at lease signing.
10) Other restrictions.
Federal, provincial, and/or local laws might require you to disclose certain information in your leasing or rental agreement. For example, you might have to inform residents about lead-based paint or the unit’s bed bug history. You’ll also want to make sure your leasing or rental agreement doesn’t violate any rent control laws, anti-discrimination laws, or health and safety codes.
In conclusion, writing leasing agreements is vital to be successful as an investor and to make sure you are protecting your asset. At ACCL Property Management, we are well equipped to manage this task for you to ultimately mitigate potential issues that can arise—making your investing life a lot more stress-free!