Standard Residential Lease Agreement
A residential lease is a fixed-term rental contract that allows a tenant to occupy a property in exchange for monthly rent. In a standard lease, the landlord and tenant come to an agreement for a given rental period, commonly 1-year, and outlines the responsibilities of each party.
Residential Lease Agreements: By State
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
Table of Contents
- Residential Lease Agreements: By State
- How to Rent a Home
- When Does a Residential Lease Become Effective?
- Difference Between a Standard and Month-to-Month Lease
- How to Get Out (Cancel) a Standard Lease
- What is a Lease-to-Own Agreement?
How to Rent a Home
Renting a home, as the landlord or tenant, is a process that times time, money, and strategic thinking skills in regards to the negotiation. In the last 10-15 years, the entire leasing process has moved online. The days of newspaper ads and or paper publications are over and replaced with interactive images and videos where a tenant can view the entire space without leaving their office. Below is a guide to property rent a home in today’s current market.
Step 1 – Preparing the Property
The landlord will need to get their home looking as clean and modern as possible in order to take photos and show the property to potential renters. This will involve taking an inventory of all appliances, scanning for scoffs or marks on the walls, and preparing and carpet or floor cleanings. It’s important that any remaining items from the previous tenant are removed to have the property in a polished condition.
Step 2 – Deciding the Asking Rent ($)
The landlord will need to visit online listing websites and view similar properties renting in their area. The landlord will want to focus on the number of bedrooms, bathrooms, and amenities others are offering in comparison to their property. This is the best idea to be made aware of the market conditions and what to offer as the monthly rent.
To get an estimate of the market rent in your area try one (1) the following websites:
Step 3 – Placing the Property Online
Once the asking monthly rent has been decided it’s best to take as clean photos as possible in order to post the property for rent online. The top rental websites in the USA are as follows:
Long-Term Rentals (1-year or longer)
*Avail.co allows landlords to post their property once to all these sites.
Short-Term Rentals (less than 1-year)
Step 4 – Setting Up Showings with Potential Tenants
Immediately after the property has been submitted online tenants will begin requesting to view the property. The landlord will want to either hire a real estate agent or clear their schedule as individuals will begin asking to view the premises, especially after hours and on the weekend.
It may be a good idea to bring a rental application or materials to obtain the potential tenant’s information in case they have an interest in starting the tenant screening process.
Step 5 – Screening the Tenant
Upon the tenant showing interest in the property, the landlord should obtain their information and start the credit and criminal background process.
The top tenant screening software is as follows: (cheapest to most expensive)
- Background Check: $18.95
- Credit Check: $9.95
- Background Check: $19.95
- Credit Check: $10
- Basic Search: $19.99
- Credit Check: $10
- TransUnion | Smartmove
- Background Check: $25
- Credit Check: $15
- Background Check: $25
- Credit Check: $20
The landlord will generally be seeking to have the tenant spend no more than 30% to 35% of their monthly income on rent.
If the tenant is not approved on a financial basis but has a clean criminal record, the landlord may offer that the tenant is able to rent the property if they are able to get a co-signer to also guarantee the lease.
Step 6 – Negotiating the Lease
After the tenant has been approved, it’s time to negotiate the terms of the lease. Often times, the landlord will wait to finalize the terms of the lease upon viewing the tenant’s credit report, background check, and their eviction history. If the tenant, for example, has had a long-term job and makes a high salary the landlord may ease on how much rent they will pay in return for having a stable tenant.
On the other hand, if the landlord finds the tenant can barely qualify for the residence a larger security deposit and pre-paid rent to be required.
Step 7 – Writing the Lease
When writing the lease, the items that mean most to the tenant will be the monthly rent, utilities, and any additional fees for parking or other amenities. Most of the terms are dependent on market conditions and whether it’s a tenant’s or landlord’s market.
In regards to the security deposit, the landlord may not charge more than the maximum allowed in the State.
After the lease is written the landlord and tenant may sign the agreement. Upon signature by both parties and acceptance has been provided, the agreement becomes a legally binding document. Due to the Electronic Signatures Act (15 U.S. Code Chapter 96), the parties may agree to sign online using an electronic signature via DocuSign, HelloSign, EverSign, or another platform.
Step 8 – Tenant Moves In
After the parties sign and the tenant pays all required deposits and fees, the tenant will be given access to the property and all common areas in time for the lease start date. If the property is available, the tenant will have the option to move-in prior to the lease start date but pay a pro-rated amount in accordance with the number (#) of days early. For example, if the tenant decides to move-in 10 days early and the rent is $1,000 per month. The tenant would be responsible for paying 1/3 the rent amount ($333.33) if they want access to the premises.
During the lease term, the landlord and tenant will both be required to comply with the terms of the agreement or face default and eviction.
When Does a Residential Lease Become Effective?
A standard lease becomes effective after it has been signed and accepted by both landlord and tenant. At the time of signing, the tenant may be required to hand-over payment for the security deposit, first (1st) month’s rent, and any proration costs. The landlord will be responsible for giving the tenant access to the premises at the lease start date.
Difference between a Standard and Month-to-Month Lease
The major difference is a standard lease is for a fixed period while a month-to-month agreement renews automatically every month with the option of either party to cancel at any time. Although, there are some other reasons for choosing one (1) type of agreement over another.
Standard Lease Agreement
- Fixed period with a specific start and end date.
- Rent cannot be increased or decreased during the leasing period.
- Cannot be canceled unless both parties give consent.
- For long-term tenants.
Month-to-Month Rental Agreement
- Flexible period with only a start date (no end date).
- Rent can be increased or decreased during the leasing period.
- Can be canceled by either party with sufficient notice.
- For short-term tenants.
How to Get Out (Cancel) a Fixed Lease
In order to terminate a fixed lease written consent is required from both landlord and tenant. Upon the tenant signing the agreement, they signed a full faith obligation to remain on the property and pay rent until the end of the term. Ending early would be a violation and the landlord could pursue the tenant for the owed amount if not paid. Therefore, the recommended way to cancel a lease is to plead financial or other hardship. For example, if a tenant informs the landlord that they lost their job and have to way to pay rent, the landlord may be inclined to cancel the lease and avoid a lengthy eviction process.
What is a Lease-to-Own Agreement?
A lease-to-own agreement is just like a standard lease except there is the addition of a clause that allows the tenant to purchase the home on agreed-upon pre-conditions.
- For Example – The landlord signs a standard lease with a clause stating the tenant has the option to buy the property for a specific price at any time during the lease term. This would be considered a lease-to-own agreement.