We all hate paperwork, and legal mumbo jumbo so consider this your micro-dose of essential need to know info about lease agreements.
It’s what you need to know so you can understand what a lease agreement should include, what your obligations are and what the tenant’s obligations are.
If you have a good property manager, they can take care of the fine print provided you give them the broad strokes to follow.
What Is A Lease Agreement?
I’m not doubting you don’t know this, but in the interest of being thorough let’s tick this box.
A lease agreement is a formal written agreement made between you and your tenant, spelling out the conditions and terms of the property lease.
Once signed it is legally binding for both parties and should provide a confident foundation for the future relationship.
What Should a Lease Agreement Cover?
It goes without saying that the lease agreement should include certain things like the address of the property, the contact details of the landlords and their agent, the contact details of the tenants, the start and end date of the lease term, the bond amount, the weekly rental fee and payment schedule and accepted methods. But a lease agreement is much more than that.
There are many clauses which are usually included as standard in many lease agreements. Each state or territory body has specific compliant, ease agreement templates available for public use. These usually include clauses such as the following;
Inspection Frequency and Notice Requirements
As a landlord, you have a right to inspect the property, but your tenant also has a right to privacy while occupying the premises. Your lease agreement should spell out how often inspections will be conducted, and how tenants will be given notice.
Ideally, you should be able to inspect the property 2 – 3 months after the tenants move in, and then quarterly afterwards. It’s highly advised to not let more than 6 months lapse between inspections.
Clause Regarding Pets
In some state’s landlords are no longer allowed to deny reasonable requests by tenants to have pets, however, this doesn’t mean they can’t place conditions around pets on the premises.
It is customary for tenants to be expected to cover the cost of any damage caused by a pet. The lease agreement should make it clear that tenants are responsible for any repairs or replacements necessary due to damage caused by pets – otherwise, their bond will be deducted.
Many landlords will also choose to include a clause stating that carpets must be dry cleaned once every few months.
Clause Regarding Subleasing or Extended Stay Visitors
To protect yourself against sub-leasing or crowding you should make sure that your lease agreement specifies that only those people listed and named on the lease can live on-premises.
There should be a limit to the amount of time which family, friends, and guests can stay (usually 2 weeks is plenty).
This is important because the more people living on the premises, the higher your wear and tear will be.
Additional Maintenance Conditions
If the property has any special features such as a swimming pool or gardens which need watering and maintenance, the upkeep of these needs to be writing into the lease.
Upon starting a lease, the law requires tenants and landlords to complete an Inspection Sheet or Condition Report. A tenancy agreement is still valid when the sheet is yet to be completed. Both parties should complete this sheet at the beginning and end of the tenancy.
The inspection sheets outline the current state of repairs and condition of the rental property before the tenant moves in. This sheet serves as evidence in a court to determine who is liable for any damage to the rented property. With this report, it will be determined if the landlord should be compensated for any damage.
Breaking the Lease and Notice Periods
The lease agreement should also spell out what the required notice period is in case the landlord wants to terminate the lease. Should the tenant want to terminate the lease early, they are also required to provide the landlord or agent with a minimum notice period. A common notice period is between 4 – 6 weeks in each instance.
A tenant may wish to move out immediately after providing notice. If this is the case, they should still be required to pay the rent equivalent to the balance of the notice period.
Who Initiates the Lease Agreement?
It is the landlord’s responsibility to draft the lease agreement and pay any fees related to this.
A property management agency will usually provide you with the standard lease agreement for you to use.
If you have any special amendments or changes you would like to make, you may need to cover the costs of having the agreement edited by a lawyer.