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The Anatomy of a Real Estate Lease Agreement

Client signing a real estate

A real estate lease agreement is a very important tool for tenants and landlords. It sets out the rights and responsibilities of both parties, as well as the rules that must be followed for the duration of the lease.

Clear and concise lease agreements can greatly help minimize friction between tenants and landlords, so make sure one is in place before signing on the dotted line. While lease agreements vary from case to case, there are certain elements that must be present in all, including the following:

  1. The names of the landlord and all adult tenants

    The lease agreement must specify the names of the parties entering into the contract. These include the landlord or their representative, and all tenants 18 years and above. This makes every adult tenant legally accountable to the terms of the lease, including the payment, the duration, and the use of the property. If one of the tenants is unable to pay or violates a condition on the lease, the others can be held liable for the infraction.

  2. The term of the lease

    The contract must include the duration of the lease, stating the exact month, day, and year of the start and the end of the lease. The length of the lease can vary from contract to contract. Some leases may last only months, while others, years. At the end of the lease term, the tenant should vacate the property unless a renewal of the lease or a new agreement has been signed.

  3. The amount and due date of the rent

    The agreement must also specify how much rent the tenant should pay for the duration of the lease, broken down into monthly payments. The due date for each month must also be included, along with how the payment should be made and the acceptable payment methods. If there are penalties for late payments or bouncing checks, they must be included in the agreement as well.

  4. Security deposits

    Most leases include one or more security deposits that will be used to pay for possible repairs or non-payment of rent at the end of the lease. The use of security deposits and the return of any unused portion are often a cause of contention between tenants and landlords, so they have to be clearly spelled out in the agreement. Security deposits are also covered by strict state laws. Note that non-refundable deposits are not allowed in California.

    Among other details, the lease agreement must include the following:

    • The amount of the security deposit/s
    • How the deposit may and may not be used
    • How and when unused deposits will be returned to the tenant
  5. Access to the property

    The agreement must include a clause affirming the tenant’s rights of possession of the leased property. The tenant can live as they please in the property without interference from the landlord, as long as they don’t violate any agreed-upon rule. The tenant also has the right to privacy, which means the landlord cannot enter or access the property without the tenant’s permission. The agreement must specify the legal grounds on which the landlord can access the tenant’s property, and how much advance notice the landlord should give before entering the property.

If you need help in finding the right rental or in managing tenants in your rental property, Ray Amouzandeh is the San Francisco leasing agent to call. Get in touch with him at 415.494.7009 or email SFHomez(at)gmail(dotted)com.