What is a Lease Agreement? Everything Renters Should Know
You're finally ready to dive into independence and score your first apartment. You may be wondering, "What is a lease agreement?"
First-time renters often feel overwhelmed by this crucial document. However, it’s simple to navigate once you know what to look for. It's also the first step in moving into your first apartment. Here's everything you need to know about lease agreements.
What is a Lease Agreement?
A lease agreement is a contract between the renter and the landlord. It clarifies responsibilities and terms over a set time period.
If you have a roommate, they should also be on the lease. Although some landlords are more casual than others, a handshake and a promise is not a lease. Both tenants and landlords should protect themselves with a legally binding lease that obligates each party to set terms.
Before you dig into the details of your contract, you should know which parties are involved:
- Leasee: The renter or tenant on a property. Leasees would include all roommates living in the apartment.
- Lessors: Landlord or property owners who are renting out an apartment.
What is the Purpose of a Lease Agreement?
A legally binding lease protects both the landlords and tenants by establishing the responsibilities and expectations of each party. Some examples of terms for landlords might include:
- Providing safe living conditions
- Pest control
- Major repairs
The lessor, or the tenant, is also agreeing to terms that usually include:
- Payment dates
- Penalties for breaking the lease
- Responsibility for specific damage to the apartment
You should have a clear idea of what is expected of you as a renter when you sign your lease. First-time renters should feel empowered to ask questions and clarify all information before signing.
Whether you're a first-time renter or have lived in several apartment complexes, it's also crucial to really study the lease. Pay close attention to the lease terms before signing. Anything in the contract can be used in legal settings or when resolving disputes.
What's the Difference Between a Lease Agreement and Rental Agreement?
Leases and rental agreements may sound the same. However, while their contents are similar, the key difference lies in the length of the agreement.
Leases are a long-term contractually binding agreement. They’re typically six months or 12 months.
They're usually beneficial for both parties. That’s because the renter can't just up and move without paying a penalty. That way, the landlord can recoup the costs.
When you sign a lease, a landlord also can't decide to suddenly raise your rent or decide you can't have a pet after all.
If you're looking for a month-to-month lease or living arrangement, you’ll likely sign a rental agreement. A standard rental agreement can also be changed on a monthly basis as the landlord sees fit.
It offers more flexibility and gives renters the chance to move at the end of the month. It also gives landlords the chance to raise the rent or decide a dog isn't a good idea after all.
Unlike a lease, a rental agreement usually renews automatically at the end of a 30-day period. To move out or change the terms, either the renter or landlord is required to give notice within an agreed-upon time. That period is typically outlined in the rental agreement, like 30 days' notice.
What's a Co-signer on a Lease Agreement?
You’ve probably come across information about co-signers when researching “what is a lease agreement.” A co-signer signs the lease with you but probably doesn't live with you. For example, a parent or relative would co-sign your lease and vouch that they’ll cover your rent payments if you're unable to.
Some cities like New York City and Boston are too expensive for people still growing their careers to satisfy a landlord's income requirements. Whether your income is low or you have poor credit, landlords may require a co-signer to satisfy the financial terms of the lease.
Can You Have a Verbal Lease Agreement?
Most lease agreements are written, legally binding documents, however, some verbal leases can be enforced as oral contracts. Although tenants are still protected by tenants-rights laws with a verbal lease, not all states uphold oral contracts.
It can be tempting to skip all of the paperwork and just go straight to a verbal contract. However, lease agreements are complex and outline many rules and stipulations about renting an apartment. As a general rule, you should not rely on a verbal lease agreement, even if they are allowed in your state. It's always safer and avoids confusion and potential lease violations if everything is put into a binding, written document from the start.
Things to Look for in Your Lease Agreement
Leases are relatively standard from property to property. However, there are some key things to look out for.
1. Lease Length and Monthly Rent
The lease length and monthly rent are the most critical pieces of information in the lease. It’ll likely be at the very top of the document.
Look for terms that include any penalties for paying rent late or breaking your lease. If you think you may need to suddenly move due to a pending job offer, a month-to-month rental agreement may be a better choice.
2. Security Deposit Details
Your security deposit amount will be defined in the lease, as well as information on how to get your security deposit back. For example, you may have to put a request in writing or agree to an in-person walkthrough with the landlord before your security deposit is returned.
It's also essential to find out when the landlord will return your security deposit. Some leases will state a duration like 15 or 30 days before a security deposit is returned.
There may also be circumstances of when your security deposit will be withheld. That could be due to negligent tenant damage from pets, parties, or other factors.
3. Pet Policy
Animal lovers already know that finding a pet-friendly apartment is hard. Although your new apartment may allow pets, you should still familiarize yourself with the policies, such as breed restrictions, and additional costs renting with your furry friend will cost you.
Look for details on pet deposits, pet rent, and pet fees. There may also be terms in your lease about pet damage and security deposits. You'll likely compromise most, if not all, of your deposit if your pet creates damage due to digging, chewing, or urine.
4. Utility Costs
Your apartment lease should also outline which apartment utilities you are responsible for, and which utilities the property owner will cover. It's common for large apartment communities to include services like trash and water.
Tenants usually pay for electricity, heat, and extras like Wi-Fi. It's also wise to see if there are any terms regarding water limits. Excessive water use could result in higher bills.
If entertaining and throwing weekly dinner parties is essential to you, you should look for details regarding quiet hours and terms regarding noise complaints. These terms are also gold for anyone who values peace and quiet and wants to know how to deal with potentially noisy neighbors.
Lease agreements never rank high on the list of things you're dying to do when moving into your new apartment, like picking out furnishings and getting to know your neighbors. But they're hugely important and can make or break your experience. Take your time studying your lease to set yourself up for a smooth transition.