How to Draft the Best Lease Agreement for You and Your Tenants

Navigating the world of rental housing can be tricky, and one of the most important aspects to get right is the residential lease agreement. Once you accept a rental application for a prospective tenant, their tenancy is not confirmed until all relevant parties sign the lease agreement. Whether you’re a seasoned landlord or you’re just getting started, a well-crafted lease is key to protecting both you and your tenants — and keeping the landlord-tenant relationship strong and worry-free.

In this article, we’ll break down the essential addenda and clauses that should be included in your lease.

A lease or rental agreement is the legally binding document that covers any items you and your tenant are agreeing on, such as rental amounts, security deposits, rules that must be followed in the rental property, as well as other important details. However, your lease may change year to year (changes called lease addendums). A lease addendum is essentially an addition or amendment to a lease agreement.

In student housing, you might need an addendum to cover special circumstances like shared living spaces or unique rules around subletting during summer breaks.

A strong lease starts with clear and thorough lease terms that lay out the rules and expectations for both parties. Here are some must-have clauses:

This clause should specify the monthly rent amount, the rent due date, any grace periods before late fees are charged, and possible payment methods (e.g., by bank transfer, check, or online portal). It’s also important to list out any charges a tenant may incur should they miss the deadline and make a late payment. For example, if rent is due on the 1st but you have a first-time grace period until 9 AM on the 4th, you’ll want to make sure that is clearly stated in your lease. You’ll also want to make clear how many times late rent will be accepted before eviction proceedings begin.

This section of the rental lease should outline the security deposit amount, how it can be used (for repairs, unpaid rent, etc.), and under what conditions it will be returned. Each state has different laws surrounding how much a landlord can charge in security deposits, and what that deposit can be used for. So, not only should you personally up to date on local and state laws, but you would also benefit from having a lawyer review your lease to save you legal trouble down the line.

This clause spells out who is responsible for maintaining the property. Generally, the property owner or property manager is responsible for major repairs, but the tenant may be responsible for minor maintenance, such as replacing light bulbs or keeping the space clean. You will also want to detail any fees related to  maintenance issues. It may be understood in the lease that you will fix maintenance concerns submitted in writing within a reasonable time frame, but if you are going to charge the residents for maintenance requests, such as lightbulb replacements, then you will want that to be clearly stated in this section of the lease.

To avoid awkward situations, and any legal woes, the standard lease will include a clause about how much notice you must give before entering a resident’s rental unit. Landlords typically need to give 24 to 48 hours’ notice before entering for repairs or inspections unless it's an emergency. Notice before entry is also typically mandated by local or state laws.

In addition to the core clauses, addenda are an important part of customizing your written lease agreement for your unique housing situation. Below are some addenda worth including:

Rental housing often involves shared spaces. A roommate agreement addendum can define each roommate's responsibilities, like who pays which bills, how chores are divided, and how conflicts will be resolved. This is crucial for preventing misunderstandings and disputes during a tenancy. This section should also cover any roommate matching, and what your liability as the landlord is when it comes to pairing residents together.

If pets are allowed, the lease should include specific details regarding pet ownership. This addendum can outline pet deposits and pet fees, weight limits, breed restrictions, and behavioral expectations (e.g., no excessive barking). If you want to limit the types or number of pets, that would be included here. It’s also important that you outline any violation fees, if there is a monthly pet rent, and what landlord vs tenant responsibility is for removing aggressive or abandoned pets.

Utilities can be a common source of tension in shared housing. A utilities addendum clarifies who is responsible for paying which utilities, whether there’s a cap on usage, and how the costs are split among roommates if applicable. You may decide that you will cover the water, trash, and sewage fees for residents, but they will be responsible for gas, electric, and Wi-Fi.

Subletting is the process in which a leaseholder relinquishes their lease to someone else prior to the contract end date. Many students seek to sublet (or sublease) their apartments over the summer or during internships. A subleasing addendum can specify whether this is allowed, under what conditions, and any related fees or processes for finding a subtenant for the residential property.

For properties that provide parking, especially in student housing where parking can be limited, a parking addendum is helpful. It should cover parking assignments, visitor parking rules, and any fees associated with parking. You may also want to include towing policies for unauthorized, illegally parked, or abandoned vehicles.

Housing within an apartment complex, especially student housing, often involves close quarters; it's wise to include a noise policy that outlines quiet hours and expectations around hosting guests during a resident’s occupancy. This addendum helps maintain a comfortable living environment for everyone, and your responsibility as the landlord should noise and guest policies be violated. You can include in your lease that not following these policies can result in lease termination.

Some landlords require that their tenants get a renters insurance policy during their tenancy. This is to ensure that, if significant damage occurs to the tenant’s belongings while they are living in the unit, there is a path forward for recouping some of the money spent on them. It comes in handy during emergencies that cause property damage, though hopefully the tenant will never need to use it.

It’s essential to ensure your lease complies with local laws and regulations. Some areas have specific landlord-tenant laws; for example, some states say you can charge two full payments of rent for a security deposit while others only allow you to charge one or one and a half times rent. Another common requirement dictated by state law is that landlords must include certain disclosures along with their lease, like if the unit has ever been exposed to lead-based paint. Consult with a legal professional to ensure your addenda and clauses are enforceable. Familiarizing yourself with these regulations can help prevent legal issues later.

Before signing, tenants and landlords (or property management companies) should carefully review the lease together to ensure everyone understands the terms. Clear communication can prevent misunderstandings later on. It’s also wise to keep a copy of the lease and any addenda for reference during the rental period. A well-prepared lease, complete with important addenda and detailed clauses, is the foundation of a smooth renting experience. Investing the time to create a comprehensive lease, which may include seeking legal advice before sending the lease to the tenant, can save you headaches later.