Residential lease agreement

What is a residential lease agreement?

The term “residential lease agreement” refers to the legally binding contract made between a landlord and his tenant and contains all the terms for renting a house or apartment as a residence. This document is also known as an apartment rental agreement or a landlord-tenant lease. Normally it is signed at the start of a rental term and remains in effect until the end date indicated in the agreement.

Residential lease agreements set forth in writing the most important terms between a tenant and landlord in order to avoid misinterpretation or confusion with regard to who has access to the property and the conditions of access.

Deeper definition

The agreement needs to cover all aspects of the lease and should clearly state what is expected of each party and the possible consequences for failing to adhere to the conditions set forth. Among the most important items within a residential lease agreement are the following:

  • Description of the property: The lease agreement should contain the physical location of the property as well as any non-fixed related assets such as refrigerators, microwaves, dryers, water filtration systems, dishwashers and ovens. In this way, the landlord is protected when the tenant moves out and the landlord is required to maintain the property and such items in working order during the lease term.
  • Names of the tenant(s): A rental lease agreement must include names and signatures of every adult who lives at the property and needs to be constantly updated as required. This will ensure that each tenant takes responsibility for the terms contained in the lease. It also allows the landlord to claim full rent, regardless of roommate turnover.
  • Duration of the lease: The lease duration could be month-to-month, annual or some other length of time.
  • Lease renewal: A month-to-month lease will typically self-renew until one of the parties, tenant, or landlord gives notice of non-renewal. In the case of longer rental lease agreements, the terms usually switch to a month-to-month arrangement once the initial term expires. In either case, the document outlines the procedure for non-renewal of the lease, as well as how much notice must be given.
  • Security deposit and fees: All monies that the tenant needs to pay to the landlord, as well as other costs, have to be noted in the agreement.

Example of residential lease agreement

The residential lease agreement is a document that offers protection to both the landlord and tenant in case of disputes. For instance, the agreement outlines whose responsibility it is to handle expensive home repairs that inevitably arise during the course of a long lease. It provides grounds for either party to claim compensation via legal means if one party had to carry out repairs that were the responsibility of the other. In addition, the residential lease agreement provides security to the innocent party in the case of disputes between a landlord and tenant.

If a tenant and landlord have only a verbal agreement, it is nearly impossible for the wronged party to receive redress in court because it is difficult to prove any terms that have not been set forth in writing. If a lease agreement is in place, most landlords require a security deposit, as well as the first and last month’s rent. This is much cheaper than the down payment needed when taking out a mortgage loan.

Residential rental agreements are often governed by state laws. For this reason, some of the appropriate and enforceable terms included in these documents vary from one state to the next. It is wise to consult an attorney with regard to residential lease agreements, whether you are a landlord or a tenant.

Use Bankrate’s calculator to figure out how much house you can afford to buy.

Other Smart Money Terms

Estate plan

An estate plan is a financial planning tool. Find out more at Bankrate.com.

Primary care network

Primary care network is an important term to know. Bankrate explains it.

Floor models

Floor models can help consumers make product choices. Find out more.

Soft inquiry

A soft inquiry, or soft pull, is a preliminary credit inquiry. Bankrate explains it.

More From Bankrate