A detailed rental lease agreement is imperative for both landlords and renters alike to minimize headaches down the road. The more thorough the lease to account for any issues that may arise, the better.
I've spent the past 17 years refining my residential lease agreement based on all past experiences. Feel free to run it by a real estate lawyer or other property professionals before use, and make suggestions on how to make it even better.
Tenant/Landlord law is a complicated area, and laws vary widely from state to state. What may work here may not work in your area, so please use prudence.
There's always a feeling of excitement on both ends when a lease is first signed. Both parties go in with a leap of faith, hoping everything will work out. But conflict is inevitable in any sort of relationship. “Understandings” that are agreed upon with a handshake tend to mean nothing if they aren't written out when problems arise.
As a Financial Samurai landlord, your goal is to achieve maximum tenant occupancy with minimum ongoing headaches in order to enjoy your freedom. Freedom is what having money is all about. If one of your assets is giving you more headache than freedom, then something must change.
I'm bullish on owning rental properties for the foreseeable future as we come out of the pandemic. The housing market should remain very strong with rates coming back down, strong government support, and rebounding corporate earnings.
Provide a good product with good service and clear terms, and I'm confident you will reap great benefits as a landlord down the road.
Good Residential Rental Lease Agreement For Landlords
Below is an example of a thorough residential lease agreement for landlords to use. You can use the residential lease as a base and customize it for your particular tenant and rental property situation.
LEASE AGREEMENT, entered into between _______________________ (Landlord/Owner) and
MASTER TENANT: ____________________________________________
TENANT 2: _____________________________________________
TENANT 3: _____________________________________________
TENANT 4: _____________________________________________
For good consideration it is agreed between the parties as follows:
1. Location: Landlord hereby leases and lets to Tenants the premises described as follows: address and description of property.
2. Term: This lease shall be for a term of one year, commencing on XX/XX/XXX and month to month thereafter, with the option to sign another one year lease after expiry. Tenants agree to move out if the Landlord decides to sell the property or use the property for personal use at any point after the one-year lease expires. A minimum advance notice of 30 days will be given to the Tenants if such situation arises.
3. Rent: Tenants shall pay the Landlord in monthly payments of $Rental Amount on the first of each month for the month ahead. Payment by direct deposit is preferred to avoid late payment and penalties. If payment is not received by the 4th day of the month, a $XXX/day penalty will be assessed until payment is made and received in full, which is why an automatic electronic payment is the best payment method. After 30 days of non-payment an eviction notice will be filed and delivered.
If tenants are in good standing, the landlord agrees the raise the rent to no more than $X,XXX for the second year.
Master tenant must provide a minimum 60 days heads up notification before departure after the one-year lease is over to provide enough time for landlord to find new tenants.
3a Security Deposit: Tenants shall pay a security deposit of $XX,XXX, which will be used to pay for damages incurred by the Tenants (damaged walls, ceilings, floors, fixtures, appliances, water damage, deck damage, etc.) that are not fixed on move-out. Whenever there is any sort of damage, the Master Tenant must notify the Landlord within 48 hours to make sure the damage does not get worse. Interest of 0.1% will be paid per annum on the deposit. Tenants agree to return the property in the same condition during first move in and will perform a walk through checklist of the house with landlord upon start and end of the lease.
4. Utilities and Services: Tenants shall pay for the following at their own expense: Electricity & Gas, cable, internet, Recology (garbage/recycling/compost), and water. Tenants must pay all charges promptly as they become due.
Landlord does not warrant the quality or adequacy of the utilities or services specified above, nor does Landlord warrant that any of the utilities or services specified above will be free from interruption caused by repairs, improvements, or alterations of the building or the premises or any of the equipment and facilities of the building, any labor controversy, or any other causes of any kind beyond Landlord's reasonable control. Any such interruption–and any other inability on Landlord's part to fulfill Landlord's lease obligations resulting from any such cause–will not be considered an eviction or disturbance of Tenants' use and possession of the premises, or render Landlord liable to Tenants for damages, or relieve Tenants from performing Tenants' lease obligations.
5. Tenant further agrees that:
a) Condition of Premises: Upon the expiration of the Lease, the house shall return possession of the leased premises in the condition they first received. A required professionally cleaning must be done within one week of move out as a professional cleaning was done prior to move-in.
b) Assignment or Subletting: Tenants shall not assign or sublet any room at ADDRESS or allow any other person to occupy the leased premises without Landlord's prior written consent. Tenants are prohibited to use programs like Airbnb or RelayRides to rent any part of the property including the parking space in the garage.
c) Alterations: Tenants shall not make any material or structural alterations to the leased premises without Landlord's prior written consent. Any alternations made must match the existing quality an architectural style. Any remodeling must be done through a licensed contractor.
d) Compliance with Law: Tenants shall comply with all building, zoning, and health codes and other applicable laws for the use of said premises.
e) Tenant’s Conduct: Tenants shall not conduct on premises any activity deemed extra hazardous, or a nuisance, or requiring an increase in fire insurance premiums. Tenants shall respect the neighbors and keep noise level to a minimum after 10pm. Any notification complaints by neighbors or police via e-mail, writing, phone call will result in an initial warning. A second offense is a $1,000 fine. A third offense may result in a rent increase beyond $X,XXX or a 30-day notice to exit the property.
f) Pets: No pets are allowed. (Or: pets are allowed with a $XXX non refundable deposit)
g) Right of Termination and Re-Entry: In the event of any breach of the payment of rent or any other allowed charge, or other breach of this Lease, Landlord shall have full rights to terminate this Lease in accordance with state law and re-enter and re-claim possession of the leased premises, in addition to such other remedies available to Landlord arising from said breach.
7. Time of Essence: Time is of the essence in this agreement. By accepting the Tenants, the Landlord is declining all other interested parties who want to rent ADDRESS during the time period of XX/XX/XXXX to XX/XX/XXXX. If Tenants decide to cancel the lease agreement after the deposit is made, Landlord will keep $X,XXX of the $XX,XXX deposit to make up for lost time and income as the landlord will no longer entertain offers or show the house to other prospective tenants.
8. Indemnity: Tenants will indemnify and hold Landlord and Landlord’s property–including the leased premises–free and harmless from any liability for injury to or death of any person, including Tenants, or for damage to property arising from Tenants’ using and occupying the premises or from the act or omission of any person or persons, including Tenants, in or about the premises with Tenants’ express or implied consent.
9. Binding of Heirs and Assigns: Subject to the provisions of this lease against assignment of Tenants’ interest under this lease, all lease provisions extend to and bind, or inure to the benefit of, the parties to this lease and to every heir, executor, representative, successor, and assign of both parties.
10. Rights and Remedies Cumulative: The rights and remedies under this lease are cumulative, and either party's using any one right or remedy will not preclude or waive that party's right to use any other. These rights and remedies are in addition to any other rights the parties may have by law, statute, ordinance, or otherwise.
12. Choice of Law: This agreement is to be construed under California law. All obligations of the parties created under this lease are performable in San Francisco County, California.
13. Legal Construction: If any one or more of the lease provisions are for any reason held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provision of this lease, which will construed as if it had never included the invalid, illegal, or unenforceable provision.
14. Prior Agreements Superseded: This agreement constitutes the only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter.
15. Amendment: No amendment, modification, or alteration of this lease is binding unless in writing, dated subsequent to the date of this lease, and duly executed by the parties.
16. Remodeling. Tenants are allowed to remodel the house with prior consent by the landlord. The default is that all remodeling expenses are to be born by the Tenants as rent is paid for the condition in which the Tenants first moved in. Landlord is open to discussion but under no obligation to remodel or allow remodeling.
17. Premature break of the lease. If the Tenants break the lease before the one-year lease is over, the Tenants agree to pay for the remaining months left on the lease. All existing tenants are responsible for their portion of the rent if they are to break the lease before the one-year lease is over on XX/XX/XXXX. Replacement tenants can only be made after XX/XX/XXXX when the lease goes month-to-month.
18. Upon Moving out. The Tenants must agree to return the house in the same condition as when first moved in. The house must be professionally cleaned and vacuumed.
19. Occupancy. Only the aforementioned Tenants on the lease are allowed to live in the house for liability reasons. Guests are welcome for normal use, defined by a weekend stay up to a week a month. Tenants are liable for their guests. Tenants shall notify landlord over e-mail if Tenants desire a guest to stay longer. The current maximum number on the lease allowed is five Tenants signed on this lease. All tenants must get RENTERS INSURANCE for liability purposes. Landlord has landlord insurance.
20. Rental Increases. The house is not under rental control, but Landlord agrees to fix rent at $X,XXX a month from start lease date XX/XX/XXXX to XX/XX/XXXX (one year from lease start date) and raise rent by no more than $X,XXX on XX/XX/XXXX (one year from now) if the tenants are in good standing. A 30-day notice will be given. (See rental increase laws and abide by them. It's often very helpful to give tenants guidance on any future rental increase plans as soon as possible).
21. House Rules. Tenants agree to follow these house rules: 1) Never buzz a person in without having visual contact first for security, 2) Watch the garage door close shut fully upon exit and entry for security reasons, 3) Keep the peace by respecting the neighbors for noise, especially after 10pm. Any house party needs to move indoors by 8:00pm due to density of the area (early the better, see section about complaints above), 4) Do not block the neighbor’s driveway, only your own. 5) Respect and care for the property.
22. Maintenance. Tenants are authorized to charge up to $200 to fix a problem without prior approval, but with explanation of repair and a valid receipt. Tenant will bear the cost up front, and landlord will reimburse within five days. Anything over $200 must get a written e-mail approval from the landlord. Bill can be mailed or e-mailed to landlord at Landlord's address or Landlord's e-mail.
* Water is the number one cause of damage to a home. Be careful not to overflow the tub or leave water on while away. Make sure drains are clear of debris before and during rain storms to prevent flooding.
* Make sure all appliances are off before leaving the house to prevent fires e.g. iron, hair blower, space heater, oven, stove. Fire damage is very seriously.
* ADT security is currently wired. Please be diligent about using the security system for your own protection.
* Replace furnace filter at least once every six months for your own clean air desires (manufacture recommends once every three months).
* Change smoke detector and C02 detector batteries as needed.
* Be careful with the use of the fireplace. It works, but someone must be present while the fire is going to prevent a fire in the house. Use grill to encase fire and protect the living room.
* Trash/recycling days are X-day morning at Y am pick up. Set trash outside after X pm or as late as possible as there are the occasional dumpster divers. All trash, recycling, and compost (green bin) must fit in the bins i.e. the lid must comfortably close, otherwise, there will be overflow of trash on the streets.
* Laundry is free to use for all tenants. Do not overload the washer or dryer, as that may cause engine failure or fire. After each dryer use, please clean the filter and throw away in the bin next to the dryer.
23. Rental Insurance. Tenants agree to get at least basic rental insurance as advised by the State of California to protect his/her belongings in case of theft, fire, and natural disaster. Landlord has Landlord Insurance from X-company. Affordable rental insurance can be found with PolicyGenius.
24. Master Tenant. Master Tenant agrees to be the Chief Financial Officer (CFO) of the house and be responsible for all on-time payments in full to the Landlord. The co-signer of the Master Tenant is responsible for all on-time payments in full if the Master Tenant fails to fulfill his duties and honor the agreement in this lease.
25. Landlord Inspection. Landlord may come by the property with a 24-hour heads up to inspect the property and pick up mail at his discretion.
26. Common Area. Common areas such as the garage, hallway, and entrance are public areas. Any goods left by tenants in common areas are at their own risk of theft and damage. Landlord strongly advises not to leave anything in the common areas, especially valuables.
27. Attorneys' Fees. Should it become necessary for Landlord to employ an attorney to enforce any of the conditions or covenants hereof, including the collection of rentals or gaining possession of the Premises, Tenant agrees to pay all expenses so incurred, including a reasonable attorneys' fee. ** Addition/suggestion from community.
Signed this __________ day of ___________________, YEAR.
IN WITNESS OF THIS AGREEMENT, the Landlord and Tenants execute this agreement as of the day and year first above written.
LANDLORD: YOUR NAME
Landlord's Mailing Address
TENANT 1 ____________________________________ (Master Tenant, Print Name)
TENANT 1 SIGNATURE ________________________ (Master Tenant, sign and date)
CO-SIGNER 1 __________________________________ (Print Name)
CO-SIGNER 1 SIGNATURE ______________________ (sign and date)
TENANT 2 ___________________________________ (Print Name)
TENANT 2 SIGNATURE _______________________ (sign and date)
CO-SIGNER 2 _________________________________ (Print Name)
CO-SIGNER 2 SIGNATURE _____________________ (sign and date)
TENANT 3 ___________________________________ (Print Name)
TENANT 3 SIGNATURE _______________________ (sign and date)
CO-SIGNER 3 _________________________________ (Print Name)
CO-SIGNER 3 SIGNATURE _____________________ (sign and date)
A Thorough Rental Lease Agreement Is Imperative
Feel free to use my residential lease agreement as a template to customize your own lease agreement. Each type of property has different issues. Each state has their own laws. Read up on them. The more you can spell out areas to watch out for in the lease to help your tenants, the better.
For example, one of my house's light wells flooded when I was at work one day during a storm because the drain was clogged with debris. Water seeped through the cracks and poured through the downstairs ceiling. Now I write in the lease to check the drains for debris throughout the year. It also doesn't hurt to e-mail a friendly reminder on maintenance issues as well.
A healthy rental deposit is vital for a landlord to protect his/her property from damages caused by the tenants and help ensure a smooth transition when it's time to move out. I've always asked for 1.5 – 2 months of rental deposit plus the first month's rent during move in.
Click here for a downloadable PDF version of my rental lease agreement. Please make sure to edit the rental lease agreement to your expectations and standards. I am not a lawyer or responsible for your tenant issues.
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It's important to customize your rental lease agreement for your specific situation. Every rental lease agreement is a little bit different. Further, you may also want to consider lowering the rent to get better tenants. Bad tenants are not worth the potential extra money. Here are also some lease rental tips to retain your best tenants.
36 thoughts on “Good Rental Lease Agreement Example For Landlords”
Thank you for this…I was looking for to know about a perfect residential rental lease agreement. I have a house where I was living for 12 years and now moved to my new apartment. I am looking for renting it, this example will help. Great to find oneciti.co.nz which has same kind of wonderful tips, if possible then visit.
This is a great addition tips blog, thank you for sharing this article. I love it how you have written the insightful, and this example of a good rental lease agreement. You really do have an amazing wealth of experience, having started Financial Samurai in 2009.
I agree with all your points that you have stated here, love this blog. I will take a look at real estate crowdfunding as a potential investment too given it’s free to explore.
Thank you so much.
I like how you mention that knowing the laws for the state in which you reside is an important part of drafting a good lease. My husband and I are wanting to rent out a house for our daughter while she is in medical school. I think we should find one she likes and make sure to read the lease and make any important changes before signing.
It’s really important that you be familiar with the laws in your particular area, as there are several clauses in this lease which are flat-out illegal in my state. Tenant-landlord law is very strictly regulated here, particularly around security deposits, and some of the stuff in this lease would get the landlord laughed out of court if you wound up there.
At the very least, this lease needs to have a separability clause added.
As an example of a local regulation not covered by this lease – in my state the landlord is legally not allowed to have keys to the rental unit unless the lease specifically gives him that right.
There are often local landlord groups you can join to help you through this, or the local NAR (National Association of Realtors) board will have lease templates that will take into account the legal peculiarities in your area. It’s best to start with one of those and then modify it to suit your needs.
It was so helpful when you said that it is essential for a landlord to hire an attorney so that their policies and contracts are enforced to the tenants and that it is included in the contract. If I were a landlord, it seems like I’d want to do everything in my power to make sure everything is done legally by both me and my tenants. It sounds like hiring a landlord attorney could potentially be a good investment in security.
Why is there no section 11? It skips from 10 to 12.
Keeps people on their toes!
How do you set it up so that the tenant can direct deposit the rent check into your bank account without them having access to said account? I have always used a property management company but I am considering dumping them after a string of terrible tenants. I need to learn the nuts and bolts of how to do everything on my own.
Very helpful, thank you! We’re in the process of moving out of our SF condo that has been home for the last few years and plan on renting it out. I am planning on managing the rental myself – do you have any tips on what medium to use to find high quality tenants (e.g. Craigslist, paid rental portal, etc) and your strategy for screening prospective tenants?
This is a great, and very extensive, article regarding what makes up a good lease agreement. This is especially important for those that self-manage their rental properties. It’s important you include the necessary provisions so that you don’t end up facing a landlord-tenant dispute. Luckily, if you employ an experienced property management company, all of these things will be included in your lease agreements. In addition, the agreement will be legally compliant, will be explained in detail to your tenants prior to move-in, and will help protect you and your investment. Thank you again for sharing this useful template. Those needing help with their lease agreements are sure to benefit.
Thanks for this article Sam. I’m a newbie to renting out but this definitely got me to hit the ground running. Always look forward to your articles. Thanks again.
That was very helpful. Definitely a few things in there that I’ll add to my leases. Thank you for sharing.
Is there a downloadable version of this? I could copy and paste and fix whatever MW mess up but I just wanted to see. I’m not a landlord but I like hard copy of things, and wanted to print this out to give to my friend to read. We’re doing research (well, me more than her lol) on how or what to do to rent our very first house and what to expect when we save up the money for it. So yeah, just looking for things to file away or keep in mind. Thought it be useful to have a downloadable version of this even though I know most landlords would probably not have the very same rental agreement. Just wanted something to have a reference on hard copy. :3
Took me as much time to copy/paste the agreement into a google doc as it did for you to type that paragraph. Plus I think the point is to edit it to make it your own.
Not sure if this was covered by another article (my apologies if it was) but I was wondering if you owned your rental properties as an individual or through a limited liability entity. How do you check your tenants’ credit? Do you require renters insurance? Thanks!
My lease agreement (available on my blog) is a bit more robust. A far lot better than any verbal agreement.
In our state, if you make the tenant pay for attorney fees, you must pay theirs if they win in Court. Even if it is not in the lease.
Require the tenant to carry insurance and list you as additional insured on their policy.
I really like that your lease agreement is short and without a lot of legalese.
Most landlords just hand their tenants 30 pages of boilerplate, and most tenants just sign without understanding what it all means.
I think it’s a mistake to treat legal agreements like “Gotcha, you didn’t read section 3.5-1 (g) (d) 4.2-7, so now you owe me $23.54!!!”
Instead I think these contracts should be a way to communicate what’s expected of the relationship, and ideally should minimize miscommunications that could lead to bigger problems later.
I think that if you have to resort to the costly and difficult ordeal of taking legal action, then you’ve already failed. Winning a court battle is the second-worst outcome to a tenancy, with losing being the only thing worse. Proper communication, including a clear and concise agreement is one of the things a landlord can do to help to make sure it never comes to that.
Thanks. This is definitely NOT a “I gotcha” type scenario. I go over the lease in detail with my prospective tenants and have a discussion about each bullet point and the various situations that may occur.
I see this as a long term partnership, and I hope other landlords and tenants do as well.
As someone who has rented A LOT, I find this agreements very fair. I had two landlords that (I felt) jacked up rents artificially high after one year because they knew it was easier for them to find a new tenant than for me to move apartments (which I did anyway). Knowing what the future rent increase would be (assuming I paid on-time) would have been a big incentive to me after those two experiences. I also like a lease that states clearly that the dwelling will be professionally cleaned prior to my arrival and that I am expected to have it professionally cleaned at the end. Clear expectations and the assurance that I will walk into a clean apartment are a huge win, in my opinion, and I am happy to reciprocate by ensuring I leave the place as I found it. When I move into a place, I can pretty much tell by the condition and cleanliness how much I am going to like my relationship with my landlord, but unfortunately that is something that is hard to tell prior to signing the lease!
You sound like a great tenant! Hope your landlord recognizes it.
Perhaps putting out this clear lease example can help future tenant and landlord relationship down the road. The clearer the agreement, the better!
First, I love reading your articles and visit your website everyday. Your articles inspire me to become landlord. My question is should I invest in rental property now given that i have enough cash? If I were to buy right now, I think the cost will be about the same as the rental price. Maybe extra few hundred dollars/month profit. Or should I wait till house prices drop and buy rental properties then? The advantage of buying now is time; over time my principal accumulates but I risk house prices going down in the next few years.
I like to make each roommate liable for the whole rent.
That’s a good point. Everybody in it together. No free riding or letting someone hold the bag.
Since you forbid pets, you are reducing your market by ~30% & therefore the rent you can charge. 62% of Americans are pet owners, but I am assuming that most of those own their dwellings.
In terms of the attorney fee transfer provision (paragraph 26), in California, a one-way transfer provision is read by the Courts as a mutual provision. So by including paragraph 26, the landlord should be aware that the tenant can also use that provision to collect attorney fees in the event the tenant needs to use an attorney to enforce any of the conditions or covenants in the lease.
Very thorough! I can’t think of anything that might be missing at the moment. You’ve had a lot of tenant experiences so that’s awesome you’ve been able to learn from them to make your lease tighter. The more clarity and specifics there are, the better you’re protected and the better the tenants know what to expect.
I once had a potential landlord who listed plenty of uncommon requirements for his tenants like mowing the front patch of lawn, refreshing the water softener, and cleaning the windows (inside and out). The tenant was also responsible for repairs like fixing the refrigerator water dispenser switch in case it breaks.
I almost became angry until I reminded myself that a lease agreement is just that–if neither party doesn’t agree, no one is forcing you to sign. Both sides have to protect themselves.
Is it common in SF to put maximum rent increases in the lease? What if you want to raise the rent to above market rates to get a bad tenant to leave, or the market explodes and your contractual maximum is significantly below the new market?
I wouldn’t want to limit myself like that, even if it meant losing a great tenant.
It’s a case by case situation. It also depends on your view of the market. If you believe the price you’re asking is fair market value, and you estimate the most the rent will increase is 10% next year. Putting a 10% increase cap is no big deal. It probably helps both sides a lot b/c it’s all about setting expectations.
Highlighting a max rent increase cap also incentives prospective tenants to stay and take care of the place. You can say there’s a 2% cap, or whatever. Or, you can say you will lower the rent by X% if XYZ happens etc.
This is a great post- I’ve picked up some extra areas to include in a lease agreement. Great to see that you specifically mention airbnb here.
yes, great post as I too picked up the newer nuances of landlord tenant leases. I never thought to fine either.
It seemed to be redundant about the neighbors as was mentioned twice. But the house rules section and the holding of landlord harmless for the utilities was novel too. Good job!
eviction costs, pest control, smoke detectors, crime or emergency, illegal substances, termination on sale of premises, hazardous material, how to serve notices, counterparts/electronic signatures, drain stoppages, holding over, “as joint tenants and not tenants in common”
Woah! A landlord being allowed to ‘fine’ their tenant?? That’s the first I’ve ever heard of it, I guess it’s not legal under UK law. What stops a landlord issuing tonnes of bogus fines?
The great thing about an agreement is that nobody is forced to sign anything. But if an agreement is assigned, by that very definition, the terms are agreed upon.
Everything is negotiable, but there needs to be clarity and things written down.
To flip it around: are you saying in the UK a tenant never has to pay rent on time or return the property back in the condition first entered without any repercussions?
In the UK we have the Unfair Contract Terms Act which makes it illegal to include terms deemed to be unfair in a contract. Even if someone signs such a contract; the terms are invalid and unenforceable. We see this pretty often where landlords try to include things like fines etc.
Here the repercussions would be a deposit deduction of missing rent/damage. If the deposit didn’t cover it then the landlord would sue the tenant.