The most important document that you can have as a landlord is a lease agreement. It is a binding contract between landlord and tenant that details their agreement of the leasing terms, rules, and responsibilities throughout the tenancy.

This contract should include not just the amount of rent a tenant has to pay, but also other important details that you want to include to ensure that your property is well taken care of and your business will not suffer losses.

You should consider these specifications to help lessen your liabilities and will also ensure your investments generate profits.

You might already have a draft prepared or you might have a standard printed format that you acquired online but it won’t hurt to enhance or double-check.

Remember to formulate a lease agreement to be state-specific as well.

It matters where

Your lease agreement should be based on state housing laws. The rules and regulations will differ from state to state and you should be knowledgeable on that subject.

For example, the allowed amount of a security deposit when you are in California should only be equivalent to two month’s rent when the unit is unfurnished and worth three month’s rent if furnished.

In Texas, on the other hand, there is no specific amount on how much security deposit you can charge. They can charge a hefty amount if they want to. However, there may be some cities that have ordinances regarding specific limits of security deposits.

If a landlord will not follow the state laws, the lease agreement will not be valid in court even if the tenant has signed the document.

So, what else should you include?

• Rental Payment and Payable Date

This is probably the first thing that you would determine if you are composing a lease agreement because the main reason for renting out properties is gaining profit. You should specify the amount for rent and its inclusions, like parking fees or pet fees.

Related article: Pros and Cons of Renting to Pet Owners

You should also detail the date of payment. It is good to give a specific day of the month so that your tenants will know when they should have their rent prepared.

Give them several payment options too. That way, they can choose which one is convenient for them. Online banking is getting more common and is easier for both parties as it only takes a few clicks on their gadgets.

• Fees for late payment

Late payments are sometimes unavoidable and should have additional fees as a consequence. These fees would most likely encourage your tenants to pay on time.

Again, abide by your state laws because there are differences depending on which area your property is in. Some states require that late fees will be applied the day after the deadline and will increase further on the following days until the rent is paid.

Some landlords will allow grace periods. A grace period is the number of days a tenant can pay rent without paying a late fee. The amount of late fees will also be based on your state law.

• Subletting

Subletting will depend on your policies. Some landlords would not allow their tenants to sublet because they are hesitant to let someone stay in their property that they have not screened.

If you do allow subletting, apply this clause to specify the terms and conditions that they should follow. For example, the tenant alone usually screens the subtenant but you can stipulate that you should be involved in the screening process.

• Owning pets

Some landlords are pretty lenient with their tenants owning pets but it should be specified in the agreement.

Do not let your tenants assume that pets are allowed, especially if they are not. And if you do allow pets, specify what kinds you’ll allow as well as the animals that you will not accommodate.

If you charge pet fees, include that too. Provide them with specific details because this will be the basis for any pet-related issue or concern that may arise.

• Fees

This should be state-specific also. Do not overcharge or ask for a different amount from what is declared in the amendment.

Also include terms on when and how the tenant can claim or refund their security deposit after their lease has ended.

• State-specific declaration

Incorporate all the details of your property, including even the smallest issues that may be unfavorable to your tenants. You might not include these in the listings you create at Padleads, that will be sent out to different rental websites, but make sure to include these in the lease agreement.

Even some disclosures are mandated by state laws. The tenants should not be kept in the dark just because you want your property to appear perfect. This may cause problems for you in the future if your tenants would file complaints.

It is important to always base your policies and guidelines on the laws mandated in your area. This will help you in preventing lawsuits from your tenants. Remember to ask an expert on this to counsel you on which should be essential if you are unsure of the leasing agreement draft you made.