7 Essential Lease Agreement Clauses

The Basics of a Good Rental Lease

Picture of Essential Lease Agreement Clauses
••• Soren Svendsen/Cultura/Getty Images

A lease agreement is an essential document between landlord and tenant. All leases are not created equal. There are certain basics a good rental contract must include. Here are seven essential clauses to include in your lease agreement.

Identify Landlord and Tenants

Every lease agreement must identify who the contract is between. In the case of a lease for rental property, this agreement is between the landlord, and/or the landlord’s agent, and the tenants that will be occupying the property. All tenants over the age of 18 should be named on the lease. The address of each party should also be included.

An example of a clause identifying the parties of a lease:

“This Lease is between the Tenant(s) Insert Tenant(s) Name
whose address is Insert Full Address of the Rental Property
referred to as the “Tenant,” AND the Landlord Insert Landlord's Name whose address is Insert Landlord's Full Mailing Address referred to as the “ Landlord.” The word “Tenant” means each Tenant named above.”

Identify Property

You will want to include the name of your property, if you have a name for it, such as "Sunset Estates," or "Half-Moon Villas." You will also include the full mailing address of the property:

  • House Number,
  • Street name,
  • Apartment Number the Tenant is Renting.
  • Town,
  • State,
  • Postal Code.

Here is an example of a lease clause identifying the property:

"The landlord agrees to rent to the tenant and the tenant agrees to lease from the landlord, Apartment #1 with 2 bedrooms and 1 bathroom, located at 123 Sunny Lane, Sunnyside, MI 12345. This rental unit will be referred to in this lease as the 'Apartment.'"

Rental Term

These are the dates the lease agreement is valid for. You should include exact dates and avoid general terms such as the lease is valid for six months or the lease is valid for one year.

You will want to include the exact date: day, month, and year, the lease begins and the exact date: day, month, and year, the lease ends. Many yearly leases automatically convert to month to month leases after the original lease term.

Here is an example of a lease clause identifying the term of the lease:

 "The lease begins on January 3, 2020 and ends on December 31, 2020."

Rent Amount and Due Date

The lease must state how much rent is due and when it is due. It is essential to include the full amount of rent due over the period of the entire lease and then break it down by the amount due per month.

Here is an example of a rent amount clause in a lease:

"The Tenant agrees to pay $12,000 as rent, to be paid as follows: $1,000 per month, due on the 1st day of each month. Payment of the first month’s rent and any security deposit is due upon the signing of this Lease by the Tenant. The Tenant must pay a late charge of $ 50.00 as additional rent for each rent payment that is more than five (5) days late."

Security Deposit Terms

The lease should include a security deposit clause. This should include:

  • Amount of Security Deposit Collected
  • Date Security Deposit Was Collected
  • Name and Address of Bank or Institution Where Security Deposit Is Held
  • Interest Rate
  • Reasons Deductions Can Be Taken From the Deposit
  • Procedures for Returning the Security Deposit

Tenant Responsibilities

This clause outlines a tenant's obligations. Tenants have specific responsibilities under landlord tenant law to maintain the rental property. Tenants must keep their property free from safety or sanitary hazards. They must not cause damage to the rental and must follow all building and housing codes. The specific tenant responsibilities listed in your state's landlord tenant laws should be included in this lease clause.

Landlord and Tenant Signatures

If the lease is not signed and dated, it is worthless. The signatures acknowledge that the landlord and the tenant agree to follow the terms of the lease.

The landlord, or the landlord’s agent, such as a property manager, must sign and date the lease. The tenants must also sign and date the lease. Make sure to have all tenants over the age of 18 sign and date the lease. These tenants should all be named in the “parties” clause of the lease.

Here is an example of a lease acknowledgment clause:

By signing this Lease agreement, the Tenant acknowledges that they have read, understood and agree to comply with all rules, terms and conditions in this Lease.
Print Name of Landlord..........Landlord’s Signature...........Date..........
Print Name of Tenant.............Tenant’s Signature..............Date..........
Print Name of Tenant.............Tenant’s Signature..............Date..........

You must keep a signed copy of the lease for your records and must provide the Tenant with a signed copy of the lease as well.