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A lease agreement is a legally binding document that sets the terms of engagement between the landlord and the tenant. It highlights both parties’ rights and responsibilities and fosters a sense of accountability.
Requiring tenants to sign a lease before moving in comes with tons of benefits. For one, it can help you to clearly outline your expectations to the tenant, thereby minimizing potential areas of conflicts or misunderstandings.
Secondly, it can help protect your financial interests by outlining the terms of rent payments, late fees, and security deposits.
Here is a comprehensive guide on how to make a solid lease agreement for your rental property.
How to Draft a Lease Agreement
You have several options when it comes to drafting a rental agreement. One option is to go the DIY route. You can simply search online, find a template, and customize it to your liking.
That said, if you’re a first-time landlord, several things can go wrong if you choose this route. You may end up drawing an illegal document that is inconsistent with local policies and New York Landlord-Tenant Laws.
The best option would be to hire an expert property manager. This route will not only save you valuable time, but also guarantee you a proper lease agreement.
Basics of a Solid Lease Agreement
While no two leases will ever be the same, the basics are. Every lease agreement should contain the following basics for a smooth experience:
Names of All Adult Tenants
Every lease should contain the names of all the adult tenants who are going to live on the property. Including their names in the lease will make them accountable to the lease terms.
This will help you hold each one of them liable for any lease violations that occur on their premises, including illegal property alterations and damage exceeding normal wear and tear.
Rent Information
Your lease should also have clearly outlined rent-related details to prevent potential conflicts or misunderstandings.
Specify the dollar amount of rent as well as when and where it’s due. Also specify the acceptable payment methods, such as check, cash, and online transfers.
Will there be any penalties if the tenant fails to pay rent on time? If so, specify the late fees, including the amount and when they come into effect.
In New York, the maximum late fee a landlord can charge must not exceed $50 or 5% of the monthly rent.
New York law also specifies that landlords must give their tenants a grace period of 5 days before charging a late fee.
The Lease Term
This will depend on the type of rental agreement you have with the tenant. Will you be renting out the unit on a short-term basis? This could be week-to-week, month-to-month, or quarter-to-quarter.
These types of leases renew automatically until either party chooses to move out by serving the other party with a proper notice.
For instance, to terminate a month-to-month lease in New York, a 30-day advance notice is necessary.
If renting the property on a relatively long-term basis, then go for a fixed-term lease. This type of lease usually runs anywhere between 6 months and a year. After it expires, it’s up to the landlord to choose whether or not to renew it.
With fixed-term leases, it’s especially important to mention the rental duration. If you just mention it’ll last for one year, you may create a loophole that may lead to issues later on, such as holdover tenants.
Occupancy Limits
In the lease, state who the adult tenants are. Specify that the tenant(s) and any minor children are the only people who can occupy the property. This will give you the right to determine who stays on the property and who doesn’t.
It’s in your best interests only to have your property occupied by people you’ve screened. Under New York laws, guests become tenants after occupying a property for 30 days.
This can complicate things for you as removing them may turn out to be a costly and lengthy experience. As such, make sure to limit the amount of days a guest can stay with the tenant.
Entry to the Rental Property
To avoid potential harassment claims by the tenant, ensure your lease is clear on your right of entry.
Clarify the reasons for entry, such as to do inspections, respond to repairs, maintain the property, or to show the property. Also specify how much advance notice you’ll give the tenant before entry.
In New York, landlords must serve their tenants “reasonable” notice. This is usually taken to mean at least 24 hours in advance, unless it’s an emergency.
Rental Policies to Include in the Lease
In addition to the aforementioned basics, you’ll also want to add some policies specific to your property as well. The following are common rental policies:
- Subletting Rules: Will you allow tenants to sublet their rented premises? If so, be clear on the requirements. If not, let the tenant know that it would be a lease violation to do so.
- Tenant Responsibilities: Specify what exactly the tenant is supposed to do when it comes to repairs and maintenance.
- Lease Termination: Let the tenant know the notice requirements when it comes to lease termination. In New York, the notice requirements depend on the rent payment frequency. For example, to terminate a month-to-month tenancy, a 30-day advance notice is necessary.
Conclusion
As a landlord, being able to draft a detailed and proper lease agreement is an important skill to possess. It’ll set you up for success by clearly highlighting your expectations and minimizing potential conflicts between you and the tenant.
If you’re just starting out or don’t have a proper grasp of New York rental laws, Librett Real Estate Group can help. We provide full-service property management services to property owners in New York City and Westchester County. Get in touch to learn more!
