A lease agreement is a binding contract between the landlord and the tenant. It’s the cornerstone to forging a good relationship between the two parties. A well-prepared lease is clear, specific, and detailed. It covers the responsibilities of a landlord and the tenant, presenting clear expectations from both sides.
The following clauses should be present in your Phoenix, Arizona lease agreement to pave the way for a harmonious and professional relationship.
1. Term of the Tenancy
It’s important that the lease agreement contains the beginning and end date of the rental. The “term” refers to the length of the rental period. Some terms are on a month-to-month basis while others are for a year. The crucial thing to note is that the term must be specifically stated in the contract.
There are two types of tenancies:
Periodic tenancy
This agreement has no end date and continues until the landlord or tenant notifies the other of the termination. To create changes to a periodic tenancy, both parties must make a new written agreement.
Fixed-term tenancy
This agreement will last for a specific time period. If the fixed-term is more than 90 days, the tenancy will automatically convert into a periodic tenancy after the fixed-term end date.
To create changes, both parties must notify the other between 90 and 21 days before the end of the fixed term.
2. Rent
The terms of the rent should be specifically stated to avoid misunderstandings. There are a number of things that should be clearly outlined in the lease agreement:
Due date
The due date for rental payment must be clearly stated. This is a helpful tip if you have several properties for rent: to avoid confusion, collecting rent the first day of the month allows for a smooth and organized process.
Channel of payment
Tenants need to know where to pay their rent.
- Is it routed to your office?
- Is it to be collected in person, by mail, or online?
Hiring a third party like a property management company for rent collection is a timesaving tip, especially if you live far from your rental property. You can also channel it through an electronic transfer facility.
Method of payment
There are several methods of payment available depending on the agreement.
The tenant can pay in cash, with a personal check, through an automatic draft, or by a credit card. The preferred method should be outlined in the lease contract.
Late payment fees structure
A late-fee policy must be included in the lease agreement. Typically, they are computed based on a percentage, but it could also be determined as a flat fee for easier monitoring. Imposing a penalty is okay as long as the charge is reasonable, and the tenant is aware of this rule.
3. Deposits and Fees
Disputes often arise when deposits and fees are not discussed properly upon signing the lease agreement. Be very clear about the following areas:
Usage of a security deposit
Identify the situations where using the security deposit will be required. For example, if there are damages caused by the tenant that needs to be attended to, or if a tenant decides to move out and wants to use the security deposit to pay his rent for the last month.
Amount of rent
The dollar amount must be clearly written and must include all the additional fees associated with it.
For example, if there’s an agreement to allow a tenant to keep a pet, the pet rent or pet fee amount must be included.
Replenishment of deposit
The lease agreement should include the situations where replenishment of the security deposit is needed (e.g. if you need to pay for a tenant’s damage and you need the full security deposit amount to be recovered).
Refund terms
It should be stated how you will refund the tenant with their security deposit when they move out of your property. There should be a clear payment system that specifies the method of return payment. The expected period for the refund should also be agreed upon.
Non-refundable fees
Your lease agreement should also clearly state which fees are non-refundable.
4. Repairs and Maintenance
To avoid conflicts and debates over which party is responsible for shouldering damages to the property, policies should be delineated properly.
Landlord’s responsibility
Landlords must pay for normal wear and tear damages and require tenants to provide feedback for conditions that need attention.
Policies regarding grievances, complaints, and repair requests should be written and detailed in the agreement.
Tenant’s responsibility
Tenants are responsible for keeping the premises clean and the furnishings damage-free. Should a contrary situation arise, they are responsible for paying the costs associated with the damage if they caused it.
Restrictions on changes in the property
Carefully outline the minimal changes you will allow where property décor is concerned. You must include that major changes require your prior approval (such as changing the house paint color, installing a fixed appliance, and drilling holes in the wall to hang picture frames).
5. Rules and Policies
Rules are incredibly important to build an amicable relationship between the two parties. Here are common policies to draw on:
- No illegal activity
- Smoking restrictions
- Pet ownership
6. Description of Rental
The agreement should contain the complete address of the property and other important details:
- Parking lots (including the specific spot number if the rental includes a parking space)
- Storage areas (e.g. a garden shed if your property includes a yard)
- Common areas (e.g. a gym, rooftop terrace, or pool)
- Areas that should not be accessed
7. Pet Details
It must be clearly specified in your lease agreement whether your property is pet-friendly.
If it is, detail the types of pet you can accommodate. This should include the following:
- Size of the pet
- Breed of the pet
- Number of pets a tenant can own
- Pet fees and security deposits
8. Entry to Rental Property
The rights of the landlord and the tenant should be clearly stated in the leasing agreement. This extends to the rental unit’s access. To safeguard a tenant’s privacy, both parties should agree on the following:
- The notice period for the landlord to conduct an inspection
- The notice period for the landlord to make repairs
- The notice period for the landlord to show the unit to potential renters if the tenant decides to end his lease
The Bottom Line
A lease agreement is essential to creating a good relationship between you and your tenants. To help you out, we've outlined the important clauses that should most definitely be in your Pheonix agreement. These will help you in identifying the responsibilities of each party and thus avoid confusion.
