With the number of renters in the United States on the rise, the need for short term and mid-term housing is increasing. To satisfy the need for housing and earn a little extra income, the number of homeowners renting out their homes or rooms is also on the rise. These approaches to non-traditional renting can leave hosts wondering "Do I need a lease agreement for my rental property?" The answer is, yes, you do! Lease agreements do not have to be difficult to navigate and you can find plenty of lease agreement templates available online. The key to a stress-free renting experience is finding-or creating-the one that meets your needs as a host.
Why do you need a rental agreement for a short-term or mid-term renter?
Chances are, you're renting your space to a stranger, which means it's important to establish written documentation of what landlord and tenant both agree to with regard to the stay in your space. A good lease agreement will outline the responsibilities of a renter as well as the responsibilities of a host and answer any questions that either party may have regarding the stay.
What to include in your rental agreement
Much like a standard lease agreement, a rental agreement for a mid-term or short-term lease should include:
This section introduces the agreement, names the landlord and renter by name and distinguishes how they will be referred to throughout the document.
Gives a physical description of the space being rented along with all of the renter accessible property space.
- the number of bedrooms
- the number of bathrooms
- attic space
- basement spaces
- parking spaces available
- furniture for rental use
Details the length of stay (renter's lease term) for a specific tenant or group of tenants.
- Specific move-in and move-out dates
- Renewal type, if applicable
Receiving rent is an important part of renting your space! Making sure that the rental section is as specific and detailed as possible to avoid any issues with payment.
- Monthly rental amount
- Due dates for the monthly rent
- Where rent should be remitted
- First and last month's rent pro-rated amounts if applicable
Like most things in life, accidents happen and it's important to let renters know upfront what the procedure will be if they're late on paying rent.
- Any grace periods (or lack thereof)
- Late fees that they will face as a penalty for late rental payments.
Describing the included or not-included utilities is crucial if you're renting your space for a stay longer than a month.
- Which utilities are included in rental payment
- Which utilities are not included in rent. If you choose to pay partial utilities and want your renters to pay any overages, this is the space to detail your procedure for that.
This section is used to outline the processes and procedures surrounding security deposit fees if you choose to require them.
- When security deposit fees are due
- What security deposit fees will be used for
- When the renter can expect a return of security deposit fees
- An outline of your state laws regarding the return of a security deposit including the maximum amount of time a host has to return a security deposit and whether or not the deposit should be returned with interest.
Use of Premises
The Use of Premises section of your lease should outline the types of uses your space is available for as well as the types that are unacceptable to you.
- What an acceptable use of your space is (living quarters, available for business, etc)
- What your policy on visitors is
- At what point (how many days) does a visitor become a tenancy
Maintenance and Repairs
The Maintenance and Repairs section should outline the expectations for renters surrounding the upkeep of the space along with procedures for reporting needed repairs to you and for how damages caused by the renter will be paid for.
- What types of damages should be reported to the landlord
- How damages will be paid for
As a host renting spaces for mid-term stays, you must be aware of all of the Fair Housing Laws designed to mitigate discrimination in housing. Hosts are responsible for providing reasonable accommodations for renters with known physical or mental disabilities and your lease agreement should outline the parameters of this accommodation.
Some renters like to make their house feel like home by making alterations to the space like painting or small renovations. If you're not okay with that (and most landlords aren't!) it needs to be noted in your lease so that renters can be made aware.
- What is allowed in terms of decorating
- What is absolutely off-limits regarding alterations of the home
- What will be required of the renter to restore the space to neutral
While smoking tobacco cigarettes is on the decline, smoking is still fairly popular and encompasses marijuana (depending on where you are) as well as eCigarettes.
- Guidelines for renters about smoking
- Locations on the property where renters can or can't smoke
Some hosts choose to allow pets while others have a no-pet policy, you'll get to decide how renters navigate having their furry friends live with them.
- What type of pets will you allow
- Amount of non-refundable pet deposit and/or monthly pet rent
- Any additional rules or guidelines that you prefer renters to follow regarding pet ownership
As a host, it's important to provide a good experience for renters while also protecting your property. Renters should agree to complete a renter checklist that will be attached as an addendum to your lease and ask renters to provide a thorough and detailed description of the space as they moved in and for comparison upon move-out.
- Purpose of the Inspection Checklist and how it will be used in conjunction with the Security Deposit
- Move-In Checklist with date and signature for renter and host
- Move-Out Checklist with date and signature for renter and host
If you choose to require your renters to obtain renter's insurance, you'll need to provide them the details about the coverage that you deem sufficient and how they can provide proof of that coverage.
- Requirements for coverage including premium amounts
- Addendum for renters insurance
Assignment and Subletting
There are some circumstances where renters will not be able to fulfill the entire obligation of their stay with you. If you allow your renter to sublease your space, you'll need to indicate the circumstances and necessary procedures for subletting. Not all hosts allow subleasing, and if that's the case for you, that should be clearly outlined.
Right of Entry
There are times when a host needs to enter the space they've rented.
- What circumstances require an entry
- Under what conditions you will visit the space
Additional things to consider
State laws regarding renting
Each state has its laws about a renter's rights when renting and how they should be upheld. As a host, you're responsible for knowing these rights and ensuring that your renters are taken care of. The American Apartment Owners Association can provide details on the laws in your state and help with navigating how to correctly return deposits, creating additional lease addendums, and establishing policy for lease changes including time frames, day notices, and month to month agreements.
While eviction is not the process than anyone has to deal with, having a plan to deal with potential eviction is key in property management. Your lease agreement will outline any actions or behaviors that could result in eviction and should include but is not limited to, unpaid rent, evidence of repeated lease violation, and property damage.
What Rental Agreements Do For You
Flexibility between landlord and tenant
Renters who are looking for short or mid-term housing are generally looking for 3-6 month lease agreements, but sometimes those circumstances change. If a renter would like to continue on a month-to-month basis, a lease agreement has the option to allow that. As a host, you can identify sufficient days' notice for your renters regarding move-out or extension. Prefer written notice? That's possible, too! Indicate in your lease that you'd like everything to be in writing.
Flexibility is not limited to the duration of stay. Everything in your lease agreement is as flexible as you want it to be as long as it's outlined and agreed upon. If you'd like to give your renter a free month of rent for staying with a 6-month rental agreement? You can do that, too. Just make sure it's documented.
Protects hosts from a surprise cancellation
Establishing a clause for cancellation upfront protects hosts from early cancellations, renters who cancel within a certain period, or no-show renters. Through establishing a cancellation policy that's agreed upon by the tenant, hosts can collect a cancellation fee and potentially keep a portion (if not all) of a security deposit and or already paid rent based on the terms of the agreement.
Provides clarity regarding damages to real estate
As a property owner, chances are you love your space and want it taken care of. While normal wear and tear are to be expected, policies and fees to take care of your space due to property damage should be outlined in your lease agreement. By being specific about how you'd like your property taken care of, renters are more aware and better informed about how they can best navigate living in your space.
While creating a rental agreement can seem like a lot of up-front work, the amount of stress and anxiety it can relieve when renting your space will prove worth it. Renters will love that you've set expectations upfront and you'll love how easy your rental transactions become!