Building a Free Lease Agreement Online Part 1: The Parties, Date and Basics

With the dearth of decent free residential leases online, this series of articles will break down basic parts and clauses found in typical residential leases, with an example you are free to use, but which we make no promises or guarantees about, and emphasize we are not providing legal advice.

The first section of the lease needs to nail down the most basic elements – who the parties are, what the property is, and what we’re doing with the property (leasing, lease with option to purchase, triple net leasing, etc.) and the date of the agreement. It’s OK to add a few other terms or specifications if they are helpful, but the first paragraph shouldn’t be bogged down with fine print – that comes later. The first paragraph should serve to quickly tell someone reading it (the tenant, a judge later in court, etc.) the basics of what this is about.

The Parties

This may sound simple, but you want to make sure you get the parties to the agreement right. With residential leases it’s unlikely the party you’re leasing to will be a corporation, trust or other entity, but who exactly is going to be living in your property, and who exactly is going to be responsible for payment of the rent (and use full names). If three competent adults are going to be living in the rental, you probably don’t want to let just one or two sign the lease. You want them all. If three roommates share a place but only one signs the lease, the other two are likely to eventually figure out they may be able to leave that person holding the bag. They will want to whine the others aren’t paying “their share” and skip out. Hold them all responsible. I’ll discuss “joint and several” more in another post, but I like to make it clear in the first paragraph as well that all parties on the leasing side are jointly and severally responsible for payment and damages. That means as far as you are concerned there aren’t “shares” (they can work that out among themselves, but it’s not your concern). You can collect what’s due from any or all of them in any amounts. There are some people who can’t be a party to a lease contract, basically anyone who isn’t competent. Minors (children) aren’t competent. People declared by a court mentally incompetent aren’t, well, competent. Also, make sure you are the right party to be leasing; if you have placed the title of the property in an LLC, or a trust or something, you personally can’t lease it. The party leasing it needs to be the LLC or trust it’s titled with. Also, if you have an assumed name (DBA or “Doing Business As”) that you’re using, it’s probably a good idea to include that. Sometimes parties are called Lessor and Lessee, but they can also be called Management and Resident, or other similar terms as long as you define the parties as them.

Date

You want to include the date of the agreement; this isn’t necessarily the date you’re granting possession, that can be agreed to be a later date elsewhere. This is the date everyone signs the agreement. This becomes important especially if there were earlier agreements because later you are going to declare those void after the date of this contract to avoid confusion.

Basics of What’s Happening

You can just say lease or rent; sometimes more legal terms like “let” or “demise” are used. If you’re doing something other than simply granting possession (renting), then that needs to be clear somewhere in the contract (if it is a lease purchase, call it that), and what better place than in the first paragraph.  Often “consideration” is talked about in terms of contracts. Consideration is required for a contract to be valid, but it’s just defining what each party is giving to the deal. You don’t have to state something like “consideration is”; in a lease the consideration you’re giving is possession of the rental, and the tenants’ consideration is whatever they are giving you (usually money, of course, but if you agree to take pigs or cows that’s still valid consideration), you just want to make sure the consideration is clearly spelled out. That includes making sure the unit or property being leased is clearly identified, at least by address. All the terms of the consideration aren’t necessary in the first paragraph, especially if they are complicated, but putting the address being leased in the first paragraph is a good idea.

So, if we put all that together, it might look something like this (words in capitals with asterisks around them are blanks you would have to fill in):

This agreement made effective *DATE* is between *YOU OR YOUR LLC ETC.*  (hereinafter called Lessor), his/her heirs or assigns, and *NAME OF TENANT(S)* (hereinafter called Lessee, “Lessee” defined as all persons entering into this Agreement with Lessor). All persons comprising Lessee, including any co-signors,  guarantors and sureties, are jointly and severally liable for obligations arising herein. Lessor lets to Lessee, and Lessee leases from Lessor, the residential unit located at and known as *ADDRESS* (hereinafter called Premises), under the following terms:

And there you have it. You’re off to a good start.

Best Free Rental Agreement: Envelope Please

OK, we’ve looked at dozens of online leases, our eyes are getting red, we’ve reviewed several on this site but are we ready to declare best free rental lease agreement? Yes, but we have to create two categories – strings and no strings attached.

With no strings attached, the best free rental lease agreement we’ve seen is from www.buyincomeproperties.com, their “Lease Agreement II”

This lease covers the common law clauses very well, much better than any other lease we’ve seen. The caveat is that it does not cover many modern clauses required by URLTA and other common requirements, such as notice of management, bank account information for deposits etc.

The lease is free, just go to the page, copy and paste. Of course, you’ll notice that this looks like it was hurriedly copied and pasted from somewhere else – with page breaks/lines in unwanted places and the like. As we noted in

Best Free Lease Agreement

We have a winner! Image courtesy of photostock at FreeDigitalPhotos.net

the review, this one is very close to one distributed years ago in a nothing down get rich kit. Whether it is or not, can’t say as we don’t have the get rich one to compare for exactness. You’ll need to take out the page breaks and add the missing modern local and URLTA clauses, but this is the best free rental lease agreement we’ve seen online so far that has no strings attached.

In the “strings attached” department, rocketlawyer.com’s free lease is superior, and is among the best of all, strings or no. It covers both common law clauses and other URLTA type clauses very well. The catch, of course, is you have to sign up for a rocketlawyer.com account and give them a credit card. It’s a seven-day free trial, so you’ll have to go back in and cancel or start getting charged $29.95 a month (and it’s hard to find the cancel process). The only other complaint is its failure to include a few common law clauses I think should be in any lease, especially  time is of the essence and joint and several.

For the truly best free rental lease agreement, I would take Rocketlawyer’s and fill in what it is missing with those sections from the “Lease Agreement II” from www.buyincomeproperties.com (which does have those sections).

At this point, after many searches, we’ve still not found a free rental lease agreement online that could be considered comprehensive; everything is still going to involve you editing – sometimes a lot – the sections that are missing. The search goes on though!

So, do you agree or disagree that these are the best? Do you have a free online lease agreement you’d like us to review? Drop us a line!

 

Free Lease Agreement Form Clauses to Look For

Of course every lease needs to specify the parties, the property, the length, payments and other basic terms. However, there are a number of legal clauses you want to be sure are in your lease (or at least know what you are deciding to leave out). It may be a free lease agreement form, but if it lacks the proper clauses it can cost you plenty, and some of these aren’t obvious to a layman. Your property is valuable and a low-cost protection can be found in proper legal clauses put in your free lease agreement form. There are additional clauses and addenda  such as lead paint disclosure, which may be required by law as well that you will be taking large risks if you don’t include them (lead paint disclosure applies to properties built before 1978, for example). Those clauses aren’t included in this list, but may be just as essential depending on your circumstances. I’m not claiming this list is exhaustive, but if the lease you’re using doesn’t have these I’d be concerned if I was in your place.

Time is of the Essence – without this clause, you may well find that “due on the first” doesn’t mean due on the first at all. Lawyers thought this one up, for sure.

Notice Period – I see lots of landlords get tripped up on this one. Most states set the minimum notice period for residential properties by law. In my case it is seven days for non-payment. However, that minimum has to be written into the lease, or the law will default to something else – often the payment period, which means that if you get paid monthly, then if they don’t pay you have to give them a month’s notice rather than seven days notice. OUCH!

Sublet/Assignment – A lease is an item which can normally be transferred, just like other property rights. You want to make sure, however, that tenants can’t sublease (unless you want to end up with a serial killer, or at

Free Lease Agreement Form

Image courtesy of Jeroen van Oostrom at FreeDigitalPhotos.net

least someone you wouldn’t want to rent to, for a tenant) or assign the lease. On the other hand, you also want to make clear that your right to transfer (to heirs, someone you sell the property too, etc.), remains intact.

Right of Access – You normally can’t say you have right of access at any time, or even “during daylight hours” – in most states that’s probably not legal. You need to find out what the minimum requirements for entry notice are in your locale and write those in, otherwise you could be committing forcible entry of some type.

Use – to make sure that house you rented for people to live in isn’t used as hair salon or something worse, and it should name who is allowed to occupy.

Indemnification – tenants can do all kinds of nasty, crazy things which involve your property and may cause harm or incur costs. You will be the perceived deeper pocket that the harmed parties (which can be anyone, including your local government) may prefer to go after. Protect yourself from your tenant’s stupidity as much as you can by holding them responsible.

Non-Waiver – another one only a lawyer could have thought up. If you accept a partial payment and don’t have a non-waiver clause, in some cases the tenant can argue successfully in court that you waived the rest of the payment.

Remedies Cumulative – don’t limit yourself to one method of recovering damages from a tenant.

Joint and Several – be sure that all tenants are responsible for all the rent, so you can say you don’t care about whatever “arrangements” they had among themselves. You can laugh when a roommate says they only owe you their “half”.

Notice Method – don’t give a tenant an opening to say they gave you oral notice, or tweeted you or some nonsense. You must specify a proper method (in writing, etc.) or prepare to waste time arguing later.

Choice of Law – decide ahead of time where you want to duke it out in court, one most convenient for you. At a minimum you want to keep it in your state’s courts (not federal).

Entire Agreement – head them off at the pass when they start lying that someone “told” them something.

Severability – Keeps the rest of your lease intact if part of it is found invalid by a court.

Repair responsibilities – in most cases you can make tenants responsible for minor repairs, but on “warranty of habitability” issues like heat, water and electric, you cannot make the tenant responsible in most cases. In any case, you want it clear what you are and aren’t responsible for (within legal limits like habitability), otherwise a court may find you responsible for things you didn’t imagine you could be. It is hard for the creator of a free lease agreement form to know your intentions in this area and you may need to look at several samples and draft your own for this section. If you leave this out, then statutory or common law will likely have a default, and you may not like it.

Pets – surely so obvious it hardly needs mentioning, but if you don’t specify no pets, or the conditions (additional fees, deposits, limits) for pets, then they could have a hundred cats and you could not evict them for breach. Maybe health code violations or something, but not breach.

Utilities – of course. Unless you want to pay all the utilities.

I personally would never use any free lease agreement form for residential renting that did not include all those above clauses worded satisfactorily. Sadly, almost no free rental agreement forms that we’ve seen do. Click here for links to our reviews of free forms.

Other clauses that are very important, and in most cases should be in every residential lease but are sometimes less essential:

Failure to deliver possession – describes what will happen – including holding you harmless – if for some reason you can’t deliver possession; the old tenants don’t move out like agreed, etc.

Collection/court costs – not always essential, but helpful to make clear upfront that the tenant will be paying enforcement costs if they breach.

Deposit return conditions – make sure everything that must happen for you (keys returned, no damage, 30 days notice, whatever) is spelled out clearly.

Abandonment – a tricky issue; in most cases the only safe method to repossess is to go through court eviction (forcible detainer in some states). However, you can attempt to create an agreement that if it is clear the premises are abandoned then you can simply take possession. Also you want to cover the tricky area of “stuff” they leave behind, basically saying you aren’t responsible for it. Courts are tricky on this, but if you don’t at least put something in the lease a court may be more likely to hold you responsible for all the worthless junk (“valuable possessions” the tenant will say) the tenant leaves behind. If this area is a big concern to you, a free lease agreement form may not be enough. You may need to have a lawyer advise you on your state’s bailment laws, at least for this section.

Comprehensive Damage Listing – an addendum that is required in URLTA areas. Why not just incorporate it into the lease? So far we’ve no problem doing this, but haven’t many free forms pick up on this.

Renewal – specify ahead of time what happens at the end of the lease.

Fair Housing Notice – many states require some sort of Fair Housing procedure, like giving the prospects a pamphlet about that state’s fair housing laws. Not only do we give them the pamphlet with the application, we incorporate it in the lease with a clause acknowledging they have received it.

FCRA Notice – You need to give this notice if you might report payment performance to a credit bureau for instance. We don’t usually report to credit bureaus, but including this clause makes it clear we might, which might make your tenant think twice before cheating you.

Authorized to Manage/receive notices and service – some states require your lease include language saying who specifically is authorized to manage the properties, receive notices and service.

Receipt of Copy – some states require an acknowledgment that the tenant has gotten a copy of the lease. Even where not required, not a bad idea.

Deposit Account Information – many locations require you to give the account information (bank, account number, etc.) of the account in which you keep the tenant deposits. Almost no free lease agreement forms include this clause.

Your free lease agreement form won’t have likely all the clauses from this second group, but it should have most of them, and may actually need all of them depending.

 

Free Lease Agreement Review: Lease-Agreement-Sample.com

Lease-agreement-sample.com – This is in html so can be copied and pasted quickly, but has several odd features like the lease and renewals being for five year periods, a six-month notice for either party to terminate the lease, and the tenant can be up to 60 days in arrears before that is considered a material breach. Beyond these quirks, this lease does a fairly terrible job of covering basic clauses, not even a pet clause, let alone time is of the essence, sublet, etc. etc. for a total of fifteen vital and important clauses missing, by my count. There is just very little good to say, other than stay away from this one unless you like to have problems.

Here is a link to this lease.

http://www.lease-agreement-sample.com/

Or Click Here to see which free lease agreement we think is the best.

Free Lease Agreement Review: E-Renter.com

E-Renter.com – offers free versions of a house lease and an apartment lease. Both of these are fairly solid, the apartment lease putting much more emphasis on specific rules and regulations typical to renting. There are some differences between house/duplex renting and apartment renting, primarily who takes care of the lawn (or defining what are common areas the landlord is responsible for), but these were a little odd in they differed in areas they didn’t need to. For instance, on the right of entry section, the house lease gives specifics (in an emergency, otherwise 24 hours notice), whereas the rental lease states a generic clause that entry will be as allowed by law. Your location may require something different than 24 hours notice (for us, 48), but it seemed interesting these two leases would differ on the same issue. The house lease puts more maintenance on the tenant, including painting (which the apartment lease version prohibits), something we’ve found to be a disaster. Do you really want tenants painting your property? Almost every time we’ve allowed it we’re regretted it, sometimes severely. You’ll want to be sure what you use is clear as to exactly what you want on maintenance issues like painting. Those minor items aside, the house lease is pretty in its basic clauses: subletting prohibition, quiet enjoyment, indemnity, waiver, joint and several, however it misses some. It has no time is of the essence clause, which means dates like when rent is due become very fluid, and assignments/successors. It also lacks an entire agreement clause and choice of law (not always critical but often important). The apartment version has the same strengths and weaknesses on the clauses. Its rules and regulations are detailed and thoughtful, covering areas of potential problems and damages which may not have occurred to you. You’ll find a lot of good ideas for yourself in these examples, just make sure they apply to you before you use them. It’s unfortunate a few basic clauses are missing. With those added in (which you can find on other free leases), these would be good leases to start with. In my thinking, I would take the house lease, add appropriate details (rules, regulations and the like) that look good from the apartment lease, add in the missing clauses and use that hybrid.

Here is a link to these forms (as well as a few others):

http://www.e-renter.com/resources

Or Click Here to see which free lease agreement we think is the best.

 

Free Lease Agreement Review: BuyIncomeProperties.com

BuyIncomeProperties.com – There are two forms on this site, simply designated Lease Agreement and Lease Agreement II. The first one is clearly intended for Pennsylvania, using terms such as township which won’t be common in most states. It also calls for both a deposit and last month’s rent (nice if you can get it, but many markets won’t go for that). Additionally it says the landlord is taking responsibility for water and garbage, so you’ll want to change that unless you want to pay those (and there is specific language about what days garbage is picked up that you’ll need to adjust or drop). One big problem is it says the landlord will take care of “necessary repairs” without defining what is necessary, or who gets to determine what is necessary. What the landlord and tenant think is necessary are going to be different things without written guidance. You’ll have to clean up this language. Section 13 allows the landlord to enter at any time without notice; again in most locations this is illegal, no matter what is agreed to in a lease. Forcible entry is not something you hear about often, but as a landlord/property manager you don’t want to be found guilty of it! Best to adjust this language to the specifics of notice and entry allowed by law in your location. Section 14 waives the notice to quit (giving the landlord the right to take possession any time there is a breach like failure to pay). I don’t know of anywhere that is legal (again, in spite of what is agreed to in a lease). In most locations acting on section 14 would be considered constructive eviction by the court, and the judge would likely be disinclined towards showing you any mercy. Be very, very careful on section 14. If you really want to keep it in, you need to ask an attorney if it’s possible in your location. Otherwise this lease does have some of the clauses you would want: severability, successors, entire agreement, but is missing some like remedies cumulative and choice of law and the sublet prohibition clause is entirely too weak. On whole, not the worst I’ve seen, but a few serious issues have to be addressed before it’s usable.

Lease Agreement II looks remarkably like one that used to come with one of those “nothing down” get rich packages people ordered on TV in droves in the ‘80’s and ‘90’s. Maybe that’s just a coincidence. This agreement does a good job of covering the clauses you want to see in a lease, including a few you seldom see anywhere else but are helpful, like failure to deliver possession and subordination to mortgagor. It covers most typical rules and regulations, though you’ll likely think of a few to add. The only glaring weakness is section 13 which grants the landlord right to enter at any time without notice. As we’ve seen on other leases, this is likely void under the law in most locations. There can be an emergency clause (can enter in case of emergency) and argue about whether it was an emergency later, but any right of entry clause needs to specify how the tenant will be notified of the entry, and needs to conform to the law. For example, in my location if it’s not an emergency we must give 48 hours notice of entry – it doesn’t matter what’s agreed to in the lease. Other than that, this is a solid form that with just a little tweaking to meet your specific needs, is a good starting point.

Here is a link:

http://www.buyincomeproperties.com/FreeRealEstateForms.htm#rentalagree

Or Click Here to see which free lease agreement we think is the best.

Free Lease Agreement Reviewed: Total Real Estate Solutions

Total Real Estate Solutions – This is a straight-up lease, no wizards etc., with a few blanks to fill in (and some have been filled in already). Honestly this looks like a lease that someone is using in real-life, and have made it available online. It does a good job of including most “must have” clauses like waiver and indemnity, although its “time is of the essence” clause seems to limit that to just payments, and you really want that for any performance required of the tenant. It goes also into good detail on all those messy issues like access, minor repairs, noise, etc.

There are a couple of concerns, though. Sections 12 and 17 deal with abandonment, giving the landlord the right to repossess the property without notice. Most, if not all, states would consider that constructive eviction which could put a landlord in really, really hot water. You never want to repossess a property without following proper notice procedures (even if that is just posting a notice on the door and taking a picture of it before you enter a property you think is abandoned) unless a lawyer has advised you plainly that the law in your areas exempts you. Even worse, section 7 says that no notices from landlord are required to commence eviction. This is almost certainly illegal everywhere, no matter what the lease says. In many states you have to swear out on the eviction complaint what date you gave written notice. Try putting “no notice required by lease” and the judge will almost certainly dismiss your action.

Section 27 also makes the tenant responsible for all plumbing repairs. You want to be careful there – in many states that would not be legal. Most states at least call for the landlord to make the property habitable under a common law theory called the “warranty of habitability”. For residential housing this means the landlord can’t get out of the basics – heat, water, electric and so forth, even if the tenant agrees to it in the lease. Most locations it would be reasonable for the tenant to agree to minor repairs, but not reasonable for them to be held accountable for all plumbing (or all heating, etc.).

This lease uses a lot of tough language; you can tell the author has seen their share of fiascoes with tenants, but in several cases the language borders on unreasonable as in the above sections. Caution is advised. However, this is a good starting point lease if you double-check and rewrite areas where it looks like it has gone too far.

Here is a link:

http://www.totalrealestatesolutions.com/realestateforms/html/rentalcontract1.html

 Or Click Here to see which free lease agreement we think is the best.

Free Lease Agreement Review: ezlandlordforms.com

EZ Landlord Forms – this site’s business model is to offer you a free lease agreement you can fill in via a wizard, but then tries to sell you a more complete, state specific version for $25. The fill-in wizard is well detailed, and will give you a good idea of some of those clauses you need in your lease (property built before 1978? lead paint forms are required, and the wizard makes sure to ask you). You will be required to create an account (so they can send you lots of follow-up emails trying to sell more of their products, of course!). Unfortunately the free version leaves much (very much) to be desired, doing little more than naming the landlord, tenant and property, describing the length of lease, deposit and property condition. No lead paint clauses, not even any sub-leasing or pet clauses, just the barest of bare bones. This free version is more likely than not to get you into hot water eventually. Plus, you have to fill out the full information for the paid version each time (seven pages worth in the Wizard) even though you aren’t using it. The wizard does try to give you hints and advice that are specific to your state; in some cases this was useful, however we also saw that some of it was incomplete, possibly incorrect . It appears that they attempt to determine if you are in an URLTA area or not, but it seemed a little confused about the results. If you’re willing to spend $25 for the good version, it looks like a reasonable starting point, and the wizard is quite customizable. You should definitely pass on the free version, though, in my opinion.

Here is the link for this form:

http://www.ezlandlordforms.com/documents/41050/free_lease_agreement/