Skip to main content

How to Create an Effective Lease Agreement

How to Create an Effective Lease Agreement

The first step in having a successful rental is writing a comprehensive, effective lease agreement that outlines the terms and conditions for the landlord and your tenant. It protects both parties by clarifying the responsibilities, expectations, and anything that may happen in case of a dispute, establishing the legal relationship between them.

In today’s article, we will cover the key elements of a successful lease to create a legally-binding document that meets all your needs. We will go over why such an agreement is beneficial, what types of agreements you can have, what it should include, and how to draft one properly. 

Why you should have an agreement in place

Like any other professional relationship, the parties should create a clear set of rules that both of them need to follow, a set of expectations to understand what each of them needs to fulfill, and regulations around what happens when things don’t do as planned. With a lease agreement in place, landlords can hold tenants accountable for any violations and protect their rights as a landlord. According to this Los Angeles property management company, It also protects them from any potential legal action arising from a tenant’s breach of the agreement. However, they can also be held accountable to respect their end of the deal. 

Note that a lease agreement should be tailored to the specific property and situation. For example, a single-family home lease agreement may differ from one for a multi-family unit. If any side has something specific they want to put in, they must ensure the deal covers it. This brings everyone to the same page, proving a legal framework. 

In case of breach of the contract, both will be legally protected by what has been spelled out here and will prevent any legal disputes that may arise. 

Types of lease

  • Fixed-term lease: A fixed-term lease is a contract that lasts for a specific period, usually one year. This type provides stability and certainty to both the landlord and the tenant. It also allows the tenant to plan and budget for the future.
  • Month-to-month lease: This type of lease is just what it sounds like—it is renewed on a monthly basis. This type of lease is good for tenants who need short-term housing or for landlords who need to have more flexibility. The downside is that it is slightly more expensive for tenants.
  • Sublease: A sublease is when a tenant agrees to rent the property to another tenant. This type benefits tenants who need to move out before their lease is up, allowing them to recoup some of their costs. The tenant must understand their responsibilities and ensure the subtenant is reliable.

What should it cover

Now that we’ve understood the benefits let’s go over what it should include. 

  • Names of the landlord and tenant: This includes the full legal name of both the landlord and the tenant and any other authorized parties, such as a property manager.
  • Description of the property: This includes the address of the property, the number of bedrooms and bathrooms, and any other pertinent information.
  • Length of lease: The lease should cover the start and end times. 
  • Limits of occupancy: This clarifies that the unit will be occupied by only people who have been screened and are signing the lease and by their minor children.  
  • Rent amount and payment deadlines: This specifies the amount of the rent and when it is due. It should also include any late fees or penalties for late rent payments.
  • Deposits and fees: Security deposits, alongside any other fees that will be implemented, need to be included as they are one common source of frustration between tenants and landlords. 
  • Rules and regulations: This includes any rules and regulations the tenant must follow, such as quiet hours and noise levels, maintenance guidelines, pet or smoking restrictions, etc.
  • Utilities: This settles who is responsible for paying for utilities such as electricity, water, and garbage.
  • Subleasing or subletting: This covers any restrictions on subleasing the property.

How to Draft a Lease Agreement

An efficient lease agreement must include all the categories above and their specifications. Each subject must be detailed to include all the information, leaving no room for confusion or extra discussions. You may use a model you find online or have a lawyer draw it up. 

We advise ensuring the tenant reads the agreement fully and understands all responsibilities and consequences. We also recommend involving a property manager or a local real estate lawyer. 

As a last step, have someone (or yourself) re-edit and format the agreement. Make sure it includes formatting elements and property signature places, and check grammar to make it professional. 


While the lease agreement may be scary for some people, and they may even sign it without properly reading it, it is, in fact, something beneficial that can quickly be drafted. 

Here is where we recommend letting a property manager handle this for you. Not only can they do it quickly and without fuss, but they can make sure you don’t overlook anything important. 

Get in touch with us today and learn more about our services.