Rental Lease Agreement

A lease agreement (also called a rental contract) is a legal document between a property owner (landlord) and a renter (tenant) that sets the rules for renting a home. This document controls the relationship during the rental period, detailing the rights and responsibilities of both people.

Around 35% of homes in the U.S. are rented. ^[6] Most of these (about 68%) are set for a fixed period (like 12 months), while the rest (about 32%) renew month-to-month. ^[8]

By Type

Residential Leases

Standard Lease: This contract fixes the rental time, usually for one year, for a home.

Month-to-Month: This deal keeps going until the owner or renter sends a notice to stop it.

Week-to-Week: This is a very short-term deal that only requires 7 days' notice to end.

Short-Term Stay: A contract for renting a place for less than 30 days.

Condo Lease: A contract for renting a unit that is part of a condominium group.

Roommate Deal: An agreement that decides who is responsible for what between people living together.

Family Lease: A rental agreement made between people who are related.

Commercial Leases

Commercial Lease: This is for renting a property to use for business activities.

Commercial Sublease: This happens when a business renter rents their space to another business.

Specialty Leases

Rent-to-Own: This contract gives the renter an option to buy the place later.

Sublease Agreement: This is when the original renter rents the home to someone new (the subtenant).

Storage Space: This is an agreement just for renting a storage unit.

Equipment Lease: This is a contract for renting large machines or gear.

Hunting Lease: An agreement that rents the right to hunt on private land.

Parking Space: This contract is just for renting a designated parking spot.

The Rental Process

The process of renting involves several important steps, regardless of whether a property owner is looking for people to rent or a person is searching for a home.

Step 1: Finding and Marketing the Place

Most renters (86%) start their search online. Some (19%) even apply without visiting the property in person^[7] Websites like Zillow and Apartments.com are popular for finding available rentals.

Step 2: Viewing and Application

After seeing a property, interested people fill out a rental application. Most renters (84%) pay an application fee, which is often around $50. ^[7] The application typically asks for:

• Name and contact information
• Job and income details
• References from past landlords
• Permission for credit and background checks

Step 3: Checking the Renter

Owners use official reports to check applicants. Under the Fair Credit Reporting Act (FCRA), owners must: ^[5]

• Get written permission before running credit checks
• Have a good reason to check (the housing decision)
• Send a notice if the application is denied because of the report
• Safely destroy the reports when finished

Step 4: Checking References

Contact past landlords to ask about:

• If rent was paid on time
• Any rule-breaking or complaints
• The property's condition when the renter moved out
• If they would rent to the person again

Step 5: Lease Negotiation

Once approved, the owner and renter discuss the final terms. The main concern for most renters (83%) is the cost. ^[7] Common things they discuss are:

• The monthly rent amount
• The move-in date and how long the contract will last
• Who pays for the utilities
• Rules and fees related to pets

Step 6: Signing the Contract

The contract becomes legally valid once both parties sign it. About 40% of contracts are signed electronically, which is valid under federal law (the E-SIGN Act).^[3]

Step 7: Moving in

After signing and paying the required amounts (first month's rent and deposit), the renter receives the keys at the start of the contract. Only 42% of renters report getting their full security deposit back, making a detailed inspection when moving in very important. ^[7]

Step 8: Paying Rent

Most renters (60%) pay rent online. Common ways to pay include bank transfers (ACH), credit cards, checks, or money orders.

Step 9: Renewal or Termination

Before the contract ends (usually 30 to 90 days before), the owner tells the renter if they want to renew the lease or end it. Options include signing a new contract or receiving a notice that the lease will not be renewed.

Step 10: Deposit Return

After the renter moves out, the owner checks the property and returns the security deposit, subtracting any money for legitimate cleaning or damages. State laws specify how quickly the deposit must be returned (usually 14 to 60 days) and how deductions must be itemized.

Landlord Obligations

Implied Warranty of Habitability

All property owners have a basic legal duty to keep the rental property in a condition that is safe and fit for people to live in. ^[4]This rule exists in every U.S. state and cannot be canceled by any clause in the lease contract.

Requirements include having:

• Good protection against weather and water leaks
• Working plumbing with hot and cold water
• Enough heat available
• Safe electrical wiring
• Clean and sanitary living conditions
• No pests or rodents
• Compliance with all local housing laws

Fair Housing Compliance

Under the Fair Housing Act, property owners are not allowed to discriminate against renters based on: ^[1]

• Race or color
• Religion
• Where a person or their family is from (national origin)
• Sex (this includes gender identity and sexual orientation)
• Familial status (families with children)
• Disability

Property owners must also provide necessary and reasonable changes for renters with disabilities, such as allowing service animals and changing certain rules if needed. ^[11]

Information to Share

Lead-Based Paint Disclosure (For Housing Built Before 1978)

For homes built before 1978, property owners must: ^[2]

• Tell the renter about any known lead-based paint or dangers
• Give the renter the official EPA booklet called 'Protect Your Family From Lead in Your Home'
• Include a specific Lead Warning Statement within the lease contract
• Keep copies of all these disclosure records for 3 years

Other Required Information (Varies by State)

Many states require property owners to provide additional information, including:

• If the property has had a bed bug problem
• If mold is present
• If the property is in a flood zone
• Information about the sex offender registry
• The rules about smoking
• The contact details for the owner or the manager (agent)

Tenant Rights and Protections

Right to Habitable Premises

If a landlord fails to maintain habitable conditions, tenants may have remedies including:

• Rent withholding (where permitted by state law)
• Repair and deduct (making repairs and deducting cost from rent)
• Lease termination (constructive eviction)
• Legal action for damages

Privacy and Landlord Access

Tenants have a right to quiet enjoyment of their rental. Landlords generally must provide advance notice (typically 24-48 hours) before entering, except in emergencies. Required notice periods vary by state.

Protection From Illegal Eviction

Property owners cannot use illegal tactics, sometimes called 'self-help' eviction, such as:^[12]

Changing the locks on the doors.

Turning off the water or electricity.

Removing doors or windows.

Threatening the renter physically.

Taking away the renter's belongings.

Only a court order carried out by law enforcement officials can legally remove a renter from a property.

Protections for Military Renters (Scra)

Active-duty military personnel have the right to break a lease contract early without paying any penalty in these situations:^[10]

They receive orders to deploy for 90 days or longer.

They receive orders for a permanent change of station (PCS).

They are entering military service for the first time.

Eviction Process

The legal procedure for removing a renter is called an unlawful detainer action. The process usually includes the following steps: ^[12]

Notice Requirements (Owner Must Give Warning)

Pay Rent or Quit: The renter is usually given 3 to 7 days to pay the rent or leave the property.

Cure or Quit: The renter is given a chance to fix a rule they broke in the lease.

Unconditional Quit: This is used for very serious violations, meaning the renter must leave with no chance to fix the problem.

30/60/90-Day Notice: This warning is used when the lease is ended without a specific reason (only allowed in certain situations).

Court Process

The property owner files a formal complaint after the warning notice time runs out.

The renter receives the legal documents (summons and complaint).

The renter has only a short time to respond to the court (usually 5 to 10 days).

A court hearing is held.

If the owner wins, the court issues an official order to take back the property.

The police or a constable then carry out the eviction.

Security Deposits

The laws regarding security deposits are very different from one state to another. These are the main points:

Maximum Amounts

The maximum amount an owner can ask for ranges from the cost of one month's rent up to no limit at all. Common limits include:

1 month's rent: States like California, Delaware, Hawaii, Nebraska, and Rhode Island.

1.5 months' rent: States like Arizona, Michigan, and New Jersey.

2 months' rent: States like Arkansas, Connecticut, Iowa, Maine, Maryland, Missouri, North Carolina, Pennsylvania, and Virginia.

No legal limit set: States like Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Minnesota, Mississippi, Montana, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

Return Timelines for Deposits

Property owners must return security deposits within the specific time limits set by each state. These limits usually are:

14 to 21 days: States like Alaska, Arizona, California, Hawaii, Montana, Nebraska, New York, South Dakota, Vermont, Washington, and Wisconsin.

30 to 45 days: This larger group includes states like Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, and Virginia.

60 days: States like Alabama, Arkansas, and West Virginia.

Some states require property owners to pay interest on the security deposits they hold. These states include: Connecticut, Florida (if the deposit is held for 6 months or more), Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York (in certain areas), Pennsylvania (after the deposit has been held for 2 years), and Virginia.

Permitted Deductions

Property owners are typically allowed to subtract money from the security deposit for the following reasons:

Unpaid rent.

Damage that is more than just normal use over time.

Costs for cleaning (if the unit is not returned in the same condition it was rented).

Other rule-breaking from the lease that has associated costs.

Property owners must usually provide a detailed list explaining any money they deduct from the deposit.

Rent Control and Stabilization

Some areas legally limit how much rent can be increased and require the owner to have a 'just cause' (a good reason) to evict (remove) someone. Major areas that control rent include:

California: Several major cities like San Francisco, Los Angeles, Oakland, and San Jose.

New York: The rent stabilization rules in New York City.

New Jersey: Over 100 different local governments (municipalities).

Maryland: Montgomery County.

Oregon: A limit placed across the whole state (7% plus annual inflation).

Washington D.C.: Rules for rent stabilization.

Always check the local laws to see if rent control applies to your specific property.