Whether you’re a property owner or a tenant looking for a place to rent to live or start a business, you’ll need to know the ins-and-outs of leases.
Leases not only protect your rights but help prevent misunderstandings and define the responsibilities of each party. Though there’s no legal requirement for leases, it’s always good practice to make one to ensure all terms are documented and enforceable.
But now comes the hard part (as is the case with legal documents), how do you create a lease agreement?
In this guide, I’ll cover everything you need to know about leases including how to make your own using a Contract Maker and lease contract templates.
Click to jump ahead:
- Understanding lease agreements
- Navigating lease agreements
- Additional resources on lease agreements
- General lease information
- FAQs
- Conclusion
Understanding lease agreements
Before learning how to create a lease, let’s understand what lease agreements are and the different types you can create.
What is a lease agreement?
A lease agreement is a contract between a landlord and a tenant. It outlines how much a tenant will pay, the length of contract, and expectations of both parties.
Here’s an example of an effective lease agreement.
If you’re not sure what a landlord and tenant means, here’s a brief overview.
- Landlord: An individual who owns a property (or land) and rents it out.
- Tenant: A person who occupies a property and pays the landlord each month.
Residential lease agreements
Anyone who’s moved cities or countries for education or work will know that finding a place to live usually requires signing a residential lease contract.
Residential leases are the most common type of lease contracts and different from commercial leases which are intended for business purposes (office space, retail store, warehouse).
Who needs a lease agreement?
Lease agreements are necessary for landlords and tenants as it protects interests of both parties, provides legal clarity, and minimizes disputes.
Why do you need a lease agreement?
Lease agreements are essential because they outline terms and conditions between a landlord and a tenant. More specifically, a lease agreement provides the following benefits.
- Allow smooth dispute resolution
Since lease agreements include details on responsibilities of both parties when it comes to rent-related issues such as maintenance, misunderstandings can be reduced or avoided altogether.
- Provide security and sets expectations
Lease agreements offer both parties legal protection against non-compliance or any abrupt changes in terms. It also sets expectations so that there is no confusion about what is expected from each party.
- Enable protection of rights and responsibilities
Lease agreements clearly delineate the rights and responsibilities of landlords and tenants which enables both to take action if obligations are not met.
Navigating lease agreements
Now that you have some background on leases, let’s see how to create one.
Can I write my own lease agreement?
Anyone can create lease agreements and there’s two methods to go about this.
- Create a lease from scratch
- Use a legal lease template to save time
Creating a lease from scratch gives you flexibility to personalize the design. However, if you don’t have professional design skills or legal experience, you might forget important details.
This is why lease contract templates are recommended along with legal counsel when creating leases.
For example, this lease agreement template lays out the all the necessary details required in a clear structure and visually appealing format.
How to create a lease agreement
To create a lease agreement that is legally binding, follow these three easy steps.
Choose a lease agreement template
First determine the type of lease agreement you need (residential vs commercial lease agreement?).
Again, a lease contract template is recommended so that you don’t forget important clauses or information.
To find lease agreement templates that don’t require design skills to edit, check out Venngage — a simple and powerful tool to create effective leases.
Note: Some of our lease agreement templates are free to edit and some require a small monthly fee.
For example, here’s a sample of one of many customizable lease agreement templates featuring a professional design with clear fields for easy completion.
Edit the template
Go through the template and fill in details such as landlord/tenant name and address, rent amount due, security deposit required, and terms and conditions.
If you want to change the layout or conditions in the template, Venngage’s drag-and-drop interface makes it super fast and convenient.
3. Download (share) your lease agreement
Once you’ve finalized a lease template, you can download it to print (available only to Business users) or share a link to it for the tenant to sign (free for all users).
How to create a residential lease agreement
Creating a residential lease agreement is not too different from the steps above. Here, your first task is to figure out whether you require a standard or comprehensive lease agreement.
Standard vs comprehensive lease agreements
Standard lease agreements are simple one-pagers that cover essential information such as rent and maintenance whereas comprehensive leases are longer, more complex, and can include very specific clauses such as guest policies and pet restrictions.
Once you know which type of residential lease contract you want, browse our collection of lease contract templates.
Here’s an example of a standard residential lease contract that separates details using with clear sections and headings.
This comprehensive lease agreement is designed for detailed property rental contracts while providing flexibility for customization based on specific rental situations.
How to choose the right format
When deciding between comprehensive vs standard lease agreements, consider the type of property in question.
For example, if you’re renting out a room, a standard lease agreement is probably enough but a comprehensive lease agreement is better for entire homes.
Fixed-term vs. month-to-month leases
A fixed-term lease is generally used for long-term deals whereas month-to-month leases are more flexible and preferred for short-term agreements.
Fixed-term
Fixed-term leases are a least 6 months in duration, but can also last a year, or several years at a time. During this time, making changes to lease terms is difficult.
Here are the pros and cons of fixed-term leases:
- More secure option for both landlords and tenants
- Lack of flexibility
Month-to-month
A month-to-month lease, like the name suggests, only lasts one month after which it revised, renewed, or cancelled.
Here are the pros and cons of month-to-month leases.
- Extremely flexible
- Not sustainable in the long-run
Renting out a room
If you have a spare room in your property, you’ve probably considered renting it out to earn some extra cash. But renting out a room is different than renting our an entire property.
That begs the question — are leases required to rent out a room?
Though not necessary, it’s recommended you still create a lease when entering any rental agreement so there is no risk of disputes later on.
This room rental contract template is visually appealing and ensures both parties understand their responsibilities and the terms.
Rent-to-own lease agreements
Rent-to-own is a type of agreement that allows tenants to purchase a rental property before the lease ends.
These agreements are rare and include two parts — the lease agreement and the option to buy. For these types of agreements, professional legal consultations are recommended.
Additional resources on lease agreements
Now that I’ve shown you different types of lease agreements and how to create one, let’s go through some additional resources.
Downloadable lease agreement templates
As mentioned earlier, rather than creating a lease from scratch, editing professionally-designed lease agreement templates save you time.
Here are some lease contracts you can customize whether you’re a newbie designer or a seasoned pro.
This lease contract template provides a structured format that makes it quick and easy to formalize rental agreements.
This lease contract template is designed to clearly outline the rental agreement between a landlord and a tenant.
This template provides a clear and organized format to ensure all essential rental terms are documented and agreed upon.
Understanding common lease terms
When creating a lease, you need to be aware of specific terms to avoid misinformation and misunderstandings.
Here’s a list of common lease terms (relevant to the US market).
- Rent: The amount of money a tenant pays the landlord to occupy a property during a specific timeframe (usually a month).
- Lessor: The landlord.
- Lessee: The tenant.
- Security deposit: A refundable deposit paid upfront by the tenant at the beginning of the lease.
- TMI: Refers to taxes, maintenance, and insurance. This is found on triple net lease agreements where the lessee pays for incidental expenses.
- Term length: The duration for which a lease is valid.
- Parties: People involved in the lease and bound by the agreement.
US landlord-tenant laws
Each US state has different landlord-tenant laws, so it’s important you learn local laws before creating or signing any lease, especially if you’re a outsider.
General lease information
Are you planning to lease a property but need help? Don’t worry—some things you need to know are coming up now.
How to lease a residential property?
If you’re looking to lease a residential property, follow these steps.
- Shortlist the neighborhoods you want to live in.
- Search for vacant units on social media, property websites, or newspapers.
- Contact a real estate agent or the property owner directly.
- Arrange to view the property.
- Evaluate the property and consider factors like condition, amenities, and lease terms.
- Review the lease agreement thoroughly, checking for important clauses.
- Negotiate terms if necessary (e.g., rent price, lease length, maintenance responsibilities).
- Conduct a walk-through inspection to document the property’s condition before moving in.
- Finalize the deal and sign the lease.
- Pay the required deposits and fees.
How to fill out a lease agreement
About to sign a lease but don’t know how to fill it out? Just follow the visual walkthrough below.
Start by filling out the contact information of the landlord and tenant.
Next, write down the address of the property being leased out, term duration, and amount of rent to be paid and by when.
The next set of details to fill includes information on the security deposit and when it will be returned once the lease finishes.
Once you’ve filled out all terms, read through the list of terms and conditions. Before you finalize, make sure to consult a lawyer to ensure everything looks in place.
Sample completed lease agreement
Here is a sample of a completed lease agreement you can use for comparison.
Frequently asked questions
How do I rent a room in my house?
To rent a room in your home, first review landlord-tenant laws specific to your jurisdiction or state to understand the requirements. Once you have a basic understanding of the law, list your room online and offline and wait for applications to roll in.
Lease vs. rental agreement: What’s the difference?
Rental agreements are short-term agreements (usually on a month-to-month basis) whereas leases are long-term (usually 6 months and more).
What are my responsibilities as a landlord?
Some responsibilities of a landlord include home insurance, property taxes, and maintenance,
I found a term in my lease agreement I don’t understand. What should I do?
Talk to your landlord about any terms you don’t understand (ideally prior to signing a lease). Ask for an explanation, suggest changes, or negotiate a middle ground if needed. If this fails, consult a legal expert.
Are free lease agreement templates safe to use?
Yes, lease agreement templates are safe to use but it’s always a good idea to get an attorney to review it.
How do I know if I need a state-specific lease agreement?
Consult a local attorney or real estate professional to understand state-specific lease requirements as each state has variations in landlord-tenant laws that govern leases, including security deposits, eviction procedures, and tenant rights.
My roommate keeps breaking lease rules. What are my options?
If your roommate keeps breaking lease rules, speak to them first. Communication can often solve your problem. If this does not work, speak to the landlord or a legal professional.
Can I rent out my apartment to someone else (sublet)?
Your ability to rent out an apartment as a sublet depends on your lease agreements. Each landlord is different and some may allow tenants to sublet and some may not.
My lease is ending soon. What happens next?
If your lease is ending soon, you can speak to landlord about extending your contract or start searching for a new place to live if you’re keen to move out.
Conclusion: Make effective and visually appealing lease agreements in seconds with Venngage
When renting out a room or property or signing a lease, it’s important not to rush and do your due diligence and understand the laws.
To protect yourself, you’ll want to invest in effective lease agreements using templates made by professional designers. It’ll save you time and headaches in the long run.
Check out our lease contracts and start customizing for free!
