About the Importance of Lease Agreements
You would think that the many court shows on television would warn potential landlords of the dangers of taking in renters without an official lease. But still, many owners will rent a property with only a verbal agreement, either because they are in a rush, uneducated about the rental process or are renting to family and friends. It doesn't matter what the situation is---you should always get a written lease agreement for the rental of property.
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Terms of the Lease
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The most basic purpose of the lease agreement is to outline the terms of the lease, including the monthly rent, length of the arrangement, security deposit on the rental, when the rent is due and information on how the agreement can be extended. The renter and owner must also both understand who is responsible for what, especially when it comes to repairs and the general maintenance of the property.
In Hindsight
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Oftentimes, when a person is looking for a new place to live, he can be starry eyed: Everything looks great on the surface, but down the line the renter may find out that everything was not as it first seemed. Some renters are so excited about taking on a new piece of property that they don't take the time to listen to the rental requirements, inclusions and exclusions. That's where many problems start and it's one of the most important reasons why you should always draw up a written lease agreement, so that they can refer to everything on paper.
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Clarifications
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After the excitement wears off and your new renter has taken possession of the property, you will likely get calls from him or her about issues with the property. For example, maybe the renter didn't realize that heat was not included in the rent. If there is something she is confused about or disagrees with, all you need to do is refer her to the lease agreement, which is binding---everything should be outlined there.
Set Expectations for Tenants
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Another reason why landlords draw up written lease agreements is so that they can set out clear expectations for each tenant. In addition to payment terms, a lease contains rules and regulations regarding the property, such as "No playing music late at night" or "No overnight guests." The lease guides the conduct of each renter to avoid damage to the property and problems with neighbors. The lease should clearly prohibit illegal activities on or around the property.
Head Off Problems at Termination
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Finally, and possibly most importantly, a written lease lets both parties know what to expect when either the renter or owner has to terminate the rental agreement. If the renter fails to pay rent or is being disruptive, the lease will state when and how the landlord can terminate the agreement and start eviction proceedings (if necessary). If the renter needs to leave early, the lease will outline what costs he or she will have to pay in order to move on. In some cases, the landlord may also want to include a clause in the lease about terminating the agreement at any time in case an opportunity arises that would require him or her to repossess of the property (for example, if the property is being sold).
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