A lease is a contract in which a property owner or manager (also known as the "landlord" or "lessor”) agrees to let another person or entity (the "tenant" or "lessee") use the lessor’s real property in exchange for something of value (usually money), for a set period of time. Usually, leases end after a year, but landlords and tenants are free to negotiate different lease periods. During the lease period, the parties typically cannot change the terms of the agreement.

Landlords and tenants usually try to address all of the parties' rights and responsibilities in the lease. There are many things that a lease must contain, like the parties' names, a description of the rental property, and the amount of rent. Leases can also contain optional terms, such as detailing who has to pay for utilities, whether or not pets are allowed, and if there’s a fee for late rent payments. Finally, there are things that the parties cannot put in a lease, such a waiver of the tenants’ right to a refund of their security deposit.

Some states regulate leases, and every state’s laws differ. So, whether you're a landlord or tenant, be certain to check the laws in your area, or seek the advice of an attorney experienced in landlord-tenant law, before signing a lease.

Necessary Elements of a Lease

Generally, if the term of a lease is for one year or longer, it needs to be in writing. A lease can be an enforceable contract, regardless of whether it is written or oral, but having it in writing makes it easier for all parties to understand and enforce their rights and obligations. Having the lease in writing also avoids uncomfortable disagreements when the parties can’t remember the details of what they agreed to.

Many states require landlords to make certain disclosures, such as whether or not there are smoke detectors in the unit or where the landlord will hold the tenant’s security deposit. Depending on the state’s law, a landlord might want to put required disclosures directly in the lease. Some other items that need to be in the lease include:

• The names of the parties. Write out the full legal name or names of all landlords and tenants. Also, each party must have the "legal capacity" to enter into a lease. Generally, anyone can execute a lease except for minors (most states consider people under the age of 18 to be minors) and people who are unable to understand the meaning or effect of the agreement.
• A description of the rental property. The description should be as precise as possible. If a property has a street address, be sure to include it (along with the city or town, state, and zip code) in the lease, along with a unit number, if there is one. In addition, if there are common areas that tenants can access, such as storage areas or parking spaces, describe them as specifically as possible in the lease.
• The amount of rent. Include the exact dollar amount of the rent, as well as when it must be paid, how it must be paid (cash or check, for instance), and if there'll be a charge for late payments.
• The length of the rental period. Also known as the “term” of the lease, this is the date on which the lease ends and the tenant must move out or sign a new lease.

In those states that require a lease to be in writing, a lease is invalid if it fails to describe the land, specify the length, or set the amount, time and manner of rent payments.

Common Lease Provisions

Most residential leases contain numerous terms relating to the rental. Although they might not be necessary elements of a lease, they help the parties understand their rights and responsibilities. Some common lease terms include:

• the amount of the security deposit
• what utilities the landlord provides and what utilities the tenant must pay for
• if pets are allowed
• the parking available to tenant—if any
• who is responsible for upkeep and maintenance
• the landlord's duty to keep the premises habitable, or "livable," by providing things like adequate water, heat, and power
• any requirements for the parties to obtain and maintain appropriate insurance
• if, how, and when the lease can be terminated or ended early by either the landlord or tenant
• how many tenants may live on the premises, and whether rent will increase if additional tenants move in, and
• whether or not the tenant may "sublet" the premises (rent it to someone else), with or without the landlord’s permission.

Prohibited Lease Provisions

State laws vary, but most states prohibit lease provisions that:

• prohibit children from living on the premises (unless the residence qualifies as “senior housing” or a “senior facility”)
• treat tenants differently on the basis of race, color, sex, religion or national origin (or any similar discriminatory statement that violates fair housing laws)
• waive tenants’ rights to a refund of their security deposit
• eliminate the landlord’s duty to keep the premises habitable
• waives tenants’ rights to file a lawsuit against the landlord for landlord’s conduct
• grant landlords greater rights to enter the premises than those specified by state law, and
• limit tenants’ remedies if the landlord enters the premises unlawfully.

In some states, when a lease contains any of these clauses, it is invalid and unenforceable—meaning that the tenants may break the lease without any consequences. Courts view landlords who deliberately include illegal terms in their leases in an especially poor light, often assessing punitive damages (additional damages aimed solely to punish the landlord), fines, and other penalties.