Leases are legally binding contracts that serve as the cornerstone of the relationship between the resident and property owner. That’s why it’s important to fully read and understand the terms of a lease, whether you’re an experienced renter or preparing to lease for the first time. Not only is every lease different, but these agreements also often include legal jargon that can be confusing at first glance.
Here are some common lease terms that renters should know before signing on the dotted line. Please note that the content of this article is for general interest and information purposes only and is not intended as legal or other professional advice. Any questions regarding a leasing contract, including the terminology of a leasing contract, should be directed to local counsel.
Automatic renewal/notice to vacate: Typically, renters must give a 60- or 90-day notice that they will not be renewing their lease, depending on the notice date written in the lease, and any applicable state or local laws. In the case of automatic renewal, if you don’t give notice, you may be automatically bound to your lease for another term or subject to a month-to-month agreement.
Deposit requirement: Deposits are sums of money that many rentals require in the event of damage to the home or unpaid rent. If these circumstances do not arise, the deposit is likely to be refunded between 14 and 60 days post-move out, depending on the state in which you live.
Grace period: This term denotes the period of time between your rent’s due date and when the property owner can begin charging a late fee. Some charges can be activated the day after the due date, although most grace periods vary between three and five days depending on your lease, state mandates and local laws.
Guest: A guest refers to an individual whose name is not on the lease and is not responsible for paying rent but may visit occasionally. Leases should have a guest policy that outlines rules such as what kinds of guests are allowed, how many are allowed, how many consecutive nights a person can spend and the maximum number of residents living in the space.
Lessor and lessee: A lessor refers to the property owner or manager while a lessee is the resident.
Month to month: A month-to-month lease is a one-month rental agreement that automatically renews on a monthly basis until ended by either the renter or the property owner. A notice to vacate normally still applies despite the shorter lease term.
Pet deposit/breed restrictions: A pet deposit is a one-time fee that a resident pays upfront to have a pet live in their home. This charge may be refundable depending on whether the pet causes any damage. Your rental home may also restrict certain breeds of non-service animals — generally dogs — or impose restrictions on weight and number of pets.
Prorate: A prorated rent means that a resident is paying according to the number of days they’ve occupied the home in a specific time period rather than the full typical monthly payment. This is often applied if the resident moves in or out mid-month, hence not needing to pay the full month’s rent.
Quiet enjoyment: This term refers to a renter’s implied right to live in their home peacefully without being disturbed by the property owner or ongoing outside disturbances. This may include unannounced visits by the property owner, ongoing construction that has exceeded the expected completion date, consistently disruptive neighbors or other factors that disturb a resident’s enjoyment.
Right of entry: A property owner has the right of reasonable entry to inspect the home, make repairs or show the home to a prospective renter, purchaser or contractor. Entry is generally limited to reasonable times and, except in the case of an emergency, the property owner must give notice of intent to enter depending on the lease agreement and applicable state and local laws.
Utilities: If you see the term “utilities included,” this generally means that services such as water, gas, electricity, sewage and/or sanitation may be included with your rent so you only have to pay one bill. In some cases, other services — like Internet and cable — may also be included, but it’s best to check with your property owner to find out which utilities are covered.
Sublet: A sublet or sublease is a contract that allows a resident to lease their home or part of the home to another individual while their name is still on the lease. This may occur when a resident has to move out early or has to live out of the home for an extended period and needs someone to cover the rent. Subletting is not always allowed and should be discussed with your property manager.
Although lease terms may seem daunting, informing yourself is the best way to ensure that you’re agreeing to a living situation that will work for you. If you see a term you don’t understand, look it up, and don’t be afraid to ask your property owner questions.
Robert Pinnegar is president and CEO of the National Apartment Association in Arlington, Va.