Understanding your lease as a renter
You found a rental that checks off all the necessary points on your checklist. Now is the time to tackle the leasing process.
A lease is a legally binding contract, so it is vital you understand exactly what you are agreeing to before you sign. Having a firm grasp on the leasing process will help you prepare to move quickly when you find the right rental. Plus, there may be room to negotiate certain terms with the landlord before you sign the lease. Here are three questions to consider:
How long do you plan on living there?
You may have options when it comes to the length of your lease, whether the typical one-year term or a shorter month-to-month term. Ending your lease early — often referred to as “breaking your lease" — can result in financial and legal consequences. Here's the difference between lease terms:
Short-term lease: Renting month-to-month allows greater flexibility, because you can give short notice when you are ready to move. The potential downside is that you aren't guaranteed the same cost security as with longer leases. For example, your monthly rent might increase more frequently, whereas your monthly fees are likely locked in with a long-term lease.
Long-term lease: With a year-long lease, you are protected against rent increases for the duration of the year. But you’ll have less flexibility if unexpected circumstances arise and you need to move before your lease expires.
Are there any final terms to negotiate?
Before you sign your lease, you should consider adding these final four items to your checklist.
Negotiate any special terms. In addition to negotiating the rent, you may be able to arrange for the security deposit to be paid over several months instead of all at once. Make sure anything you negotiate is captured in writing and signed by both parties.
Ask questions. It's natural to have some questions. Consider writing down your concerns to the landlord, leasing office or another trusted advisor if you need clarity. Of note: determine if the landlord lives on site or if a local company manages the property, and ask how repair requests and general upkeep are handled.
Complete a walk-through inspection. It's best to do a walk-through inspection of the property with the landlord or someone from the leasing office before you sign the lease. Have the landlord document any damage or wear and tear that you see in the unit in an inspection report.
Read the lease thoroughly. Take time to read the lease carefully, as it is a legally binding contract. Leases should include information about the number of people who can live in a unit, expectations for noise level and occupancy duration. Make sure all terms you have discussed are included before you sign the lease.
What costs are you responsible for?
After negotiations are complete, you’ll be responsible for several upfront costs, which you may be required to pay by check. Upfront costs may include:
Security deposit. The security deposit is typically equal to one- or two-months’ rent. When your lease is up, you will get this money back if there is no damage or excessive wear and tear. That’s why it’s important to document existing damage with a walk-through inspection report before you move in.
One- or two-months’ rent. Landlords may require one or two months’ rent up front.
Pet deposit. If you have pets, you may be required to pay a pet deposit when you move in. Some landlords charge a monthly pet fee on top of that.