What You Should Know about the Lease Contract

Considerations for First-Time Home Renters

To secure your new place, you will be signing a lease contract. This legally binding contract between you and the landlord will detail the responsibilities of each party. It is extremely important to read the lease agreement thoroughly before signing.  There will likely be some legal jargon to sort through, so take your time and don’t be afraid to ask for clarification if you don’t understand something. Once the lease is signed, you and the landlord are legally bound to carry out the responsibilities you agreed to.

Specific Contract Details to be Aware of

  • Pet Policy
  • Parking policy
  • What day is rent due each month?
  • What is the fee if the rent is late?
  • Length of the lease
  • Fees associated with breaking the lease
  • Is rental insurance required?
  • Who pays the utilities?

Initial Costs for First-Time Home Renters

The upfront cost of applying, securing, and moving into a rental is something that many first-time renters are not prepared for. In addition to saving up for the first month’s rent and utilities, there are a few other costs that you might need to cover before moving in.

  • Application fees
  • Security deposit
  • Pet deposit
  • Utility deposit
  • Rental insurance

Minimum Requirements

Most landlords have a minimum credit score and income requirement for renters. Having this requirement helps them secure renters that are financially stable. To determine if an applicant meets the minimum requirement, the landlord will likely request to see bank statements &  paystubs and pull a credit report.

If your financial situation does not meet the minimum requirement, you may need to have someone co-sign the lease with you. A co-signer is someone that may not be living in the home but assumes legal and financial responsibility if the tenant fails to do so. Oftentimes, a co-signer is a parent, relative, or close friend of the tenant.

Renter’s Insurance

Whether the landlord requires you to have it or not, renters insurance is very important and well worth the minimal cost. This type of insurance will reimburse you for covered damage, loss, or theft of your personal possessions up to the amount of your policy. The average policy costs approximately $15 a month for up to $30,000 in personal property coverage. With the affordability of renter’s insurance and the peace of mind the coverage will give you, securing a policy is a no-brainer.

This wonderful security blanket can be obtained through many providers. Most renters consult with their car insurance providers for their renter’s insurance.

Roommate or No Roommate?

Roommates for first-time renters

Have you decided if you are going to have a roommate or not? Most first-time renters opt to live with a roommate in order to help with monthly rent and utilities. Be sure to do your research to compare the costs (including utilities) of renting a smaller place and living alone versus renting a larger unit and splitting the bills with a roommate. There are definitely pros and cons either way. It will be a safe bet to sort this out before signing a lease as it becomes tricky to add or remove tenants to the lease later on.

Don’t Skip the Walk-through

It may be tempting to move all your belongings into your new home immediately after signing the lease, but there is one HUGE task you should do first. Inspect it! Schedule a time to walk through the unit to inspect the condition of the space, appliances, and utilities. Document any defect that you see. Provide your list of defects, needed repairs, and cleaning issues to the landlord before moving in. Doing this will also ensure that you are not held responsible for any of these issues at the end of your lease since you have documentation that they existed before you moved in.

Things to consider before signing the lease agreement

Here are some things to look for and test during your inspection.

  • Look for damage or discoloration to walls, floors, countertops, appliances, etc.
  • Open and close all doors and cabinets to ensure they open and close properly.
  • Open faucets to check for water pressure and to ensure hot water is present
  • Look inside all appliances to ensure they are clean and all parts are present.
  • Turn on appliances to ensure they work properly
  • Test all electrical outlets by plugging in a small lamp or a cell phone charger.

You Have Rights as a Renter

Sure, the landlord owns the property, but once you sign that lease, you actually have a form of temporary ownership. That means you have rights as a leaseholder and you should be aware of what they are.  California residents can download this renter’s guide that outlines the rights and responsibilities of landlords and tenants in California. If you are not in California, visit this website to find resources and information about tenant rights in your state.

One Last Thing to Consider for First-time Home Renters

Successfully renting your first place can be a trying process. Do your due diligence and be patient. You will be best served by saving a little extra money and waiting for the perfect rental home. This will be your home for the foreseeable future, so do your best to secure a home and lease that suits your budget and preferred lifestyle.