What Is a Lease? A Simple Explanation for New Landlords

A lease is the contract between you and your tenant. It sets the rent, when it's due, who pays utilities, how long the tenancy lasts, and the rules both sides must follow. You need one for every tenant—it protects you and them and makes disputes easier to resolve.

What Is a Lease?

A lease (also called a rental or tenancy agreement) is a legally binding agreement: you give the tenant the right to live in the property for a set period in exchange for rent and their agreement to your rules. It can be written or, in some states, oral—but a written lease is best. It gives you and the tenant a clear record of what was agreed. If you just bought your first property, see How to Buy Your First Rental Property for what to do after closing; the lease is one of the first things you'll use.

What Should Be in a Lease?

A good lease includes: rent amount and due date, length of tenancy (e.g. 12 months), who pays utilities (you or the tenant), security deposit amount and when it's returned (see Security Deposits), and rules—pets, guests, whether you require renters insurance (see Should Landlords Require Renters Insurance?), maintenance requests, no subletting without permission, etc. Many landlords use a state-specific or lawyer-reviewed form so the terms are enforceable. Landlord-tenant rules (what must be in a lease, deposit limits, notice requirements) vary by state—see Landlord Legal Compliance for an overview. When you screen tenants and write your lease, you must also follow fair housing laws; see Fair Housing for Landlords.

Why You Need a Lease

Without a lease, you and the tenant may disagree later about rent, due dates, or rules. A written lease gives both sides certainty: what the rent is, when it's due, what happens if it's late, and what behavior is allowed. If you ever need to evict or keep part of the security deposit, the lease is the first place you and a court will look. Taking the time to get a solid lease up front saves trouble later. For the full workflow from application to signing and renewal, see Lease Management: From Application to Renewal.