đź“„ What Is a Lease Agreement in Real Estate?

A lease agreement is a legally binding contract between a landlord and a tenant that outlines the terms for renting a property. It defines rent amount, responsibilities, duration, and the rights of both parties throughout the lease period.

How a Lease Agreement Works

A lease agreement sets the rules for renting residential or commercial property. Once signed, both parties must follow the terms unless the agreement is modified in writing.

Most lease agreements include:

  • Lease start and end dates
  • Monthly rent amount and due date
  • Security deposit terms
  • Maintenance and repair responsibilities
  • Pet policies and occupancy limits
  • Rules for fixtures and alterations
  • Notice requirements for termination or renewal

Leases must comply with state and local landlord–tenant laws and fair housing regulations.

Why Lease Agreements Matter

Lease agreements help prevent disputes by clearly defining:

  • Who is responsible for repairs
  • Which fixtures or appliances are included
  • What happens if rent is late
  • Whether tenants can make changes to the property
  • How and when the tenant must move out

Common types of lease agreements:

  • Residential leases (homes, condos, apartments)
  • Commercial leases (office, retail, industrial)
  • Month-to-month leases
  • Fixed-term leases

Example of a Lease Agreement in Action

A tenant signs a 12-month lease for an apartment with a monthly rent of $1,500. The lease states that the landlord maintains major systems, while the tenant handles minor repairs and keeps the unit clean. At the end of the term, the tenant must either renew or move out according to the notice requirements in the agreement.

Why Lease Agreements Matter for FSBO Sellers

  • Sellers must disclose whether a tenant occupies the home
  • Lease terms can affect the selling timeline
  • Buyers may need to honor an existing lease
  • Rental properties with clear lease agreements sell more smoothly

Understanding lease agreements helps FSBO sellers communicate clearly with buyers and avoid last-minute issues during closing.

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