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Understanding Lease Agreements

August 06, 2019

Understanding Lease Agreements 101 – Part 1

How often do tenants read lease agreements and understand them? Likely not very often or thoroughly, which means potential renters don’t often know what they’re signing. That could lead to misunderstandings, legal battles, and conflict.

If a tenant understands the lease they’re signing, it might actually create a better tenant/landlord relationship.

It takes time and patience to research information, meet with the owner/property manager, review the unit, go through the rental qualifying process, and eventually the sign lease agreement before you get the keys to move in.  That lack of time means tenants may not read what they are about to sign.

Your lease agreement can range from 2 to as many as 10 pages along with house rules and any other addendums or disclosures required to be executed by owner/owner’s representative and tenant(s). 

Understanding Lease Terms

The main purpose of executing this legally binding document is to prevent future disputes between owners and tenants. As a tenant, you should spend time to read and fully understand all the terms and provisions stated in the lease agreement. Let’s start with the basic provisions below:

Lease terms:

  • All persons 18 years old or older should be named as tenants and sign the lease agreement. Minors and other persons who reside in the same unit should be listed as occupants on the lease agreement.
  • It’s not uncommon that the owner may require the tenant to sign a specific-term lease from 6 months to 1 year. For this type of lease agreement, it must state the starting and ending dates of the tenancy. When the lease ends and if the tenant decides to remain to stay in his or her unit, the agreement will become a month-to-month tenancy, unless otherwise stated.
  • As a tenant, you may also agree with a month-to-month lease with the owner. The major advantage is the tenant may give the owner a 30-day notice to move out and terminate the tenancy. The disadvantage is the owner can also change the terms of the agreement with a 30-day notice as well as increase the rent with either a 30-day or 60-day notice.

Terms Regarding Rent:

  • Generally speaking, rent is due on the 1st day of the month. Most of the owners will give a grace period which allows rent payment to be received by the 5th of the month. If the rent payment is not received by the 5th of the month (except when the 5th day falls onto a weekend), owner may charge a late fee in addition to the regular rent amount. 
  • Owner may require specific forms of payment such as by personal check, money order, cashier check, or electronic fund transfer. Most of the owners do not accept cash payment of rent. Owners may also not to accept partial rent payment.
  • In terms of where rent is to be paid, tenants can pay directly to the property manager or the building owner. If you live in an apartment complex, a rent drop box is usually located right in front of the management office. Some owners may also accept rent payment by mail but it is tenant’s responsibility of making sure rent payment will be arrived in the owner’s hand on time.
  • If the tenant’s rent payment check is returned to the owner by the payer’s bank due to non-sufficient funds (NSF), owner may charge NSF fee and request the tenant to pay for the unpaid full amount by money order or cashier check.
  • As a tenant, you have rights of requesting a rent receipt. The rent receipt should include your name, unit number, the amount received, the date and signature of the person who receives the payment.

In the next article, we will continue to explore other provisions in lease agreements. Again, a lease agreement is a legally binding document. You should read through and understand all details or consult with your attorney before you sign.


Gordon Leung has worked in property management for more than 13 years and specialized in strategic planning and people development. If you have questions, you may contact him at


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