How Apartment Leases Work (All You Need to Know)

The exact mechanisms of apartment leases vary by area but most broadly follow the outline below.

Typically, leases are either fixed-term or month-to-month, and they will have various upfront costs that you’ll need to consider on top of your first month’s rent.

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Lease Style

Apartment leases typically have one of two styles: fixed-term or month-to-month.

Fixed-Term Leases

Fixed-term leases last for a set period, usually 12 months at a time. At the end of this period, tenants can renew the lease with the landlord’s permission.

This is the most common lease style in many areas because tenants usually prefer the security of longer lease periods while landlords like having guarantees for occupancy.

Landlords and tenants alike cannot alter fixed-term leases while they’re in effect unless either the tenant or landlord violates the lease’s terms.

Month-to-Month

As the name implies, month-to-month leases go for a month at a time. However, unlike fixed-term leases, they renew automatically unless one of the parties decides to terminate them.

Many landlords dislike this style because there’s less certainty of occupancy and income, so it’s not as common as fixed-term leases in many areas.

Month-to-month leases are sometimes known as rental agreements instead of leases.

In most cases, either party needs to give adequate notice before terminating a month-to-month agreement. This is usually thirty days.

Up-Front Costs

Apartment leases usually have several types of upfront costs for moving in.

Here are the most common fees.

Advance Rent

Most landlords charge for the first month and the last month when you move in.

Some landlords may also charge for up to two additional months as advance, although it’s rare to see them go any further than four months total.

The main reason for this is that landlords want to be sure they’ll get the last month of rent if you leave suddenly.

Security Deposit

Security deposits are additional fees landlords collect to help protect against damage to the apartment aside from regular wear-and-tear.

This is usually equal to another month or two of rent, but the actual amount can vary by state. If there are no problems at the end of the rent, landlords should return the security deposit.

Laws may require landlords to keep this money in an account that earns interest. However, some landlords may use various means to keep security deposits even when they shouldn’t.

This is one reason it helps to take photographs of absolutely everything when entering an apartment and when leaving it.

Broker’s Fees

This only comes into play if the tenant uses a broker to find the apartment.

Costs can vary but are usually 1/10 or 1/12 of a year’s rent.

Other Fees

Any fees beyond these are highly situational.

They can include moving, storage, or pet fees, although exceptions exist for things like service animals that help individuals with disabilities.

Guarantors

Guarantors are people who do not live in an apartment but are legally responsible for it.

As The Spruce explains, guarantors are usually parents or other adults who have good credit and a financial record.

In rarer cases, guarantors could be friends, work colleagues, or businesses. Companies are more likely to act as guarantors when trying to attract personnel to competitive areas.

Government and charitable organizations, including religious groups, may also serve as guarantors for low-income tenants, immigrants, and other people who have difficulty finding housing.

Most people do not need guarantors past their first apartment. This usually only matters for people who have no notable financial history.

Guarantors are not the same thing as co-signers.

Co-signers have equal responsibility for making payments, whereas guarantors only need to pay if the primary signer can’t.

Regular co-signers have the right to occupy the apartment, but guarantors do not.

Breaking Lease Agreements

Violating the terms of a lease agreement can lead to tenants being kicked out of the property. Tenants may need to pay all of the remaining rent or possibly find someone else to take over the lease.

However, there are several situations where tenants are allowed to break leases without penalty. These include:

Landlords invading the privacy of tenants
Landlords interfering with the general enjoyment of the rental
Landlords repeatedly entering the household without permission
Landlords failing to uphold their obligations (esp. safety)

Additionally, tenants who are active-duty military personnel can generally terminate leases without penalty when being deployed.

Landlords can also terminate leases, usually for failure to pay rent or violating other clauses.

Landlords must follow state laws to break a lease agreement this way. This usually requires a set period before the lease ends.

Failing to follow state laws could result in tenants being allowed to remain on the property.

Property Information

Apartment leases should include general data about the property itself.

This includes things like the landlord’s name, a way to reach the landlord (usually by phone, for emergencies), and the date of signing the lease.

Property details also include details about things like options for lease renewal and policies for increases.

Repair And Maintenance Guidelines

This is one area where leases can differ a lot.

In some leasing arrangements, landlords are responsible for most types of maintenance and repairs. This can include things like fixing a leaky roof or taking care of damaged appliances.

Damaged appliances won’t necessarily be covered by security deposits, so landlords may have to pay out of pocket in these scenarios.

Alternatively, leases could stipulate that landlords are only responsible for major problems, but tenants must repair and maintain other things.

Lease agreements should clearly explain who is responsible for which repairs, including the amount of time a party has to resolve any maintenance issues.

Utility Details

Lease agreements also typically cover utility information. This includes things like whether they’re included in the monthly rent.

A common arrangement is that landlords will provide basic electricity, sewer, and water utilities, while tenants are responsible for optional utilities like the internet or television.

This isn’t universal, though. For example, landlords who install high-speed internet may include it for all apartments as part of the lease.

House Rules

House rules cover the general usage of the property, and these can vary greatly by location.

In many cases, new house rules are written to cover problems that have happened once and stop them from recurring.

House rules cover details like:

When the landlord is allowed to enter the property
What to do about long absences (e.g., extended vacations)
Eviction policies
Quiet hours
Whether guests can stay overnight
The maximum occupancy of each apartment
Parking policies
Access to a storage facility
Smoking or other legal drug use
Access for maintenance workers
Insurance needs
Making changes to the apartment

These lists can be quite long, so tenants and landlords should study them carefully.

Pet Policies

Some apartments allow pets while others do not.

Policies can vary greatly in their enforcement. For example, apartments may permit certain dog breeds but not others.

Generally, apartments are much more accommodating of pets that aren’t likely to cause trouble.

Tenants can also ask for exceptions to a no-pets policy. While landlords are not obligated to allow pets, many can be convinced.

For example, many reptiles have little or no chance of harming an apartment and make almost no noise. Landlords often permit pets like those.

Leases may have an additional deposit for pets. Alternatively, landlords may charge pet rents.

Also read: Will My Landlord Know I have a Cat?

Challenging Rules

In many cases, tenants can challenge rules that they believe are unfair.

This is usually when apartment lawyers get involved. Rules challenges typically rest on whether a particular rule is legal or fair to the occupant.

Particularly strange house rules may violate state law and are therefore not enforceable.

The Fair Housing Act

The Fair Housing Act of 1968 (FHA) is one of the major pieces of legislation that affects apartment leases, so understanding it is an important part of any lease.

Notably, this act prohibits discrimination in several major categories, including ethnicity, religion, and disabilities.

This means that landlords cannot refuse to negotiate for housing based on the protected criteria.

Landlords also cannot charge different prices, offer different facilities, harass people, or generally make it harder for someone to rent the property.

Even more importantly, the FHA prohibits landlords from threatening people to try and make them stop exercising their rights. It prohibits retaliation against them, too.

Landlords who do not follow the terms of the Fair Housing Act are at serious risk of legal liability. This is one of the many reasons why all parties should make sure each lease agreement fully complies with the terms of the FHA.

Note that the Fair Housing Act does not prohibit rejecting potential tenants for reasons outside of its guidelines.

For example, this act still allows landlords to reject tenants based on their demonstrated inability to pay rent. Similarly, landlords may reject tenants for poor credit.

Remember, State Laws Vary

All of the guidelines above are common for most apartment leases. However, state laws can complicate things.

For example, local laws may add additional categories for protection or change the deadlines for notification.

States may also impose limits on fees or restrict the use of deposits. Always check city, county, state, and federal guidelines for your area before entering a lease agreement.

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