Understanding leases

So you’ve found a place to live, and you’re ready to sign a lease. This piece of paper may well be the first legal document you’ve ever signed — but don’t let that scare you.

A lease is a written agreement with a landlord that allows you to live in a specific property for a certain period of time in exchange for rent. Usually, that period is a year, or from September to May or June if you're a student.  Some leases are month to month, meaning you can leave at any time as long as you tell your landlord first.

Whatever the time period, the point of your lease is to fix the agreement so that no one can change it, by raising your rent, for example, or evicting you (unless you do something to violate the lease). In exchange, you’re usually responsible for paying rent until the end of the lease term, even if you move out earlier.

Most landlords ask for a security deposit when you sign a lease, which they hold in case you damage the property. Most likely, you’ll get this money back when you move out. But if you really mess up the place or paint the whole thing dark green, count on the landlord to keep at least part of your security deposit to pay for the damage. In many states, he or she must notify you in writing that the deposit is being withheld and why. Expect the security deposit to equal at least one month’s rent, sometimes a month and a half.

It’s smart to read your lease very carefully because it’s a legally binding agreement, which means a court is likely to hold you to its provisions. The lease spells out all the rules applying to your apartment or house, such as whether or not you’re allowed to bring that three-foot iguana with you or if you’re entitled to a parking spot. It will also say how much security deposit you paid, when the lease term ends, and how and when you should pay rent — such as by mail or in a drop box. The lease should indicate the late fee if you’re tardy with the rent (most penalties like this are 4% to 6% of the amount due). Of course, you’ll want to put your copy of the lease in a safe place in case you need to refer to it later.