Basement Rental Agreement

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Basement Rental Agreement

Brief Introduction About Basement Rental Agreement

If you are a homeowner who has a basement, you can rent it out to tenants. A house with basement for rent is a lucky find as it can allow the owner to generate extra income by leasing out the basement. You may either rent it out to tenants for longer periods or to people for certain events. In both cases, you will require a basement rental agreement.

Also called a basement lease agreement, it is similar to rental agreements. The main difference is that in this case, only the basement is rented. This agreement clarifies the terms of the lease between the landlord and the tenant. It states the rent and deposit to be paid, what activities are permitted and what responsibilities the tenant has.

Purpose of Basement Rental Agreement

If you plan to rent the basement of your house to a tenant, you must check whether it is legal to do so in your area. It is very important to comply with the relevant rental zoning laws and local housing codes. These vary from state to state. They may even be different for different cities. One way to ensure compliance is to sign a ‘basement for rent agreement’ with the tenant. It will contain all the terms according to applicable law. In this way, you will not have to pay any penalty.

It will also explain the conditions of the rental arrangement, including the duties of the tenant. This will prevent any confusion between you and the tenant. You can also include additional house rules that you want the tenant to follow.

Contents of the Basement Rental Agreement

A basement rental agreement sample may be used as a reference for drafting.  The following points should be considered while drafting these contracts.

  • Names of the landlord and the tenant
  • Address and description of the property
  • Term of the agreement
  • Number of residents allowed
  • Rent and deposit
  • Payment details- when and how the rent has to be paid.
  • Utilities
  • Parking
  • Pet policy
  • Responsibilities of the tenant
  • Pre-move out inspection
  • Grounds for termination
  • Notice requirements
  • Dispute settlement
  • Governing law
  • Signature of the parties

How to Draft a Basement Rental Agreement?

After the landlord and tenant have met and discussed the terms, the drafting process begins. The first step is to check the local rental laws. Then the terms agreed by the parties are written under separate provisions. When drafting the basement rental agreement form, it is very important to see that all the provisions are according to the relevant laws.

The clauses in the contract must be clear and easy to interpret. Some specific points to note are:

  • The property should be correctly described. Many states have specific rules regarding the dimensions of a basement if it is to be rented. The property has to be in good condition to live.
  • Rent and deposit: The amount of rent and when it will be paid (usually, monthly) should be clear. For deposits, the clause should include the amount as well as the conditions when the amount can be deducted or confiscated.
  • The utilities and who is responsible for paying for them must be stated clearly. For example, the tenant will have to pay for electricity, gas, and internet while the landlord can pay for garbage.
  • Pre-move out an inspection: Some landlords may include this provision. It states that before the tenant moves out of the basement, the landlord will inspect the property. If there is any damage caused by the tenant, he can be asked to repair it.

Negotiation strategy

Landlord: Before finalizing a tenant, a landlord should conduct a background check of the tenant. This will help him assess if the tenant is fit for the basement property. In case an issue arises during the check, it can be clarified at the negotiation stage. Additionally, while setting the rent, the landlord should look at the rents of places in the area offering similar facilities. This will provide a fair idea about the market.

Tenant: If the tenant feels that the rent is not worth the facilities that are offered by the landlord, he can negotiate for a lesser rent. It is wise to first look at what other tenants are paying in the area and compare the rates. If the landlord says that the rent is fixed, then he can negotiate on other points that are important for him, such as parking space or pet addendum .

Benefits and drawbacks of Basement Rental Agreement


  • It allows a landlord to generate some extra income in the form of rent.
  • It provides a reasonable accommodation to a tenant at lesser prices.
  • It lays down all the terms of the rental. Hence, it avoids any misunderstanding between the parties.


  • Since it is the landlord’s property, he will dictate the terms.
  • The landlord may already have a standard agreement. This will leave give the tenant less chance to negotiate.
  • The agreement may contain some rules that the tenant may not agree with.

What happens if a basement rental agreement is violated?

A violation of the agreement will result in a breach of contract(1). It will usually mention how a violation will be treated. The parties will proceed according to the steps mentioned in the dispute settlement clause. For example, it may state that the landlord and the tenant will resolve the violation through negotiation(2). But if that fails, the suffering party can sue the defaulting party in the local court. The state mentioned in the governing law clause will have jurisdiction. It is usually the state where the property is situated.

A basement rental contract protects the interests of the landlord as well as the tenant. Since the parties agree to its terms, they know their duties. It is not a complex legal document to draft. But since it involves local laws and rules, it is advisable to get it reviewed by an attorney. This will ensure that no law or rule is violated.