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This tutorial explains the importance of a lease agreement for landlords, highlighting the potential financial risks of operating without one, such as liability for property damage and difficulties in collecting unpaid rent. A residential lease agreement is defined as a legally binding contract that outlines the rights and obligations of both landlords and tenants, helping to prevent disputes and manage issues effectively. The video emphasizes that creating a lease agreement is straightforward and serves as the first line of defense in protecting a landlord's property. Essential elements to include in a lease agreement are outlined, such as the property details and the names and contact information of involved parties.