Try to figure out what the law is about giving notice to vacate. Such an arrangement might come under boarding house laws instead of monthly apartment rental laws. Don't do an annual lease. If roommate turns out to be a PITA, your SIL doesn't want to be stuck with her for a year. Consider requiring the roommate putting either gas or electric in her name. Then each month or two, they balance who owes whom for the difference in the two bills. That protects both of them by each of them being directly responsible for a bill and able to look at each bill to be sure the utility is actually being paid. Consider requiring that the bills must be paid on time each month. Write in an agreement on the temperature (when someone is home, when no one is home, and at night. Be aware that one bedroom may be colder than another. Agree on whether or not a space heater can be used. Write up when dishes must be washed (e.g. ok to leave cereal bowl and coffee cup in sink until return from work?? All dishes must be washed and put away or in the dishwasher before going to bed). Write up noise agreement. Ear phones solve a lot of problems if someone is into blasting heavy metal. maybe agree to specified quiet hours. Include hours for appliances (e.g. we don't do laundry after 9pm. it reverberates though the house). lock up precious things. If she'll be upset its broken, don't leave it out. Agree on whether or not things left out in the common area permanently can be used by the other (e.g. books on a bookcase). And..most of all.. don't let the little things get you down!!
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