Putting up a property for rent can be risky for a lot of people. It is their hard-earned money they used to afford such luxury after all. However, renting has always been an attractive business opportunity, especially if an individual owns multiple properties and he or she doesn’t occupy most of the time. So for these individuals who want to clinch on the bountiful benefits of the renting business but want to protect their properties from damages and loss, they draft up a rental agreement.
A rental agreement is a type of written contract between an owner of the property and an individual that temporarily occupies or uses this property for a specific period of time. This type of agreement samples entitles the tenant temporary ownership of the property by paying an amount regularly. This article will be delving into rental agreements and everything you need to know about it.
These are the parts and provisions commonly found in a rental agreement:
1. Landlord or Lessor: This is a party or entity that owns a building, a piece of land, or any form of real estate which they set up for rent to another individual or organization.
2. Tenant or Lessee: The party or entity that legally occupies a property that is subject to the payment of lease or rent by a landlord.
3. Rent: These are the details that define the landlord to tenant interaction. The rent includes the actual amount that the tenant must shell out every period, the due date of that amount, and the various ways that the tenant can pay. In some rental agreements, it is also stated in this part the penalties involved when a tenant fails to pay the rent on time, including the grace window period.
4. Rental Term: This pertains to the date that the rental agreement comes in full effect, which is usually the time when the tenant starts occupying the property. This also specifies the time period that the agreement will take effect, particularly on when it will terminate.
5. Security Deposit: This is the additional amount that must be paid as a security bond in case mismanagement of the property is committed by the tenant. It basically protects the landlord from any damage that could be incurred.
6. Property Description: This is a short paragraph that describes the rental property that is being put for rent. Types of information that can be included in the property description are the name of the building, address, and type of property.
7. A right of Entry: This provision allows the landlord to conduct an inspection on the property from time to time to ensure that it is being well taken cared of and that no irreparable damages have occurred.
1. Pre-writing notice: Before you draft your terms and conditions in your rental or lease agreement, familiarize yourself with the local laws about leasing properties. This will prevent complications in the future especially if the tenant finds out that one of your provisions are not allowed in the law of your state.
2. Naming the landlord and the tenant in the preamble: Before you write the main sections, start witth a legal preamble at the topmost part of your rental agreement. This part identifies the parties involved such as you, the landlord, will be known as “THE LESSOR” or “THE OWNER” and the ones who will be renting will be known as “THE LESSEE” or “THE TENANT.” State the address of the property, phone number, and the date that the agreement will be signed on below this block of text.
3. Writing the Rent Section: The Rent Section is the first numbered part of your rental agreement. Its purpose is to give general information regarding the renting terms. For this part, you have to state the amount that the tenant has to pay ever pay period, the frequency of your rent collection or the pay period, and the respective sanctions should the tenant fail to pay on time. The pay period usually spans for a month, meaning the rent collection will be done monthly by the landlord.
4. Setting the Security Deposit: In this part, you have to indicate the full amount you will be collecting as a security deposit and the guidelines regarding the deposit. State the term on how long you plan to hold on to the deposit and on what terms you will release it.
5. Describing your property in the Property Description: The Property Description is where you will describe the condition of your property for inventory and warrant purposes. Indicate that you and the tenant both agree that the property is in good condition. You can set the tenant up to an obligation of maintaining the property and prompt reporting for any breakage or damage. For the inventory, list down all the items and utilities you have provided for the tenant.
6. Writing the Right of Entry Section: This part should state that you will have and will be granted access to the property for regular inspection and repair purposes. It is also important to indicate in the agreement that you will be giving an advanced notice every visit, as unannounced and sudden entry are considered harassment.
7. Wrapping up: The goal of the rental agreement is to protect you from any property damages by the tenant. Feel free to add more rules and provisions if it will help you secure that goal. Some sections you can add are for your move-out and eviction policies, visitor rules, and curfew provisions.
Since it is the landlord’s property that is being up under lease, then, yes, he or she should be the one to prepare a rental agreement. There are various templates and samples in this article that can help in drafting one, or the landlord can seek the help of a local attorney with a blank rental agreement template ready.
Most rental agreements that are under fixed general tenancy fall under the term of 12 months or one year. After that, the tenant has the option to leave the property or to sign a lease renewal contract with the landlord.
It is important to note that you have to make the tenant sign the rental agreement before you let them occupy your priority. Doing so will entitle the tenant an acceptance to his or her own liability and it will gives you the legal hold on your property according to the stipulations stated.
Remember that a good rental agreement is one that is conceived out of the interest of both the landlords and tenants. Keep an open communication with the tenant and it will surely prevent yours from any complications and legal friction that could arise in the future.