What is a Deposit Agreement?
A deposit agreement states the nature of how a landlord takes a security deposit rent, other than an advanced payment, from a tenant. The rental security deposit will serve to protect the landlord if the tenant breaks or violates the terms of the lease or rental agreement. The landlord will use the deposit in the event of damage to the unit or if the tenant fails to pay rent.
How to Write a Rental Deposit Agreement
Whenever you are part of the real estate industry, you'll have to protect yourself from tenants who don't comply to certain rules and regulations. Drafting a rental deposit agreement will help you keep a proof of record about how the tenant should pay deposit and follow specific terms and conditions. Check out the pro tips listed down below if you want to make a deposit agreement for your current or future clients.
1. Write the Basic Information of Both Parties
The very first part of the legal contract should contain the information of the lessor and the lessee with respective identification details. The basic information includes the contact details and addresses of both parties. The complete address and location of the leased premises is also required to be stated with the basic information section.
2. State a Security Deposit Clause
On the second part of the contract agreement document, write down the clause which states the specific on why and how the security deposit should be carried out. The security deposit clause must specify the number of days a tenant can make the payment after the agreement has been signed and sealed.
3. Provide Payment Options
Your rental deposit agreement should specify the amount of deposit and how it's to be paid, such as by mail to your office. To avoid any confusion, disputes, and misunderstandings with your respective tenants, the simple agreement must spell out the details for the acceptable payment methods. Write down options if there will be grace periods and additional fees and charges if the deposit is not paid on time.
4. Include the Terms and Conditions
The sample agreement should lay out in detail all the terms and conditions for a better understanding and definition of terms and services. This section must explain the rules and regulations once the agreement will be carried out. It must state the exact monetary amount to be collected, the interest rate and the terms by which you, as the landlord or property manager, will be permitted to keep any or all of the deposit. Moreover, it should also specify the process for having the money returned at the conclusion of the leasing period. State all your terms and conditions and explain it to the tenant one by one.
5. Specify Dates and Place of Execution
The specific date when the agreement should be signed becomes an important inclusion in the primary part of the written agreement. The place of execution must also be added for recording purposes. The dates will help both parties keep track of the deadlines and important events in the duration of the leasing agreement.
6. Close the Agreement with Signatures
To arrive at an agreement, both parties must seal the deal with signatures. Signing the documents indicates that both parties understand and comprehend every part of the basic agreement, and that they are bound to follow and respect the process and terms stated within.