by Francis Jock

Created on: July 09, 2008

Rental Agreements differ from Leases in that Rental Agreements are used for month-to-month rentals and Leases are used for long-term rentals. Both contain a number of clauses intended to protect the property interests of both the property owner and the tenant. If you have a vacant rental unit that you intend to rent out on a monthly basis, it would be advisable for you to create a Rental Agreement form. This article discusses common clauses found in a typical Rental Agreement.

A typical Rental Agreement form may contain twenty-five different clauses that are important for managing the business of renting. Examples of these forms can be found in the reference section of your local library or from several online resources. Leases & Rental Agreements (Stewart, 1998) is an example of a good publication to peruse.

The first section of a Rental Agreement identifies the property owner and the tenant, as well as a description of the property, including any furnishing and appliances. An important key phrase included here is one that explains that the rental is to be used "for residential purposes", clearly stating that the rental unit is not being rented for anyone to operate a business on the premises.

Also included here is an explanation of who may occupy the unit, how long a guest may stay in the unit without your consent, and the duration of the agreement. In a month-to-month Rental Agreement, you may opt to revise the agreement after providing adequate notice to the renter. It also stipulates how much notice the renter should provide to you before moving out.

The next three clauses cover the payment of rent, late charges, charges for returned checks and bank charges, and the all important security deposit. Ideally, rent is always paid on the first of the month, is never late, checks never bounce, and security deposits are paid in advance. Since experience shows that this is seldom the case, it is a good idea to have well-constructed clauses to cover these situations.

Another clause describing who is responsible for payment of different utility charges follows this section. As the landlord, you may choose to be responsible for providing common, or shared utilities such as collecting and disposing of garbage, providing water service and sewage. Tenants are usually responsible for paying their own telephone, cable, gas and electricity charges.

This section concludes with an important clause about subletting and assignment of the Rental Agreement. Subletting a rental is

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