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 always discouraged and can be grounds for eviction. You should not permit a tenant to sublease, or assign his or her apartment to anyone without your permission. You should check state laws regarding subletting and assignment of leases for how to handle this situation if it arises.
Included in the next section are clauses that deal with maintenance of the unit, repairs, and alterations to the unit. First, the tenant's responsibilities for the upkeep and routine maintenance of the unit are detailed. Then, the tenant is advised that they may not make any repairs or alterations to the premises without your permission. You may want to prohibit certain modifications entirely, such as installing satellite dish antennas, computer network wiring, or anything that will detract from the marketability of your property.
Following this discussion, the form should include some standard clauses that are intended to cover the particular legal issues. Here you will find stipulations regarding circumstances that constitute grounds for eviction, possession of pets, the property owner's legal right to enter their property, and a requirement for notification of any long-term absence by the tenant. There should also be a clause explaining what will happen if either the landlord or the tenant fail to take possession of the property when expected. In other words, the tenant fails to move in or the unit is not available for them to move in to due to circumstances under the landlord's control.
This section is followed with a statement that the tenant acknowledges having read the rules and regulations concerning their occupancy in the unit. Rules and Regulations are usually delineated as a separate attachment to the Agreement. These can cover a wide variety of conditions, all intended to make sure there isn't any misunderstanding regarding the safety and well-being of the tenant, other tenants and the use of facilities such as a laundry or a pool. This can be an extensive list covering such things as garbage disposal, key control and charges, smoking areas, noise, pets, and specific tenant/landlord responsibilities.
As might be expected, the final section of a Rental Agreement covers such things as payment of court costs and attorneys, and certain legal disclosures such as the presence of lead paint and other defects. You should check with state and local authorities for what items should be included here.
It is important to include statements regarding the servicing of legal papers, any provisions that are unique to this particular Agreement, and a clause known as the "savings" clause. The "savings" clause provides for the unlikely circumstance where a court may find a particular section or clause illegal. In this situation, the remaining clauses would remain in effect while the illegal clause would become unenforceable.
The Rental Agreement concludes by wrapping up the entire document in two parts. First, a clause states that any violation of the Agreement by anyone associated with the tenant, or the tenant himself, is grounds for termination of tenancy. Finally, the Agreement concludes with a statement that the Agreement constitutes the entire Agreement between the property owner and the tenant, which renders any verbal promises or statements by either party, or anyone else for that matter, inoperative.
Once all these details have been completed, each party to the Agreement will sign and date the Agreement, thereby placing it into effect. A copy of the Agreement should be provided to the tenant and the original filed in a secure location along with any background documents such as the application form, the results of any background and credit checks, and employer and prior landlord reference checks. All of these documents are invaluable sources of information for any legal proceedings.
Reference:
Stewart, Marcia. Leases & Rental Agreements. 2nd ed. Berkley: Nolo Press, 1998