Rental Contracts: Everything You Need to Know
Rental contracts are legally binding agreements between tenants and landlords. These contracts cover specific terms and conditions, including length of contract, rent amount, and details about living arrangements.3 min read
Rental contracts are legally binding agreements between tenants and landlords. These contracts cover specific terms and conditions, including length of contract, rent amount, and details about living arrangements.
Residential Lease Agreement
A residential lease can be known as any of the following:
- House rental agreement
- Lease agreement or contract
- Lease form
- Rental agreement or contract
- Tenancy agreement
Both the tenant(s) and landlord(s) agree to terms and sign a contract when the landlord rents out property to a tenant. The agreement includes details about the tenant, landlord, and the property.
A simple lease agreement will outline basics, such as the following:
- Length of the contract
- Terms of the contract
- Amount and frequency of rent payment
- Provisions for rent increases, if any
- Tenant details, such as being allowed to own pets, smoke, or run a home based business
- Security/damage deposit
- Late payment charges
- Additional charges
- Insurance obligations
- Maintenance obligations
- Rules concerning guests
- Any signing incentives
- An option to purchase and/or renew
Tenants and landlords should keep a signed copy of the agreement for their records.
Rental contracts can be used for residential properties, such as the following:
- Basement suite
- Mobile home
- Vacation rental
- In-law suite
- Other living spaces
A valid contract should outline the landlord's and tenant's rights and responsibilities.
Rental contracts are useful for the following:
- Homeowners seeking tenants
- Tenants looking for a place to rent
- Property managers
- Tenant placement services
- Individuals looking to rent residential property
- Tenants or landlords looking to rent with the option to buy
The rental agreement should lay out specific rules that tenants and landlords agree to follow as part of their rental relationship. It doesn't matter how many pages the agreement covers. Whether it's a simple, one-page document or a lengthy one spanning several pages, it has to cover the basic terms of the rental period.
Both tenants and landlords can refer to the contract at any time questions may arise. The contract organizes all aspects of a lease arrangement into one document. Once it's signed, all parties should have a clear understanding of their rental arrangement.
Sometimes, landlords and tenants may enter into a rent-to-own agreement, which is a rental contract that contains an option to buy. This purchase option provides the tenant with an opportunity to buy the rental property. The contract terms usually specify a set period of time and a certain price.
This type of agreement is often used when a landlord wants to sell the home, but the tenant isn't currently able to provide a sufficient deposit for a mortgage and/or has a low credit score.
In most cases, the tenant agrees to pay a non-refundable option fee. In return, the landlord gives the tenant the chance to purchase the home at a predetermined price. In the event the renter doesn't buy the home, the landlord keeps the option fee.
Related Forms to Rental Contracts
Landlords and tenants may use a rental inspection report before and after the tenancy period. This document details the state of a property and assesses any damages. Landlords may use residential rental applications to screen applicants before renting property to them.
Roommate agreements detail the obligations, rules, and responsibilities of people who live together.
Commercial lease agreements are contracts for commercial spaces that detail the rights, responsibilities, and obligations of business tenants.
A tenant may use a sublease agreement to sublet a residential property to another tenant prior to the end of the current tenant's lease. If someone wants to rent his or her personal property to or from someone else, he or she may draw up a personal property rental contract.
Common forms landlords or tenants may use related to evictions and lease issues include the following:
- Eviction notice
- Notice to increase rent
- Notice to pay rent
- Notice of lease violation
- Notice of termination
- Demand for compliance or possession
- Notice to repair
- Notice of intent to vacate
It's very important to fully read over and understand any contract before you sign. Knowing your rights, responsibilities, and obligations in advance ensures a smoother tenant-landlord relationship. This helps avoid potential legal hassles and financial problems down the road.
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