Tenant Contracts: Everything You Need to Know
A tenant contract outlines an agreement between a property owner and someone who wishes to live in the unit without transferring rights of ownership. 3 min read
Tenant contracts are legally binding agreements between landlords and tenants that specify the rights and obligations of each party in residential property rental arrangements. They contain a wide range of information regarding property rentals, from rental rates to tenancy rules. By making rental agreements enforceable by law, these contracts can help reduce misunderstandings and conflicts between landlords and tenants in the future.
What Is a Tenant Contract?
A tenant contract outlines an agreement between a property owner and someone who wishes to live in the unit without transferring rights of ownership. It includes details about the property, landlord, and tenant. This contract also typically contains information such as:
- Duration of the contract
- Amount of rent to be paid
- Frequency of rent payment
- Possibility of rent increases
- Rules regarding smoking, pets, or operating a home business
- Security or damage deposit, late payment charges, and additional charges such as utilities
- Insurance and maintenance obligations
- Signing incentives
- Guest rules
- Option to purchase the property or renew the lease
A tenant contract can be used in the rental of all kinds of residential property, including a house, condominium unit, apartment, townhouse, duplex, basement suite, individual room, mobile home, other living spaces, and lease-to-own options. This type of contract is also sometimes referred to as a residential lease agreement, lease agreement, lease form, house rental agreement, or rental contract.
Who Uses a Tenant Contract?
When you are entering into any kind of residential rental situation, you should use a legally binding contract to outline your responsibilities and rights as a tenant or landlord. People who use a tenant contract include:
- Homeowners who wish to rent property out to tenants
- Tenants who wish to rent a home
- Property managers, landlords, and tenant placement service providers
- People who are renting residential property to family members or friends
- Landlords or tenants who wish to enter into a lease-to-own agreement
Other Tenancy-Related Forms
Other than tenant contracts, landlords and tenants may also have to complete other tenancy-related forms, such as:
- Residential rental application – An application form that landlords use to screen prospective tenants who are interested in renting their property.
- Residential rental inspection report – A report that a landlord and tenant use before and after tenancy to inspect the condition of a rental property to assess damages.
- Roommate agreement – This agreement outlines the responsibilities and rights of tenants who are living together.
- Residential sublease agreement – An agreement that a tenant uses to sublease a residential property to another tenant before the current lease expires.
- Personal property rental agreement – An agreement that is used for renting personal property to or from an individual.
- Eviction and lease notices – Notices for landlords and tenants, including Eviction Notice, Notice of Termination, Notice of Lease Violation, Notice to Pay Rent, Notice to Increase Rent, Notice to Repair, Notice of Intent to Vacate, and Demand for Compliance or Possession.
How to Create a Tenant Contract?
Tenant contracts can differ significantly from one rental situation to another. Regardless of the situation, it is recommended that you take the following steps when creating a tenant contract:
- Check the tenant's background and credit history – Before offering a potential tenant a contract, you should check his or her credit score, employment status, renting history, criminal background, and references.
- Choose an appropriate agreement – There are basically four kinds of tenancy agreement for you choose from: standard one-year agreement, month-to-month rental agreement, sublease agreement, and roommate agreement.
- Negotiate for the right terms – Make sure you negotiate the terms and conditions of the rental agreement before signing the contract. Besides the monthly rent, you should also negotiate the security deposit, late payment penalty, utilities and services, non-sufficient fees, subletting, and co-signer or co-guarantor.
- Sign the tenant contract – Usually, the landlord, tenant, and agent, if any, are required to sign a tenancy contract. Unlike some other legal contracts, a residential rental agreement does not have to be signed in the presence of a notary public. It is important to check with a state agency to ensure that the contract complies with all state laws.
- Receive rent and security deposit and allow occupancy – Typically, a landlord has to wait until the first month's rent and a security deposit are paid before allowing the tenant to occupy the property.
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