A Brief Introduction About Rental Lease Agreement
A rental lease agreement, also known as a rental contract, rental agreement form, tenancy agreement or rental lease, is an essential document that protects the rights of the landlord and the tenant. It is a legally binding document between the two parties, and hence, it should be signed before the landlord rents out the property. The agreement outlines the agreement between the landlord and the tenant.
Once the two parties sign the rental lease, the duration of the lease, and the monthly rent stated in the agreement cannot be altered. That prevents the landlord from arbitrarily increasing the rent and the tenant from leaving the property without proper notice.
Since the agreement is for a specific period, it ends when that period is up. If the tenant wishes to stay on, they have to enter into a new agreement. At that point, the landlord can make changes to the terms of the agreement and increase the rent. The tenant can accept, negotiate, or refuse the changes and rent hike.
Who Takes the Rental Lease Agreement – People Involved?
The rental lease agreement is between the owner of the property and the person who wants to rent the property. The owner is the landlord, or lessor, while the person renting the property is the tenant or lessee.
Before signing a house rental lease agreement, it is usually common for the landlord to request the prospective tenant to furnish references, employment history, and credit reports. It helps the landlord ascertain their credibility.
Purpose of the Rental Lease Agreement – Why Do You Need It?
A landlord and tenant may discuss terms and conditions verbally, and hence; it is easy to forget them, causing the relationship between the two parties to sour. Furthermore, verbal agreements cannot be proven in court unless you tape the conversation. So, it is hard to enforce them.
When you correctly execute the rental lease agreement, it precisely documents the agreed terms and conditions, ensures that the tenant pays the rental amount on time throughout the period of the agreement and works as evidence if the landlord wants to evict the tenant for non-compliance of the agreement, or for any other legal dispute. It also helps the tenant as the landlord to bound by the terms and conditions of the agreement and cannot ask the tenant to vacate the premises for no reason as long as the rental lease is in force.
Contents of the Rental Lease Agreement – Inclusions
You can download a sample rental lease agreement PDF format to check the necessary information that should be part of the agreement. Typically, when creating the rental lease agreement, some of the following information should be part of it:
- Name of the landlord
- Name of the tenant
- Location of the property (complete address)
- The duration of the agreement
- Terms and conditions – like the tenant agreeing to vacate the property if the landlord wants to sell or use it for personal use
- Rent amount and the date by which the tenant should pay and how much the landlord can increase the rent by in the second year
- What happens if the tenant fails to pay the rent on time
- When can the landlord issue an eviction notice?
- The amount of security deposit
- Tenant’s conduct
- Premature break of agreement
How to Draft the Rental Lease Agreement – Points to Consider While Preparing the Agreement
It is always advisable to use a sample rental lease and then customize it to suit your needs. Nonetheless, here are some points to consider when drafting a home or room rental lease agreement:
- Create a title for the agreement. The rental lease agreement would suffice
- Draft headings for each section, so that you can easily organize the information under each heading. Use headings, like property, rent, term, tenant’s responsibilities, landlord’s responsibilities, terms and conditions, terms for termination, rental increase, amendments to the agreement and so on
- When you use a sample rental lease, you will not have to create headings as they will already be present in the sample. You would just have to fill in the details that are missing from the template
- Keep space for tenant and landlord’s signature along with the date
Remember, the agreement should comply with the local tenant/landlord law.
Negotiation Strategy
Check if the rent is negotiable. If you are negotiating the renewal of the agreement, begin the discussion at least a month before your rental lease expires. Offer to leave the dwelling in summer, when it would be easier to find new tenants. This may prompt them to reduce the rent.
[Also Read: Residential Lease Agreement ]
Benefits & Drawbacks of the Rental Lease Agreement
Some of the advantages of a rental lease agreement are:
- Allows the landlord and tenant to be on the same page
- Ensures the tenant can lock the rental amount and duration of the rental period even if property prices or rent increase
- Can be used to rent properties that may not be apt for long-term tenants
- Allows the landlord to generate income
Some of the disadvantages of the rental lease agreement are:
- Once signed, it is legally binding for both parties
- The landlord cannot terminate the lease mid-way
- The tenant cannot leave the premises half-way through the term of the lease
- If rental prices increase in the area during the agreement period, the landlord cannot benefit from it
What Happens in Case of Violation?
If the tenant violates the terms and conditions(1) of the rental lease agreement, the landlord is within their rights, give an eviction notice to the tenant. The number of days will depend on state and city law. Also, the landlord can take the tenant to court for non-payment of rent or gain possession of the premises if the tenant does not vacate after receiving a notice or eviction letter.
On the other hand, if the landlord violates the terms of the agreement, the tenant can write and bring it to the landlord’s notice. If the landlord does not take remedial measures, the tenant can take the matter to court.
A rental lease agreement maintains the landlord and tenant on the same page and ensures that their agreement is formally listed down to avoid misunderstandings at later stages. As a landlord, you can simplify your dealings and negotiations(2) by using a sample Rental Lease Agreement.