“The 6 Important Terms To Include In A Basic Rental Agreement” written by Mike Marko.
Are you looking to either create or improve your basic rental agreement?
The basic rental agreement is an important document for both the property manager and the tenants. It sets the “ground rules” for the tenant’s stay at the rental property.
The basic rental agreement also helps protect the property that’s why it’s important to includes some key terms in the basic rental agreement.
That’s why in this article we’ll be talking about what terms you need to include in your basic rental agreement, and why you should include them.
What Should Be Present In A Basic Rental Agreement
When renting and finding tenants for your properties you need to have an excellent basic rental agreement to avoid any misunderstandings or disputes while the tenant rents the property. Having a basic rental agreement contains simple information and is still considered as a legal document.
The basic rental agreement is signed and agreed to by both parties: the tenant and the landlord or property manager. Since it is a legal document both parties will become responsible for anything that is written in the agreement.
The key to having an excellent basic rental agreement is including the terms needed to run and manage the property. In this post we will introduce important terms that you need to include in your basic rental agreement.
What Is A Rental Agreement
A rental agreement is a written contract that is signed by the tenant and the property manager and serves as proof that both parties have agreed on certain rules, policies, terms, and responsibilities for renting the property.
The rental agreement binds the property manager and the tenant until the tenancy is over. The agreement also protects everyone who is involved in the tenancy. When written correctly the rental agreement can be used to hold all parties responsible to the contract including the property manager, landlord, or the tenant.
If any of the parties to the contract violates anything that is written in the rental agreement, it can be brought to the court to be ruled on and used as a proof to settle any dispute. The rental agreement is the complete contract for running the property while it is being rented and it contains a lot of valuable information about the tenancy.
To better help you in making your own agreement, here are the five important terms that should be included in a basic rental agreement…
1. Parties Involved In The Agreement
The first key term to the contract will be to list the parties involved and responsible for the rental contract. A basic rental agreement will always include the names of the individuals that are involved in the tenancy while renting the property. The name of the property manager, landlord, tenant and the names of the individuals that are moving with the tenant must be mentioned in the agreement.
The agreement must also be signed by all the people mentioned on the basic rental agreement. Additionally, every tenant listed on the rental agreement should be background checked and vetted for financial ability to pay rent and they are all parties to the rental agreement upon signing. Once all the parties to the agreement sign the agreement, they are all entitled to follow the terms, rules, or policies in renting the property and management of the property.
2. Identification And Location Of The Property
A key feature that needs to be detailed completely is making sure that the location of the property and the condition and identification of the property is done in detail. The best place to add the terms for the details of the rented property to the contract is next to the names of the tenants and the property manager.
The name of your rental property should be present in this part along with the following information:
- The house number
- Street name
- Apartment number
- Postal Code
In some cases, the basic rental agreement also states the condition of the property before the tenant moves in. By having a detailed description of the property you are protecting the property from damage during the rental. The more detailed you can be, including taking pictures and proof of the condition of the property prior to rental, you can avoid any misunderstandings when tenants leave the property and ask for return of their rental deposit.
3. Term Of Rental Lease
Every basic rental agreement should also include details about the term of the rental lease. This is probably the most important part of the rental agreement after the basic information about the tenancy.Â When signing the contract, both parties are agreeing to rental of that property for a specific period of time. When that time expires then the rental agreement needs to be renewed or goes to month to month until the tenant is asked to leave the property.
As the property manager, you should specify if the contract is a rental or lease agreement. A rental agreement is month to month where as a lease agreement is for a longer period of time like 1 year. Along with designating the type of contract you must also include Information such as the start and end date of the tenancy.
4. The Rental Fee
When the tenant and property manager agree to the length of the contract they should also include and agree to the amount of monthly rent required to rent the property. The best place to add this term into the contract would be after the term of the rental lease. Knowing how long the rental will be under contract makes it logical to write information about the rental fee and terms of late payments and possible eviction proceeding if rents are missed.
A basic rental agreement should clearly specify the full amount of rent that should be paid over the period of the entire lease term. Most rental agreement includes the full amount of rent and it also shows how much will be the cost of the rent per month. By being detailed in the terms you can avoid any misunderstandings about rents and payments of rents.
Along with the amount of rent your rental agreement should also add information about your preferred forms of payment. Any penalties for delayed or late rent payment should also be included to minimize the possibilities of future problems regarding late payments and possible evictions.
5. Security Deposits
The security deposit is a cash deposit made by the tenant to cover any possible damages to that they may cause to the property while the are renting that said property. A basic rental agreement should also include details about security deposits and how it can be used like cleaning or replacement of carpets should be detailed when collecting the security deposit. Almost every state allow property managers or landlords to ask for the security deposit as part of the rental agreement.
The security deposit is sometimes called “Damage” depositÂ because this money is often used if there are repairs that need to be done after the rental agreement or contract has ended for the property.
The usage of the security deposits is one of the common causes of an argument between the property manager and the tenant. It is advisable to also include how you are going to use the security deposit in your rental agreement. Always check the rental laws in your area about refunding security deposits to avoid any misunderstandings or legal challenges.
6. Acknowledgement Clause
The acknowledgment clause is the terms of the contract where both the landlord or property manager along with the tenant sign and agree that they understand all areas and terms of the contract. This is the part of the basic contract that holds all parties legally accountable for the contract they are signing. It’s normally placed at the bottom of your rental agreement.
The acknowledgement space is meant for the names and signatures of both parties, and shows both of you have discussed and agreed to everything that is included in the contract, including how to resolve any disagreements.
When both parties to the contract sign in the acknowledgement space you and your tenant have agreed to the terms and policies for renting the property. The basic rental agreement can then be used during or after the rental of the property to help solve or resolve any issues or concerns.
Final Thoughts On What To Include In A Basic Rental Agreement
In this article we talked about the basic rental agreement and how it sets the “ground rules” for the property manager and the tenant for the duration of the tenancy. There are essential terms you need to include in the basic rental agreement to help ensure that the property is protected, and helps reduce misunderstandings (and wasted time and money).
The basic rental agreement is a legal document, treat it as such. It may be used to defend you or the tenant in court someday.
If you have any questions or insight about the basic rental agreement, then please feel free to include it in the comments below.
Have questions and want to connect?
Add me on Facebook then shoot me a message:
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.