“A Simple Overview About Rental Lease Agreement” written by Mike Marko.
Are you looking to learn more about the rental lease agreement and how it can be used to help you manage your rental properties?
The rental lease agreement is an important element of rental properties, it helps you and the tenant have established “ground rules” in writing. Otherwise you open yourself for confusion (or worse).
That’s why it’s good to talk about some of the details behind a rental lease agreement.
How To Better Understand A Rental Lease Agreement
As your property management business continues to grow you will most likely look for ways to save money and time when managing your properties. One of the biggest time and money savers is using a fixed term rental lease agreement.
Let me explain…
As a property manager your main duty is to make sure that all of the properties that you are managing have reliable tenants renting each unit and that every unit or property is rented. Having reliable tenants in each of your rentals ensures that your properties will continue to produce rental profits and that management and maintenance costs could be kept at minimums.
The best way to ensure that rents are maintained with tenants and paid on time is to enter into a 12-month fixed term rental lease agreement with your new and existing renters. The benefits for renters is their rent will be fixed at a certain rate for a year with no increases. While the benefits to your business is that rental becomes almost on automatic payment and reduces the time you need to manage that rental unit.
An effective rental lease agreement, that can help you streamline your property management business,is the most important document in your property managment business. It is used every time a tenant wishes to rent out a property.
So what exactly is included in a rental lease agreement and how can it help you to streamline your rental business?
What Is A Rental Lease Agreement
A rental lease agreement is a type of contract that recognizes a legally binding relationship between two parties regarding the rental of a property. These two parties are the renter, lessee or the tenant and the landlord, lessor or the property manager.
A rental lease agreement traditionally is a contract that has a agreed to beginning and end date. During the time period covered under the contract all rents are agreed to and there is normally no rent increases during the contract. The rental lease agreement can also be referred to as a rental contract, a lease form, or a tenancy agreement.
Put It In Writing
The agreement is almost always in written form and it is usually prepared by a property manager or a landlord. The contract states or designates that the tenant has been granted a temporary possession of the property for a period of time as long as they fulfill the rental payments during the term of the contract.
The lease agreement will also designate length and type of rental the property will be managed under like the amount of rent for the fixed term, and the term or length that the property will be rented.
What Are The Terms
The details about specific terms of renting the property are also included. These specific terms could give the lessor or property managers approval for allowing tenants for subletting. This is where the tenant rents the property for a length of time during the contract to another resident to live in.
Some terms can specify about the lessor allowing the tenant to use a designated parking space, the storage area if available, access to services like laundry and common areas of the property. The terms of the lease or rental contract can also restrict the lessee in restricting them from smoking in the property or not allowing a specific lifestyle or habit of the tenant. The terms of the lease is where it is specified that pets and other family members are allowed or not allowed during the rental of the property.
The terms that are included in the rental lease agreement will set the rules that are needed to be followed by both the parties during a lease term.
What Should Be Included In A Rental Lease Agreement?
A rental lease agreement should include the basic elements of a simple lease agreement. Depending on the property manager, the laws, rules, and regulations of the state, other terms can also be included in the agreement. It should also include the responsibilities of both parties in the rental unit throughout the lease term.
A simple rental lease agreement will have the following basic elements:
- Premises. This can either be a house, apartment, condo, attic, or basement.
- Landlord. The owner of the property. This can be the property manager as well, most commonly known as the “lessor”.
- Tenant. The one who is renting the premises, also known as “lessee”.
- Rent. The amount of money that the lessee or tenant will pay to the lessor.
- Term. The duration or the length of time that the tenant has to stay on the premises.
When it comes to premises, it is not just limited to those that are stated above. According to LegalTemplates.net, it may also be the following premises:
- Vacation rental
- Mobile home
- In-law suite
- Rent-to-own options
- Other living spaces
Other Terms Included
Some other terms that are included in a rental lease agreement are the following:
- Security deposit. This serves as an assurance if ever the tenant fails to comply with the terms of the agreement. It is given upfront by the tenant and it is commonly used for repair of any damages that the tenant may have caused to the property. However, the lessor has the right to return the deposit if no damage was done to the property.
- Permissions. This term is about whether the lessor allows the tenant to access any specific equipment or appliances, make alterations to the rented premise, or right to entry of the tenant. It can also be whether the lessor will allow pets, smoking policy, or subletting the premises.
- Fees and other payments. If there is any late payment on the tenant’s part, what are the levels of financial penalties, days late payments will be accepted, possible evictions due to late or non payments. Additional terms or fees should also be stated who among the two parties gets to pay for any maintenance cost of the premise. It should also specify the specific situations where the property manager or the tenant should be responsible in shouldering the maintenance cost.
- Default. This term will discuss what happens when the tenant is not able to pay the rent. There is also the possibility of the tenant violating parts of the agreement. This term will help you decide whether to resolve the problem, terminate the tenant, or go directly to the eviction process.
- Any advanced warnings. This includes any noise policy within the premise or certain areas of the premise. It can also be for any increase in rent or renewal of rent. This can also be where property maintenance can be found and who is responsible for it.
Why Property Managers Need It
The moment you start to decide to accept tenants to your property, it’s wise that you have a rental lease agreement ready. This agreement should be clearly and completely discussed to a tenant who wishes to rent the property before the person signs it.
A formal relationship exists between a tenant and a property manager. The law also recognizes that both parties have special right and obligations. The rental lease agreement is considered a legally binding agreement and If any legal actions arise between the lessor and the lessee, the property manager or tenant can use and refer to the agreement for reference.
A written contract will help you in many ways compared to a verbal contract between another party involved. You can always refer to the written agreement when conflicts arise between you and your tenant. The written agreement serves as a reminder between the two parties of what they have agreed upon the beginning of the relationship. The lease agreement signed by both parties holds them legally to the terms included in the contract.
The written agreement clearly spells out the detailed promise of the lessor and the lessee. It will also explain what will happen if ever one of the two parties break their promises to one another. As such, it’s important that a property manager has a rental lease agreement ready the moment he or she decides the property is open for rent.
Final Thoughts On What To Know About A Rental Lease Agreement
As we discussed, a rental lease agreement is an important tool for rental property management. A rental lease agreement is a binding contract between a property manager and the tenant. It is wise that a property manager knows the ins and outs of what should be included. The basic elements found in an agreement are very important and should not be missed.
Don’t forget to sure that the tenant completely and clearly understands every term that are specified in the agreement before he/she signs it.
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