What to Include in a Rental Agreement

When renting out your property, you need to create a rental agreement to provide necessary information to your tenants.

This document binds both you and renter to fulfill the rules agreed upon. It includes paying the set rental rate per month, performing the responsibilities of each party, and complying with state laws and property policies outlined in the rental agreement.

Even if rental agreements vary in terms and conditions, there are basic terms that appear in every contract.

In this article, we will tell you about the top 8 terms that should be covered in each rental agreement.

Top 8 Terms to Include in a Rental Agreement

1. Names of All Tenants

Since you are entering a legal contract with another party, you need to include their names in the lease. Renters must affix their signatures to show they agree to fulfill their duty of paying the rental rate each month and to honor their responsibilities as residents.

By signing the rental agreement, tenants also show their tacit agreement with the terms and conditions outlined in the contract.

2. Occupancy Limits

To retain control over who rents your unit, your rental agreement must state the number of acceptable residents. Be specific and declare that only those who signed the contract are considered as tenants, including their minor children.

In case your tenant decides to sublet the rental space or allow other people to stay without informing you properly, you have the power to evict them since the parties to the rental agreement are specified in the document.

3. Tenancy Term

Another vital point to be clear on is whether your rental agreement is fixed-term or on a month-to-month basis. This is key since both have different renewal processes.

Fixed-term leases often renew in a year or more and need a renewal lease to be signed. Meanwhile, month-to-month leases auto-renew each month until one of the parties to the rental agreement sends a notice.

You need to decide whether you are more comfortable with a month-to-month lease arrangement or you prefer a longer leasing term.

4. Rent Amount

To ensure that the tenant knows the exact rental fee of the unit, you need to state the full amount, including the due dates. This helps you avoid potential conflicts.

It is also recommended to be clear about the ways renters can pay the rent. You can state if checks, electronic payments, or credit card payments are accepted.

The other way you can be more specific is by being open about whether you intend to collect late fees for delayed rent payments. Be clear about the amount and whether you will provide any grace period. You can also include the additional fees you will charge if the rent checks bounce.

5. Deposits and Fees

Another ground for probable tensions between a landlord and tenant is how the security deposits will be deducted in case of property damage. In addition, conflicts also brew over when the landlord refunds the security deposit to the renter when the tenancy ends.

To avoid this issue, be clear about the following:

• Amount of the security deposit you will collect and make sure to research the maximum limit in your state.
• How the deposit will be used and what specific repairs will be charged to the renter and deducted from the deposit. For example, delayed rental payment or damage caused by a renter through negligence or abuse.
• Method of returning the security deposit, including when it will be returned and the details of the deductions.
• Legal fees that will be nonrefundable, such as pet fees or cleaning fees.

It is a great practice for landlords to also inform the renters about how the security deposit is held and if the interest will be paid out to the tenant. Some states will strictly require this but others won’t. Still, being transparent with how the security deposit is handled will satisfy the renters.

6. Repairs and Maintenance

The most common form of disagreement between landlords and tenants has to do with security deposits.

It is best to be clear about which areas landlords and tenants are responsible for when it comes to property repairs. Your rental agreement should be specific on the following:

• The renter’s duty to maintain a clean and sanitary environment and the conditions for being charged for damage that resulted from a resident’s neglect and abuse of the property
• Requiring a tenant to report any dangerous circumstances in the rental space, including the specific process for resolving complaints and maintenance repair requests
• Issuing restrictions relating to DIY repairs, installation of new security systems, replacement of appliances, and drilling holes inside the unit without proper approval from the landlord

7. Rental Property Access

It is best to outline the circumstances when the landlord enters the unit to ensure that the implied covenant of quiet enjoyment is always observed.

You must provide the specific events, such as performing property inspections and repairs. Make it a point to notify the renter in advance before going inside the unit, per the notice period stated under state laws.

8. Pets

Since more tenants own pets, the condition of allowing pets in your rental agreement must be included in your rental agreement. You should be specific about the breed, size, and number of pets you will permit.

It is also advisable to list the responsibilities of a renter with pets, such as ensuring they clean up after their pets. If pets are not allowed, then you should clearly state in your contract.

Bottom Line

Rental agreements reduce conflicts between landlords and tenants and ensure expectations will be met. If you require aid in creating a complete rental agreement, contact American Dream Realty and Management today.

We offer top-notch property management services, including crafting detailed rental agreements. Contact us today to learn more!