More people than ever have turned to renting as a housing solution. Homeownership is falling, and rising housing prices, especially in metropolitan areas, have created a high demand for rental spaces. This demand presents a quality investment opportunity for those who can take advantage of the current market.
Anyone who has experience renting out a property knows just how important it is to have a well-crafted rental agreement between the landlord and the renter. A quality agreement is the basis for healthy, productive communication between the two parties and denotes the expectations and responsibilities of both sides.
A poorly written rental agreement can be the cause of much friction and debate between renter and owner. It can drag out disputes and may even lead to costly litigation. Here we will look at how to avoid this by creating a quality and comprehensive rental agreement.
1. Customize Agreement Accordingly
Many homeowners and property managers resort to templates for their rental agreements. While these templates are useful as starting points, they are not sufficient for many reasons. One of the most common items that templates leave out are Local and State laws regarding rental requirements. Each state has its rules and regulations that should be clearly outlined in the rental agreements. Landlord specific regulations, such as pet or damage deposit policy, should be clearly outlined and specified.
2. Be Very Specific Regarding Rental Terms
Generally speaking, the more specific a rental agreement, the better it will be. There are several items that any homeowner or property manager needs to have outlined, in no uncertain terms, on a rental agreement. These items include: rental term (12 month, month to month, etc.), maximum occupancy, renters full names and contact information, rent payment method, utility costs, maintenance expectations or protocol, and anything else the owner feels needs to be clearly outlined.
There should also be a section briefly outlining renter conduct and stating types of behaviors or activities which are not permitted. Examples of this could be rules on smoking, hosting large events, etc.
3. Add Necessary Additional Elements
Some other clauses or requirements need to be outlined in a rental agreement. These additional elements are often not included in rental agreement templates because they are often dependent upon the specific rental situation. The following are some of the most important clauses to add.
- Severability Clause: A severability clause clarifies that if one stipulation or requirement of the rental agreement is deemed to be unlawful, the remainder of the contract still applies. The clauses are individual of one another, and the legal overturning of any one clause does not void the rental agreement. An example of this could be extra rental fees for pets. Certain states have laws governing what a homeowner can and cannot charge renters for having pets in the house. Should a renter challenge the specific clause outlining this and win, it does not mean the rest of the agreement is now invalid.
- Premise Access: Landlords can enter a home they are renting if there is ample notice given, and it is done so at a reasonable hour. Laws about how much notice is required vary greatly from state to state. “By adding access to premises clause, it means the landlord can enter the house unannounced in the event of an emergency. This adds some legal protection to the landlord should they be charged with unlawful entry by the renter.” writes Shane McCowen, a business consultant at Writemyx and Nextcoursework.
- Sublet Rules: In most states, it is up to the landlord to determine if they will permit the subleasing of a property or not. If no policy is explicitly stated, it can lead to a disagreement should the renter decide to sublet part or all of the property.
- Possession Rules: There are many items that Landlords will not permit on the premises. “A common example would be water beds for fear of water damage or barbecues for fear of fire damage.” writes Jeff Sutherland, a marketer at Britstudent and Australia2write. These rules need to be clearly outlined before the renter signs the agreement.
- Lease Renewal Rights: Some leases allow for the renter to renew the agreement once the current one has ended. Any additional details, such as price increase, should be clearly defined under a renewal rights clause in the lease agreement.
Katrina Hatchett is a lifestyle blogger at Academic Brits and writer for Origin Writings. In a consultant role, she has worked with businesses and organizations in identifying their problems and issues and finding solutions that rely on improved communication and effectiveness. Katrina has written articles for several publications, many of which can be found in the Ph.D. Kingdom.