Your lawyer will make sure it is understandable, lawful and contains the correct terms and conditions.

This can save so many complications in the future.

This article is for both landlords and tenants to read.

It does not cover every aspect of a rental agreement,  however,  it does give important “pointers” in a number of key areas.  The areas covered in this article include:

Read then sign  ..  USA Renting  ..  Rental Agreement choices  ..  Missed rental payments ..  Tenant living at the property  ..  Tenant not living at the property  ..  Effect of unpaid monthly rental payments  ..  Deposit / Bond monies  ..  Utility providers  ..  Pets  ..  Guests

(1) Read then sign

It is always best practice to ask the tenants to read each page of the contract and sign each page, thereby confirming they have read and understood all the terms and conditions contained within the lease contract.

(2) USA renting .. Interesting point to remember

If you are renting in the USA,  it is a legal requirement to make sure that the tenant is made aware of any lead based paint in your property ( for buildings constructed before 1978 ) and they must sign a “disclaimer” which confirms they understand the fact that lead based paint is in the property and they are comfortable with this.

(3) Rental Agreement choices

Normally owners have a choice between two types of rental agreements when renting out their property

(a) The Rental agreement

(b) The Lease Contract

(a) The Rental agreement

You will find that with this type of agreement, there is not a length of residence requirement, as the agreement runs for only one month at a time.

At the end of every month, changes to the rental agreement can be requested to be made by either the tenant or the rental property owner.

• One of the main reasons for a change in the rental agreement is the owner wishing to increase the rent.
• Another common reason for wanting to change the rental agreement is a request by the tenant to leave the property.

All changes to the Rental Agreement require a notice period of 30 days.

Due to the short term nature of this type of agreement, it is best used for a property where it is difficult to find a long term tenant, for students or for people who travel a lot with their jobs and require only short term rentals.

(b) The Lease  contract

This is a much more specific type of contract and specifies a set time period for the contract to run and should detail the following information:

It should indicate a specific period of time for the lease.

Normally the initial period of a lease is 6 months, with the option to renew after this period of time.

Some people want more secure timelines, and, if the landlord agrees, they can have a 12 month lease.

Whatever time frame is decided upon, from the outset, until the lease expires,  both parties must adhere to all the terms and conditions contained within the lease rental contract.

During the tem of the lease, the terms and conditions cannot be changed.

A 6 or 12 month (or even longer timeline) lease gives both the owner and the tenant a stable situation, and peace of mind.

If a mortgage is in place with the property,  a long term lease helps provide the owner with the security of knowing that there will be rental income each month for the agreed period of time.

(4) Missed rental payments

It is always necessary to point out to tenant the consequences of not paying their monthly rental payments during agreed time frame of the lease contract.

(5) Tenant living at the property

When a tenant is living in the property and not paying rent, the owner/landlord is entitled to get the tenant evicted, and then purse the tenant through the courts for unpaid rental payments plus all legal expenses incurred.

The legal costs can be quite substantial in addition to the missed rental payments.

(6) Tenant not living at the property

In a situation where a tenant has moved elsewhere before the end of the lease contract, the tenant is still liable for the monthly rental payments. Failure to fulfil the payment terms contained in the contract will lead to legal action, as described above.

(7) Effect of unpaid monthly rental payments

Should eviction and court action take place, the tenant will be faced with detrimental entries on his/her credit file,   thereby affecting all types of future financial transactions.

So, the moral of the story is for tenants not to miss their rental payments.

If their financial circumstances change, it is always best for the tenant to approach the landlord/owner and explain the situation.

“A problem shared is a problem halved”.. and some kind of compromise may be possible.

(8) Deposit / Bond monies

On the day the lease contract is signed the landlord will expect to be paid 1 months rent plus a deposit (sometimes called a Bond) . This Deposit / Bond is to be no more than month’s rent and should be acknowledged immediately by the tenant being given a receipt. The receipt should clearly state the amount paid and the date the Deposit / Bond was paid.

In the USA, the Deposit / Bond money must be lodged with the Office of Rental Bonds. If the Deposit / Bond money has not been lodged within 2 weeks by the landlord, with the names of everyone who has contributed to the bond; then the tenant can obtain an order from the residential tenancy tribunal which will force the landlord to pay the bond to the Office of Rental Bonds.

(9) Utility providers

Normally the landlord will have the property with a particular utility company for your heat and power and telephone needs.

If you know of less expensive or more efficient utility companies, tell the landlord, and request a change.

It takes a matter of minutes to change to a different utility company,  and doing this can save you a considerable amount of money over the term of your lease contract.

If you think about it,  you are paying these bills, so it makes sense to find the best deal whilst you live in the rental property.

(10) Pets

If you have a pet, or pets, it is always most prudent to check with the landlord at the outset of the rental property lease, whither or not pets are allowed.

(11) Guests

This may seem strange, but if you are expecting a friend is going to be staying a long time at the property, and they are not on the lease, it is always a good idea to tell the landlord beforehand and make sure he is okay with this.

…………………………………………….. end of the article ………………………………………………….

The next article will look at a successful Real Estate Entrepreneur and what he can offer my readers!