What Does It Mean to Draft a Rental Agreement?
You must sign a rental agreement when you want to rent a space or property. Rental agreements are a type of legally binding contract between the owner of a property ( landlord ) and the person who rents it ( tenant ).
Tenants agree to rent a space or property for a rental fee. The rental fee is a fixed price that does not change or have any interest. However, in some commercial lease agreements, rent is a variable fee that varies based on set circumstances.
By signing a rental agreement, you enter a contractual relationship with a landlord to pay rent in exchange for the use of the property. You also agree to follow the terms and conditions in the rental agreement, which vary by contract and state.
Here is an article with a general definition of a rental agreement and how the contract works in U.S. law.
What Should Be Included in a Rental Agreement?
Every rental agreement has several key components that ensure it is legally compliant. Without these features, a rental agreement may be considered invalid. For this reason, it's vital that you ensure your documents respect all of the rent laws in your state.
The most important elements of a rental agreement are:
- Names of landlord, tenants, and occupants. The rental agreement needs to identify the landlord, the tenant, and any occupants that will reside on the property during the rental agreement term. Occupants are not held legally liable for rent. Hence, it is important to specify who is responsible for paying the rent.
- Dates of the agreement. Every rental agreement must have a definitive start and end date. The start date is when the agreement goes into effect, also known as the day when someone can legally reside or operate on the property. The end date is when the tenant must leave the property and have paid all of their owed rent in full.
- Terms of tenancy. Rental agreements are signed for a shorter period of time than a traditional lease, sometimes on a month-to-month basis. Therefore, your agreement must detail how long a tenant has to renew their agreement and how much notification they must provide if they want to end their agreement early.
- Rent payment terms. The most important terms in a rental agreement are found in the payment terms agreement. Make sure you know how much rent is owed, when it is due, how it will be paid, and the penalties for non-payment.
- Security deposit and additional fees. If you require a security deposit, pet rent, utilities, or other expenses, outline these in the security deposit agreement section of the rental agreement. You must also describe how the security deposit will be used if it is not reimbursed to the tenant. If it is returned at the end of their agreement, note how and when the tenant will receive the money.
- Policies for repairs. Maintenance is a crucial part of maintaining a safe and sanitary environment. If you are going to assume full responsibility for all of the repairs and maintenance of the property, say so. You can also specify what roles the tenant must take during their tenancy. You can also use this section to restrict tenants from making unauthorized modifications to the property.
- Right to enter the premises. Although you're the property owner, you cannot enter another person’s residence without advance notice. The exact timeframes and justification for entry vary by state, so ensure you are continuously operating in compliance with your region’s laws.
- Occupancy rules. You can enforce specific rules for tenants, such as no pets except for service or emotional support animals, no smoking, and no illegal activity. You should also state what activities are prohibited.
- Landlord disclosures. Both federal and state laws require landlords to disclose details about their rental properties. However, depending on where you live, the disclosures will vary. Consulting with a rental attorney can help you determine what disclaimers you are legally required to provide.
- Liability waivers. You can have tenants waive the right to sue you for certain damages or injuries sustained on the premises. The limit of liability depends on your state, and it does not include acts of gross negligence on your behalf.
- Contact information. Ensure your agreement outlines how tenants can contact you. Telephone numbers and email are common forms of contact information. You can also provide an emergency contact number for maintenance.
Here is an article about common rental agreement disclosures.
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Who Drafts a Rental Agreement?
Rental agreements are always drafted by the landlord and issued to the tenant. The rental agreement will vary depending on what type of property you are renting and its purpose. For example, if you rent a space for a party or event, you will sign an event rental agreement from the venue.
Landlords can draft their rental agreements using templates online, which can be complicated. For one, the templates you find may not include requirements for rental agreements in your state. Without a legal background, you may not be able to determine how valid an agreement is.
The best way to ensure your rental agreement is valid is to have an attorney draft one for you. The lawyer can also draft rental agreement templates that are easily modifiable.
Here is an article where you can find vetted rental agreement lawyers near you.
What is the Purpose of a Rental Agreement?
The purpose of a rental agreement is to ensure that you, the landlord, are paid the rent you are owed. In addition, the rental agreement ensures that tenants can legally occupy or use space for specific purposes for a set of time.
Rental agreements also provide security for all parties and designate legal responsibilities for tenants and landlords.
Furthermore, rental agreements also enforce limitations on tenants. For example, you may prohibit subleasing the property without permission or not allow certain types of pets on your property.
Rental agreements also have severability clauses, which keep some parts of the agreement intact if others are found to be invalid or illegal.
Here is an article that discusses the importance of rental agreements.
How Long Does a Rental Agreement Last?
Rental agreements had to be for a shorter period of time than the average lease. Most rental agreements range between 30 and 90 days. Leases tend to run on terms between 6 to 18 months.
The average rental agreement is under 30 days, though some may automatically renew monthly.
Here is an article that discusses the difference between rental agreements and leases.
What is the Difference Between a Lease and a Rental Agreement?
Both rental agreements and leases serve the same purpose. However, a lease tends to be long and often more restrictive than a rental agreement. Nevertheless, both leases and rental agreements are necessary for anyone who wants to rent their property to someone for residential or commercial use.
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