The rental lease agreement
When you’ve chosen any new tenant, you’ll want to agree on the term of the lease, which is your rental contract with your tenant. Most leases tend to be one year in length. Some can be two years. And some rentals are simply in the form of a month to month rental agreement, meaning there is no set time for a tenant to stay – and you will be required to give them their security deposit back with only a month’s notice. Make sure you have a standard lease all ready to be signed once you’ve selected your tenant. There are standardized leases you can purchase at office stores, or on-line. If there is any item that’s specific to your rental, you can type up a separate “rider” page for these items(for example, that the tenant will be responsible for shoveling his own private walkway and steps in the winter).
Most property investors are familiar with a basic residential lease agreement, and are comfortable utilizing them. A standard rental agreement can be obtained quite easily online. Some are basic free rental agreement forms. These free lease agreement documents are traditionally very basic in scope. More esoteric varieties of rental agreements are available using any number of Blumberg leases (blumberglegalforms.com).
Standard form rental contract
The lease form will cover the basics of the rental itself – lease dates, rent to be paid, when it will be paid, security deposits as well as what happens in the event of accidents. However, it’s always good investment property advice to tailor a standard lease document to help spell out exactly what will occur if the tenant doesn’t perform his part of the rental agreement.
Rental agreement inclusions
Some of the most important items to delineate in any standard rental contract include items such as changes to the unit (eg., how will your tenants get your approval to make alterations to their unit?). In addition, the basic rental agreement will spell out that rent is due on the first of the month (and what sort of grace period, if any, you will allow if they are late).
Other items to consider
You will certainly want to include how the unit will be used (ie., spelling out how many people of the same family will be allowed to live in the unit, as well as unrelated tenants.) Also make sure you put down what the tenant will be responsible for in terms of maintenance of the unit, as well as what you will take care of as well. For example, define who pays for each of these items: heat, electricity, yard maintenance, garbage removal, small repairs, phone, cable and internet access. Don’t forget to include whether there will be any additional rent clauses – namely, annual rent bumps, and be very specific if you will have these. Likewise, if a tenant doesn’t pay their rent or if they damage the unit, or violate the lease in any way, include a rent acceleration clause that allows you to collect the full amount due for the remainder of their rental period.
There will also be a clause spelling out the exact security deposit you are keeping on their behalf until they leave. It will say when and how the security will be returned. In addition, it will state how long you will have to return the security after they move out. If you can, try to allow for up to 30 days in which to return a tenant’s security deposit to allow you time to check on the condition of the unit after they vacate. In addition, are you asking for a separate security amount for a pet that you’re allowing? If so, be sure it adequately covers you in the event of damage from the pet.
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