There was a time when landlords and tenants would just agree on how much the rental fee is, how much they had to pay as a reservation or advance payment, and the landlord hands the keys to the property and with a firm handshake, everything is settled. Any landlord and tenant relationship is built on trust that the landlord sees to it that the living space is at its best, and the tenant pays the rent on time and will not purposely damage the property. This is in fact acceptable practice and has been how people have done business for a long time, especially in small towns. However, the state government has made rental agreements compulsory and goes into the tax claims filed by the landlord. Or worst, if you have a number of properties rented out without rental agreements, then it becomes an illegal business, and the IRS might go after you for tax evasion. The thing is, we can always trust and build relationships with our tenants, but nowadays, rental agreement is necessary. The rental agreement is there as a legal contract between the landlord and the tenant, and they have to adhere to what is contained in the contract or legal disputes can ensue. Whether you are a landlord or a tenant, knowing what a rental agreement is and why you need it is a valuable knowledge.
Rental Agreement Discussed
Buying your own house is probably one goal that most people strive to achieve in their lifetime, but for those who do not have the capacity to buy a house, then renting is the next best option. Renting also allows for a temporary set-up where you can just terminate the contract if you decide to move or buy your own house. Renting for some is also cost-effective, you do not need to worry about the maintenance of the house or to pay real-property tax. If you are single, going to school, or do not have the energy to maintain a house, renting is still the best option.
Thus, real-property is a good investment, and you can make serious money from renting your property, especially if you find that perfect tenant who in the long term would stay with your property. However, you need to make sure that you have a rental agreement that is acceptable to both you and your tenant for both your protection. A rental agreement is essentially a legally binding contract between the landlord and the tenant. The contract stipulates the conditions in which the agreement has been made. It must contain the names of the landlord and tenant, their legal status and addresses, and that the agreement has been entered into without coercion. The agreement also identifies the property that is to be rented out, and where it is located, and the specifics of the property, and the rental fee. Additionally, the agreement also indicates the schedule at which the rental fee has to be paid may it be on a month to month basis, or in a one-time annual or semi-annual schedule. The rental agreement will also stipulate until when the contract is in effect or when it ends. Moreover, the rental agreement is required in most states even for the month to month rentals, and more importantly if it is a long term rental.
Kinds of Rental Agreements
Rental agreements can take on various forms, most of which depend on the kind of rental whether it is short term or long term and whether it is for an apartment, a garage or a storage unit. One of the key information that must be contained in the rental agreement is the length or duration of the agreed rental. In month to month rentals the tenant agrees to pay the rental fee on a monthly basis and the payment of which will automatically renew the rent for another month until the tenant signifies that he or she is leaving the property. Most young adults without a steady job or those who live from paycheck to paycheck would prefer the monthly arrangement as it is much easier to pay, however, if within a certain period the tenant is unable to pay the rent he or she can be evicted if the landlord wishes to. Long-term rental agreement is where the duration of the rental is within a year or a period of 3 to 5 years. This arrangement however would entail a bigger financial requirement as the rental fee should be paid in full. Whatever it is that you choose to offer or require the tenant, just be sure that the tenant knows this upfront so there will be no misunderstandings in the future. Also, this should be clearly stipulated in the rental agreement and agreed on by both parties.
The legal terms and addendums required by state laws for rental agreements also vary in terms of the kind of space that is being rented out. This would mean that there are several conditions that should be in a house or apartment rental agreement but not in a garage or storage rental. There are times when people would just want a place where they can store their valuable stuff, which may or may not have great monetary value. Nonetheless, people want a storage space they can put their things in and be assured that it is safe and protected and to which they can have easy access when they want to. The solution is to rent a storage space. Most storage owners offer long-term rentals and payments are often a one-time affair. After a year, if the renter does not come back to renew the rental agreement, the owner can be able to sell off the contents of the storage area to recover losses which is also stipulated in the rental agreement.
Sublet Rental Contract
There are times when the original tenant has to move out due to work, studies or even travel but he or she does not want to terminate the rental agreement as it could be costly, or the tenant is still thinking of coming back and he or she wants the same property. In this cases, the original tenant can actually sublet the property to another tenant, which is now called a subtenant and the original tenant becomes the sub-landlord. This arrangement usually occurs in a long-term rental agreement, the subtenant will pay the rental fee to the sub-landlord while the rental fee for the property have already been paid in full by the original tenant. Subletting can only be permitted if the original landlord agrees with it, and a whole new sublet rental contract has to be drawn up. The said rental agreement should contain all the required state terms and addendums and may even exceed it if there are things that the landlord and tenant want to be included in the contract.
Vacation Rental Agreement
Vacation homes are now in fashion, a family or a couple can go to the mountains or the beach and rather than staying in a hotel or inn, you can now rent an entire house for the duration of the vacation from an overnight stay to a week or a month. In this case, owners of vacation homes have an entirely different set of rental agreement conditions and terms which should also follow state laws. If you plan to rent out your vacation home to a stranger, you have to make sure that the terms of the rental agreement should be enough to protect your property from possible damage and looting like putting a clause in which any damage to the property has to be paid for by the tenant or to require the tenant to pay a rental bond which can be returned after their stay in the vacation home if there are no damages to the property.
Rent-to-own Agreement
There are also rent-to-own agreements, where the tenant has to pay a set amount on a monthly basis which is equivalent to the market value of the property for a set period of months. After which, the ownership of the property is transferred to the tenant. Rent-to-own agreements are not very common, but there are those who no longer wish to have to deal with property maintenance, taxes, repairs and problematic tenants, and also does not need a large amount of money so that they can just make their living from the rent they collect.
Without a doubt, if you are looking for a tenant for any property you may have, a rental agreement is a must. But going through the motions of hiring a lawyer to draw up the rental agreement, having it checked for consistency and compliance with state laws is too time consuming for most landlords. The easiest way to make a rental agreement that is above board and legally binding is to hire a firm that can do all of the work for you, without even having to leave the comfort of your home. The transactions are all online and without any forms to accomplish or fill.
