Understanding Your Rental Contract

Whether you want to rent out your current home or rent a new home, you’ll need to read and understand every part of the contract prior to signing. A rental agreement is a contract that you’ll keep handy for occasional review. Understanding your rights as either the tenant or the landlord is important; it will ensure that you don’t find yourself in breach of contract. Here are just a few of the items on a rental contract that will require your consideration.

First and foremost, you need to appreciate all of the financial implications of your rental agreement. The rental agreement should state clearly the monthly rate and security deposit. Look closely at what constitutes withholding a security deposit. There should be defined parameters for when the deposit will be returned. It should state what the late charge will be and what length of time qualifies as “late.”

The landlord or the tenant can pay utilities. Either way, the contract should state who carries the responsibility for utility payments. Typically the landlord carries property insurance, and it may be required that the tenant obtain a renter’s policy.

Occupancy restrictions are another item often found on a rental agreement. The contract should state clearly the number of occupants, which includes adults, children, and pets. (Speaking of pets, review the contract to determine whether there is an additional charge for pets). Also, there can be language within the agreement that defines when a “visitor,” becomes a “tenant.” It’s the tenant’s responsibility to notify the landlord of any changes to the original terms.

For those do-it-yourselfers that like to paint every room of the house, there’s often a paragraph in the contract addressing alterations to the property. The landlord may allow some enhancements to the property, with written approval. Keep in mind that if the landlord allows you to make changes during your tenancy, he may also want the property restored upon termination. For some agreements, all alterations are forbidden.

Be aware that the landlord can investigate potential breaches of your contract by allowing himself the right of entry and inspection. The rental contract should contain language stipulating how much notice the landlord must give the tenant before coming over (for non-emergent situations). Often times, landlords will change the air filters, check the smoke alarm batteries, have the carpets cleaned, or perform other preventative maintenance while inspecting the property. Whether you’re the landlord or the tenant, it’s important not to violate or be violated by improper entry/inspections.

Lastly, consider what constitutes “termination” of the lease agreement. Any grounds for an early termination should be articulated clearly. Upon expiration of the initial lease agreement, there should be language to describe what happens next. It’s possible for that the landlord will automatically renew the initial terms. It’s also possible for lease to terminate immediately. Some landlords require a renewal commitment two to three months prior to expiration. All parties will want to know those timelines on the front end. The rental agreement should describe the landlord’s expectation for the condition of the property after you vacate the premises.

Every part of the rental agreement is vitally important to both the landlord and the tenant. Carefully read through each paragraph without skipping over anything. Before you sign, during the lease, and even after pay special attention to the conditions described above. The most common lawsuits in civil court revolve around breach of contracts. Read through your lease agreement cautiously, ask the experts clarifying questions, and keep the signed document in a safe place to review periodically.

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