Leases & Rental Agreements Tips

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Who Benefits More From a Lease Agreement, the Landlord or the Renter?

Benefits Of a Lease Agreement

Rental apartments are more often occupied under a lease versus a month-to-month, more "casual" agreement. The question of who benefits most -- landlord or tenant -- is sometimes asked as if this agreement were a win/lose proposition. However, a fairly negotiated and written lease benefits both parties equally if the parties understand what they want and include these items in the agreement.

The primary benefits to BOTH parties typically include the following items.

  • Stability. Both the landlord and tenant have agreed to a set of conditions, acceptable to all, which should provide some level of stability for the parties. Longer term leases fro two to five years increase the stability factor.
  • Continuity of income (landlord) and housing expense (tenant). A residential lease agreement benefits both landlord and tenant by stipulating a continuity of income/expense over the term of the contract. Since both parties agreed to the terms, both should be satisfied with the monetary factors.
  • Commitment that should be comforting for both parties. Both landlord and tenant have shown commitment when rental apartments are occupied through a lease agreement. Often a house rental becomes a home rental because of this commitment level. Whether you use a standard sample lease form or more complex custom document, both parties win.
There are a few instances, usually unforeseen, that may give an advantage to either landlord or tenant. For example, suppose you're a tenant whose been offered a fabulous new job in another state. Wonderful, right? But, you're in the second year of a five-year lease of your home. Now what? The landlord has an advantage because the lease must, legally, be fulfilled. If your residential lease form allows you to sublet your house, you'll probably have to do that to fulfill the terms of the contract.

On the other hand, suppose your landlord unexpectedly needs to sell your house. Having a longer-term lease, instead of a month-to-month rental term, gives you some security knowing your rental lease agreement cannot simply be terminated on 30 days' notice. In this example, the tenant normally has an advantage.

Under typical circumstances, however, both parties enjoy equal benefits under a standard lease used for rental apartments and houses.

The above-listed tip is for informational use only. Always read entire specific documents and language before executing any contract or agreement.

   
What happens to my security deposit?

Interest On Your Security Deposit

A security deposit is any advance rental payment other than the first month's rent. The security deposit remains the tenant's property but the landlord holds a security interest in it. Security deposits must be kept in an escrow or savings account at a bank. In some cases, landlords pay tenants interest on security deposits annually or on the anniversary date of a tenancy either directly to tenants or as a credit towards the next month's rent. Make sure to ask if your security will be held in an interest bearing account and when you will receive you the accumulating interest. Payment should be made to you no later then 30 days after moving out of the rental property.

   
Should I exaggerate on my rental application?

Completing The Rental Application

You will usually have to fill out a rental application to be considered for the rental home. The rental agreement helps the potential landlord or agency get to know you and collect contact information on you and your references. Make sure you answer the application truthfully and be honest with accurate information.

The application usually includes all the tenant's particulars needed to check credit, income and references. It will ask questions about the names of tenants, number of occupants, pets (if any), address of unit, occupancy date, amount of rent, when rent begins and when rent is due to the landlord. A tenant who violates any of these conditions can be evicted. Be sure you sign the application stating all the information is correct. The rental application is “Subject to Landlord Approval” and is not a legally binding document. It is important to thoroughly fill out the rental application and get it back to the landlord or rental agency promptly to be considered an interested responsible potential.

   
Can I have the rental lease amended to make more clear?

The Standard Lease

You can find a copy of a rental lease agreement at many local office supply stores. Standard leases usually include all the typical lease terms, but you should carefully read all aspects of the lease, and add in clauses that you feel need to be clarified before signing the agreement. Security deposit information and amount paid, date rent is due, and any rules and restrictions while renting should be agreed upon before signing the lease.

A lease is binding agreement between landlord and tenant, if there is anything that is unclear make sure it is clarified and written in the lease to avoid any disagreements during the lease or termination of the lease.

   
How will I know the cost of exiting a lease early?

Early Termination Of Lease

Before signing a lease, make sure you discuss exiting the lease, even if you intend on staying for the entire duration of the lease. You never know what will happen and emergency situations or situations beyond your control with work or family do come up. Find out if there is a penalty for moving out before the lease expiration date. There are different penalties or processes for moving out before the lease is expired, depending on the lease and the landlord. Usually you will only have to pay for the time until the apartment is re-rented, but it's a good idea to ensure that there are no hidden fees associated with breaking the lease.

   
Can the landlord ask me for a pet security deposit?

Ask About Security Deposit Upfront

Landlords have the right to ask for a security deposit to protect the rental property from any damage that may incur while you are renting. They are not allowed to hold a security deposit that is more than two months rent unless they are holding it for a specific threat to the property, such as a pet security deposit for any additional damages pets may do to the property. Ask about all security costs up front before signing lease.


   
Will my landlord contact my employer to tell them I moved?

Employment And Income Verification

Landlords may also ask to contact your current employer to verify the amount of income you say you are earning on your rental application. It is a good idea to let your contact person or HR representative know that you are looking for rental properties and to expect calls from potential landlords. It is not a good idea to lie on a rental application - potential landlords usually verify all information and it will only hurt you and prevent you from getting the rental.

If you are self-employed, have copies ready of your latest tax returns, and bank statements showing a comfortable stream of deposits and balances.

If you are a student, potential landlords may also request permission to verify scholarships, loans, and grants from the institution.

   
Is it legal for my landlord to ask for a credit report?

Credit Reports For A Rental Property

A credit report tells the landlord if a prospective tenant has honored their financial obligations in the past, and serves as a good indicator of the renter's timeliness and financial stability. The report will show missed payments, late payments, and any balances owed. It may also show any past or outstanding litigation, especially against landlords. It may even include criminal and court records.

This is usually not intended to be an invasion of privacy but rather to see if you have a history of paying your bills on time. A small blemish will usually not interfere with getting the rental, but a chronic history of bad debt and the amount of debt may be relevant.

It is a good idea to get a copy of your credit report before looking for rental properties, so you will be able to explain to prospective landlords the reason behind any blemishes.


   
What Are the Pros and Cons of a Month-to-Month Rental Agreement?

Pros and Cons of a Month-to-Month Rental Agreement

Month-to-month agreements, used to occupy rental apartments, can work well for some and become a nightmare for others. As with most fairly negotiated agreements, the success or failure of the arrangement often directly relates to the wishes of the parties. Month-to-month residential lease agreements are a perfect example of this proven theory.

First, both parties should understand the basics of month-to-month arrangements as they apply to rental apartments. Most of these agreements stipulate that the tenant agrees to occupy and the landlord agrees to allow the rental property to be occupied by the tenant for a term of one month at a time, possibly with no future stipulated end of term. Hence, the term may last as short as 30 days or may continue, technically, forever -- as long as both tenant and landlord are happy with the arrangement.

From a landlord's perspective, this arrangement allows quick reaction to market changes (increasing rents, taxes, the need to sell the rental property, etc.) that help protect against economic downturns. The tenants enjoys the same flexibility should he want it. Since he is not committed to long term residency, should the rent increase, he secures a fabulous new job offer in another state or another housing opportunity presents itself, he has the freedom to move and improve his quality of life quickly.

Unfortunately, every coin has two sides. Landlords enjoy little security that their current tenants will remain over the long term. As experienced landlords are well aware, a vacancy and the related costs to find a new tenant can make a serious dent in one's bank account. Tenants are also often afflicted by this lack of security. Moving from one rental property to another is not usually classified as an enjoyable activity. An agreement that allows a short 30-day notice of termination does not provide a very effective time frame to look for, rent, and move to a new home.

The flexibility offered by a month-to-month term for rental apartments, however, often works well for both landlord and tenant. The downside risks to one, the other, or both are, however, potentially a problem. Month-to-month residential lease agreements are still widely used but should be carefully considered by both parties before a contract is executed.

The above-listed tip is for informational use only. Always read entire specific documents and language before executing any contract or agreement.

   
What Can Happen If a Landlord or a Tenant Breaks a Lease?

Possible Results If a Landlord or a Tenant "Breaks" a Lease

Many things can happen if landlords or tenants break material terms of leases on rental apartments. Most would agree that the majority of the “things” that could happen are unacceptable for one or both parties. If one of the parties is accused of breaking the terms of a lease, the importance of a clear, concise, and complete agreement will be evident to both parties rather quickly and emphatically.

The potential activities and/or remedies typically depend on which party has violated the lease agreement terms. If the tenant has performed actions that may have violated the tenant lease terms, the landlord may have the legal authority to be awarded reparations (damages) or eviction of the renter. Should the landlord have allegedly broken the promises of the lease, the tenant may have the legal ability to have the court mandate correction of the problem or receive monetary awards from the landlord.

Whether you are a landlord or a tenant, understand the complete list of terms to which you agreed when signing the lease agreement. Many potential problems with leases on rental apartments can be avoided if both parties fully understand the contents of their contract.

The end result of a violated residential lease agreement invariably involves time and money, at the least. The results of this situation typically terminate in a lose/lose situation. No one wins. The loss of time and money, normally by both parties, usually outweighs any anticipated monetary gain. Often, only the attorneys involved in litigation make money, while the tenant and landlord live through an unpleasant situation.

   
What AreThe Similarities and Difference Between a Lease and a Rental Agreement?

Similarities and Differences Between a Lease and a Rental Agreement

There are many similarities and a few important differences between lease and rental agreements. First, here are some similarities of agreements pertaining to rental property.

Both a rental and a lease agreement should have the following attributes:

  • Both agreements should always be in writing. There are no known exceptions on this planet to this rule. Of course, it's easier and more pleasant to make an oral rental lease agreement because both landlord and tenant are happy to be making a deal. However, should a problem arise, oral agreements are less useful and unenforceable.
  • A residential lease agreement should have a clear identification of the monthly rent or lease amount for rental apartments and when, during the month, the rent is due. Most agreements call for the agreed payment to be made in advance, unlike a mortgage loan which is paid in arrears -- on the first day of every month during the term of the agreement.
  • There should be a clear statement of the length of the agreement. Whether your agreement is a pure month-to-month occupation or a five-year rental lease agreement, the length of the term should be clearly specified. Also, any agreed-upon renewals or extensions of the agreement terms should also be clearly identified.
  • Identify whether or not this is a fixed-term rental or lease agreement, which normally specifies that the landlord cannot increase the rental amount during the term of the agreement or a more open-ended and flexible contract. For obvious reasons, this can be a critical component of any tenant lease or rental agreement.
Primary differences in a rental and lease agreement often include:

  • Lease agreements tend to be longer than rental agreements, but this is not a requirement. Many people tend to consider a rental agreement to be a short-term agreement (normally month-to-month), while typical use of the term "lease" often refers to a longer-term document -- six months to five years or beyond.
  • Oral lease agreements are often invalid. You learned above that neither agreement should ever be an oral contract. But many state courts will at least consider ruling on oral rental agreements that were intended to last less than one year. The majority of state courts will often decline to even hear or consider enforcing an oral lease agreement with original terms longer than one year.
  • Unlike short term rental agreements (e.g., month-to-month), the majority of lease agreements do not automatically renew themselves. Many month-to-month rental agreements have language that states the agreement will automatically renew every month, while both parties (landlord and tenant) have to provide only 30 days' notice of a termination of the contract. A three-year lease may state that the parties agree to the term and rental amount to be fixed for three years.
There may be other differences important to both parties, almost all of which are negotiable before any contract is signed and executed. As long as the language is clear and the terms are acceptable to both parties, either agreement should be workable.

The above-listed tip is for informational use only. Always read entire specific documents and language before executing any contract or agreement.

   

Completing The Rental Application

The security deposit covers any damage that may happen to the rental property while you are living in it, outside of any normal wear and tear. It is a good idea to walk through the rental with the landlord and document any damage in the rental before you move in, so you will not be held responsible for it when you vacate the property.

   

Interest On Your Security Deposit

When you give your new landlord the security deposit for your new home rental, make sure to get a receipt for your security deposit or keep a copy of the cashed check. It is also a good idea to put the amount paid for the security into the lease. This way it is agreed by the signing of the lease that amount was given to the landlord.

   
What can I do to get my security deposit back?

Ensure Getting Your Security Deposit Back

If something in the rental home gets damaged during your lease, you should make an effort to repair the damage yourself, if possible. If you do not repair the damage the landlord has the right to use your security deposit to pay for the repairs. Often, the cost of having the landlord find someone to make the repairs will cost more then if you try and fix the damage yourself or get someone to fix it for you. The amount of security deposit you get back depends on how close the rental property looks to the way it was when you rented it.

   
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