If you're a landlord and have property to rent, it's important to have a written rental agreement. If you and your tenant ever have a legal dispute, your chances of a favorable outcome improve if you have a written agreement.
Your rental agreement, however, must include some basic rental terms.
What Is a Rental Agreement?
A rental agreement is a document that acts as a contract between you and your tenant, defining the terms of the tenancy. You can have it written in a way that is favorable to you because you can decide what goes into the agreement.
Most rental agreements are short-term agreements, such as month-to-month tenancies, while lease agreements are usually for longer rental periods, such as six months, a year, or more.
A rental agreement is a good idea if you want to make sure your tenant is reliable or if you're renting a room in a house in which you're living. It's easier to terminate a month-to-month tenancy than a long lease.
How to write a rental agreement
A month-to-month rental agreement should include certain provisions so that the agreement protects you. It's often helpful to have an attorney prepare a rental agreement for you, even if it's just a one-page document, especially if you're a first-time landlord.
Numerous provisions can be included, but a basic rental agreement should include at least the following 10 terms:
- Identify the parties to the agreement and the address of the property you own. Make sure you include the name of every tenant living at the property and their contact information. Include your name and contact information and the address of the property. Describe the property if it doesn't have a number. For example, if it's a room in a house, you can state that the property is the "third-floor bedroom" if there's only one bedroom on that floor. Be precise.
- The term of the tenancy and how it ends. List how long the term is, such as a month-to-month rental or a three-month rental. Start the rental term on the first of the month. Include how much notice you and the tenant must give if either of you wants to end the agreement. Check with an attorney or your local building department about specific laws governing how much notice of termination you and the tenant must give for short-term or month-to-month agreements.
- Rent and security deposit. State how much the rent is per month and where and how the tenant should pay the rent. If you'll take credit cards over the phone, state that. If you want the tenant to send a rent check every month, provide the address. Include the amount of any late fees, but make sure they're not excessive. Also, list the amount of the security deposit. Check with your local building department about limits on how much you can collect for a security deposit and late fees.
- What's included with the rental. State whether you're providing any utilities, such as electric, gas, heat, and cable. Alternatively, state the tenant's responsibility for utilities. Be clear about what's included in the rent and what isn't. If you're providing appliances and furniture, list them by name, such as a dishwasher, stove, refrigerator, bed, and couch.
- Pets. State whether pets are allowed, what types, how many, and what, if any, extra charges apply. State clearly that the tenant cannot bring any other type of pet if you want to limit the type of animal. You can also choose to have a no-pet policy. State that in the rental agreement.
- Each occupant's name and the number of occupants. If you don't want additional occupants, state that the tenant is the only person allowed to occupy the premises. List all occupants and state, for example, that no more than two people may occupy the rental. State that this agreement is between you and your tenant only and that the tenant may not sublease or assign the rental.
- Landlord's access to the property for repairs, maintenance, and inspection. State what notice you'll give to enter the premises for repairs other than emergency repairs. Many local communities have their own notice requirements, while some states have consistent requirements throughout the state, so discuss this with your attorney or local building department. State that the tenant's failure to give you access for needed repairs is a ground for termination. Also, state what the tenant is responsible for repairing.
- Rules of the tenancy. List what you expect of the tenant, such as no illegal activities, no smoking on the premises, and no noise after a particular hour. State that you can terminate the agreement if the tenant fails to abide by the tenancy rules and that the tenant is responsible for legal fees if you have to take the tenant to court to enforce the agreement.
- Damaged property. State that the tenant is responsible for damages other than regular wear and tear. Include that the tenant must return the premises in "broom-clean" condition. State that the tenant is responsible for legal fees if you take the tenant to court for damaged property.
- Signatures. You and the tenant must sign and date the agreement at the bottom.
So long as you have these terms in your rental agreement, you're protecting yourself in the event your tenant is someone you no longer want to rent to. The rental agreement provides an easy way for you to get them to move out and shows what they're responsible for if they don't leave voluntarily.