Step 7: How to Know What You Are Signing
The Basics of Rental Agreements
It may seem basic, but make sure you read what you are signing. Before you sign any papers, request a copy of rules, regulations, terms and conditions, etc. Read through those documents thoroughly so that you know exactly what you will be signing and reduce any risk of unwanted surprises.
Read the Contract, Then Read It Again!
Of all the pieces of advice in this article, this one might be the most important: read your contract. Twice. Make absolutely sure you know exactly what your lease entails. Being clear on the terms of your lease will help you avoid getting in trouble, and you’ll be able to hold your landlord accountable for any missteps that might occur on their end.
Here are some of the key things to focus on:
- How much is the application fee, if any?
- Is the application fee refundable if you do not qualify to rent?
- What is the beginning lease date and expiration date?
- What is the rental price and how much is the security deposit?
- Is the security deposit refundable when you move out?
- Who is responsible for paying for the utilities, you or your property owner?
- For what reason(s) may the apartment community or property owner terminate your lease?
- Are there penalties for moving out too early?
- Can other people move in with you after you sign the lease and move in?
- Can you sublease?
- Do you need to have renter’s insurance? (If yes, it will increase your cost).
- What is the guest/visitor policy?
- Are you responsible for any maintenance repairs?
What Questions to Ask for Your Rental Agreement?
Here are some important questions to consider when signing a lease – make sure to have a copy of the lease for your records. And remember that what a property owner may tell you is not official or binding unless it is in writing.
- What is the method of payment?
- What is the deposit amount and is it refundable?
- Is there a cancellation policy? What is it?
- What is the move out date and time?
- What is the number of occupants allowed?
- Do all occupants over 18 years of age need to sign the lease?
- Pet fees and restrictions – are there any?
- Any specific responsibilities as a resident? This includes any damage fees.
- How many days in advance do you need to provide a notice to vacate?
Year-to-Year or Multi-Year Lease
Apartments almost always carry either month-to-month leases or annual lease agreements. This might seem like a short duration, but it is done for a reason. At the end of the lease period, the landlord has the ability to renew the lease or not to renew it. They can also decide to raise or to lower the rent based on the market trends.
In most cases, homes for rent follow this same standard. The majority of home rental agreements are based on one-year agreement terms. Landlords, whether they are renting out homes or apartments, simply don’t want to find themselves tied down with nightmare tenants for any longer than they have to. So they will usually offer year-to-year leases in an effort to keep their risks as low as possible.
Landlords rarely entertain the thought of extending their rental agreement beyond a 12-month term, but it’s not impossible.
What to Expect in a House Lease
Lease agreements for houses are almost identical to those drafted up for apartments, but depending on the landlord, the inclusions can be minimal or extensive. That said, along with the rent amount and duration, most house rental agreements tend to include the following:
- General conduct requirements
- Parking restrictions
- Pet allowances
- Proper use of outdoor (or common) space
- Property alteration restrictions
- Garbage removal
- Maintenance requirements
- Utility responsibilities
- Guest restrictions
- Move out conditions and expectations
It’s important to understand that every lease is different, just as each landlord and renter is different. You never really know what the landlord is going to be willing to do for you until you ask. Depending on your negotiation skills, you may be able to secure a multi-year lease that benefits both your family and your landlord, so it’s always worth asking about.
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 also often found in a rental agreement. The contract should clearly state 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 them). 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-yourself-ers 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-emergency 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 breaches 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.