“5 Questions Your Basic Rental Agreement Should Answer” written by Mike Marko
How can an empty, unused property be of use to you? If you have already eliminated the possibility of turning your property into your storage space of business location, maybe it’s time to utilize it to generate money. The easiest way to do that is to rent out your property!
Renting out property has become a widely common practice among property owners. This is because they still get to keep ownership of their property while other people pay them in order to use the rentable space.
By renting out your property, revenue will come from your tenants monthly while you handle other responsibilities. Renting out your property also doesn’t require you to always check up on your tenants to ensure that they will pay rent when it’s due.
A steady influx of money from a rented property can be ensured and legalized by creating a basic rental agreement. If you don’t know how to make one, don’t worry! This blog will teach you what your basic rental agreement should have.
What Should Be Included in Your Basic Rental Agreement?
Creating your own basic rental agreement may sound troublesome but there is a secret to it. Focusing on the questions “who”, “when”, “where”, “what” and “how” will help you easily create a basic rental agreement.
Although these five basic questions may seem easy to answer, you should be careful with the details of your basic rental agreement. A basic rental agreement is legally binding. If you are not careful, serious problems may arise as a result.
So, what questions should your basic rental agreement answer?
Who Shares the Lease Agreement?
As with any legally binding document, information about the tenant and the landlord should always be clear in every basic rental agreement. The information should include their names, ages, and occupations.
Some tenants may have other individuals sharing the property with them. In this situation, make sure to include all the general information of the additional individuals.
Pet provisions may also be included by the property manager if the tenant will share the property with a pet or animal.
Clearing up all the general information of the individuals sharing the property will work as assurance that they understand their responsibilities as tenants. Having all their names listed will help you terminate the lease if one of them violates the basic rental agreement terms.
Gathering the tenants’ general information will also clear up what uses the property will undergo. For example, the property may be used for business or rented as a residence.
Where Is the Property Located?
If you have a name for your property, include its name with its complete billing address in your basic rental agreement. Including this information is solely for full disclosure.
“Rentable space” or usable square footage that the tenant can occupy should be clarified in a basic rental agreement. Rentable spaces include lobbies, elevators, stairs, common bathrooms, and common hallways.
Clarifying this in a basic rental agreement will prevent tenants from occupying or claiming spaces that are not part of their lease.
You should also specify driveways and parking spaces that your tenants can use or claim in the basic rental agreement.
Doing so will prevent non-tenants from occupying part of the property you are leasing. At the same time, it will also prevent tenants from occupying other parking spaces or driveways.
When Will the Contract Be Valid?
You should always include the exact dates of when the lease will begin and end. If you have agreed to rent the property for a tentative amount of time, you should avoid listing vague lease ends.
Vague lease ends include estimates such as “within two months” or “around a year”.
Always specify the dates on your basic rental agreement as it may become confusing or contradictory in the future. A situation may arise where you will have to determine when the lease will be terminated.
With specific dates, you will be able to provide your tenants and future replacements with exact timelines to follow.
You should also include renewal clauses in your basic rental agreement. Including renewal clauses gives your tenant the option to extend their lease on a pre-negotiated agreement.
This will provide them with the ability to have a long-term agreement with the freedom to terminate the lease on the initial date.
Renewal clauses also give the landlords the ability to keep desirable tenants. However, you should be mindful of renewal deadlines.
In order to avoid complications, it is advised to keep open lines of communication between the landlord and the tenant.
What Does the Tenant Have to Pay?
When creating a basic rental agreement, it is essential to disclose the full amount of the rent due to be paid as agreed. Since rent is commonly agreed to be paid every month, you should be careful when breaking down how much tenants will have to pay by month.
Do not forget to include late fees in your basic rental agreement. This will ensure full disclosure of the penalty fine your tenants will have to pay if they fail to pay their rent in time.
You should also include other fees such as security deposits in your basic rental agreement. State laws may differ when it comes to security deposits, but security deposits are commonly used to pay for damages or maintenance.
Your basic rental agreement should disclose what kind of fees the security deposit will be able to cover, such as cleaning and repair.
How Does The Contract Become Binding?
Your basic rental agreement should require names with signed signatures. Without these, your basic rental agreement can be rendered worthless and not legally binding.
This is because these signatures will act as an acknowledgment that both parties agree to follow the terms of the lease.
Keep in mind that some states also require a witness to the signing to make the basic rental agreement legally binding.
You should also make sure that all the parties signing the basic rental agreement are of legal age. This is because minors cannot make legally binding contracts. Therefore, it is better to have an adult co-sign the lease with them.
Finally, you should make sure that both parties have a copy of the signed basic rental agreement.
Final Thoughts on What to Include in Your Basic Rental Agreement
There you have it! With this simple guide, you will be able to create your own basic rental agreement in no time.
By focusing on the 5 fundamental questions presented in this blog and their details, you will be able to create a legally binding lease form. In addition to that, you will be able to prevent loopholes from arising and creating problems in the future.
Here are the 5 questions your basic rental agreement needs to answer, again:
- Who Shares the Lease Agreement?
- Where Is the Property Located?
- When Will the Contract Be Valid?
- What Does the Tenant Have to Pay?
- How Does The Contract Become Binding?
Addressing these queries should help you formulate a comprehensive, meticulously-filled-in basic rental agreement.
If you have any questions regarding what should be included in a basic rental agreement, please leave a comment below!
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