“Guide To Creating A House Rental Contract” written by Mike Marko
Are you planning on creating your own house rental contract?
As a property manager, you want to make sure that your business is running smoothly. A good rental contract can help with this.
What is a good house rental contract? It’s one that’s agreeable to the tenant and that also benefits you as the property manager.
That means making a house rental contract can be tricky. You have to protect two parties’ interests in it and abide by all relevant laws in your state.
If you’ve never done one of these contracts before, it’s all too easy to miss something.
You don’t have to worry about that any longer, though. Here, I’ll discuss how to create a house rental contract by providing a list of the clauses you need to have in it.
Clauses to Include in a House Rental Contract
Why is a house rental contract important? Because it outlines the expectations both property managers and tenants can have of each other.
As a property manager, you need this contract to make your tenants abide by the rules and regulations you set for using your property. This can assure you that they’ll take care of your property for as long as they’re renting it.
As for the tenants, they need the contract to make sure their rights and interests are also looked after. The house rental contract can protect them from unreasonable eviction, for instance. It can also assure them that the rent can’t be raised without warning.
The contract is a binding legal document. Hence, once signed, it legally compels all parties to it to follow all the rules set out by its clauses.
So what clauses should your house rental contract include? Below is a guide to filling out the terms of your house rental contract.
Start with the Basic Clauses
Start by writing down the names of the parties that will be involved in the contract. This is to establish who exactly is expected to follow the clauses written in the contract.
Add all relevant details afterwards. For example, don’t forget to include the address of the rented property in the contract.
If you have furniture or appliances that come with the property, be sure to list all of them in the house rental contract too.
Following that, you can start with the basic house rental contract clauses. Specify the following:
- What kind of contract is being made (rental or lease),
- How long it will last,
- How much rent the tenant must pay,
- How the tenant can pay the rent and when,
- If there are fees for late payment and how and when they should be paid, and
- What usage of the property is permitted (residential, commercial, or both).
Also mention if the contract will be month-to-month or even much more. It depends on the agreed term between you and the tenant.
Include a Security Deposit Clause
A security deposit clause is par for the course with a house rental contract. It states that the tenant will have to pay a security deposit that is usually equal to one month of the tenant’s rent.
As the property manager, it’s your responsibility to secure the money in a separate interest-bearing account to avoid spending it. You shouldn’t touch that money unless the tenancy has come to an end and you need the deposit to fix the damage the tenant caused to the property.
It’s standard for the security deposit clause of a house rental contract to state that any remaining funds after repairs should be returned to the tenant. Be sure to add that to your own house rental contract.
Add a Maintenance Clause
As a property manager, you don’t want a tenant who won’t take care of your property. So to avoid that, you can include a maintenance clause in your house rental contract.
The clause should state that the tenant will keep the premises in a clean and sanitary condition. He should also keep and maintain all interior fixtures and equipment.
You can also state in the contract what appliances the tenants can use and who’s responsible for maintaining them. You can even note the condition of the appliances at the time the tenant moves in.
This will help you both avoid confusion if one of the appliances breaks down later.
Make sure to also state in the contract who’s responsible for maintaining the following:
- Maintenance of the foundation,
- Load bearing walls, and
- Electrical system.
Finally, state the conditions under which you have the right to enter the property for maintenance purposes. For example, you could specify that you need to give the tenant reasonable notice for it first (be detailed about what reasonable notice means, though).
Provide a Clause on Warning of Concealed Defects
Property managers have to let tenants know if there are any defects with a property. Again, this is to avoid misunderstandings during the tenancy.
Of course, if there’s any defect in the property, you as a property manager can fix the defect before the tenant moves in. It’s when defects haven’t been completely resolved that you’re obliged to note them in the house rental contract.
The idea is to protect the tenant from issues from him being unaware of the defect. By disclosing defects on the contract, you’re also giving yourself legal protection. Should issues arise later, you can then prove that you gave the tenant fa air warning.
Indicate a Subletting Clause
Sometimes, tenants want to sublet a property they’re already renting. That’s when they rent out a property someone else rented out to them.
If you want to allow this for your tenants, be sure to include it in your house rental contract. State the conditions under which you’ll permit it and the obligations the sublessee (the person your original tenant is renting out to) has to the property.
In most cases, though, property managers don’t permit subletting in a house rental contract. That’s because it adds a whole new layer of complication to the rental agreement.
If you do decide to add a subletting clause to your house rental contract, it may be wise to consult a rental lawyer. He can guide you through the complexities of such arrangements.
Early Termination Clause
An early termination clause must be included in the house rental contract as well. Termination can happen anytime if the tenant does anything to break the contract.
A termination can also happen at the end of a non-continuing lease.
Know the rules in your area regarding lease termination. Notify your tenant properly to avoid any lawsuits.
Finally, you may want to include your conditions and procedures for evacuating tenants here. Again, this is something you want to talk over with a rental lawyer.
That’s because some states have very specific rules about evacuation, e.g. some states require you to notify tenants at least 30 days before they have to evacuate.
Abandoned Personal Properties
When tenants leave a rented property, there’s always a high chance of abandoned personal belongings. By adding this clause in the contract the tenant will know what will happen to such belongings.
The clause will let you legally dispose of the belongings that the tenant has abandoned. It usually assures tenants some measure of warning before you can do that.
For example, your contract may state that you should notify your tenants about their left-behinds at least 30 days before you deal with them yourself.
If after the 30 days are up they still haven’t picked up the left-behinds, you can legally dispose of the items.
Some states allow the landlord to sell the items. The landlord may even claim a storage fee for the hassle. Again, check with your local laws on what to do with the abandoned properties.
Final Thoughts on Things to Include in a House Rental Contract
A house rental contract is a document outlining the expectations of property managers and tenants from each other.
As such, it’s vitally important that you include all the right terms and clauses in a house rental contract. Aside from the basic rental clauses, below are some of the things you should have in yours:
- A security deposit clause,
- A maintenance clause,
- A clause on warning concealed defects,
- A subletting clause,
- An early termination clause, and
- An abandoned personal properties clause.
If there’s anything else you need to know about house rental contract, leave a question in the comment section below.
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Article: Guide To Creating A House Rental Contract