“Why Contract Rental Form is Needed” written by Mike Marko
Have you ever wondered why a rental contract form is needed?
This is one thing a lot of first-time landlords tend to ask. Some of them even think that it’s a waste of time.
After all, you can just have a verbal rental contract, right? Why bother with a written rental contract form, when it adds work to the process?
Well, while it’s actually possible to have a verbal rental contract, it’s far from advisable. The truth is, drawing up a written rental contract form is definitely one of the best steps you’ll do when engaging into property leasing.
A detailed rental lease agreement is necessary for both landlords and tenants to minimize headaches down the road. The more thoroughly the rental contract form accounts for any issues that may arise, the better.
To know more about the importance of having a rental contract form for your leasing, let’s take a look of these 5 advantages of having one.
Are you ready? Let’s dive in!
The Importance of Having a Rental Contract Form
Sometimes, it’s all too easy to believe that you and your tenant are on the same page about your rental agreement. Unfortunately, you shouldn’t take that on faith.
The thing is, conflict is inevitable in any sort of property leasing. That’s when verbal contracts won’t help, as they’re very hard to refer to for help in settling a problem or dispute.
You can hardly take the dispute to court either if there’s no reference available as evidence for your contention. That’s the case if the terms you and your tenant settled on aren’t written in a specific contract form.
So, as you can see, it’s indeed very important to make your own rental contract form. There are many advantages to having one for your rental property business.
Let’s see what these are…
Ensures Payment Conditions Are Met
One of the most important things to ensure when you’re running a rental property is that payments are met. And a rental contract form is needed to enforce this.
You see, if you don’t have a rental contract form stating how and when the tenant should pay rent, it’s pretty hard to complain to them if they miss a payment.
You can’t even take legal action to compel them to pay you because — as I said earlier — you don’t have a contract to serve as proof of their obligation.
With that said, property managers must create a contract rental form that has a very detailed clause about the way payment must be done.
The contract should state the exact amount that the tenants must pay every month. Regardless on what type of lease form it is, the payment terms must be specifically written.
That means the rental contract form should state when each payment should be made, what payment options are viable (cash, check, money transfer, etc.), and what penalties are applicable to late payors.
Thus, if you want to charge your tenants a fee for late payment, you have to state it in the rental contract form. You also need to state when that fee needs to be paid.
Tenants Follow the Rules and Regulations
Aside from the clause that states the payment terms, there must also be a space in the rental contract form that talks about the rules and regulations of the leasing term.
The usual rules and regulations found in the rental contract form are about the overstay charges, conditions for renewal, and general responsibilities.
This form must tell all the tenants that they’re not allowed to overstay once the agreed-upon tenancy period has concluded. If ever the tenant will incur overstay charges, the form must specify the specific charges for it.
That’s actually related to why the rental contract form also needs to state the terms for renewal of the rental contract.
Some contract forms make it automatically-renewing unless the tenant opts out of that within a particular time period before the end of the tenancy. It’s up to you how you phrase it in your own rental contract form, though.
Finally, your rental contract form should state who’s responsible for what. Who handles maintenance of what objects, who does repair for damage to the property, and so on.
Rule Violations Lead to Certain Sanctions
Another reason to have a rental contract form is that it can help tenants and landlords avoid getting into conflict. That’s because it establishes what they should and should not do.
That said, a rental contract form must also detail what happens when the rules it outlines are broken. That’s why you have to be clear on what happens to rule violators in your property.
We already saw this earlier, when talking about penalties resulting from late payments. The rental contract form also typically shows that tenants are responsible for property damage that occurs during their tenancy of a unit.
Most importantly, the rental contract form must show the valid sanctions that may happen when tenants conduct dangerous activities.
Conducting activities that are dangerous to health and a threat to the neighborhood’s peace, for instance, should be cause for ending a tenancy.
Verifies the Property’s Validity
This may sound like an odd advantage, but it’s useful for legal purposes. The rental contract form must point out the property’s exact location.
It should also illustrate a brief yet clear appearance of the property. Some rental contract forms even come with photos of it.
That may come in helpful in various situations. For example, if ever a disagreement arises on the damage a tenant has caused to the property later, you might refer to the description or photos in the rental contract form to illustrate the changes to the property since his tenancy.
Determine If Changes Are Permissible or Not
This is a topic that should always be addressed in a rental contract form. A lot of tenants want to change or customize their rental units for their needs — you want to state if you allow that or not.
The rental contract form reiterates if tenants should leave the property to its original condition upon moving out.
Final Thoughts on Having a Contract Rental Form
That wraps up my blog post for today about the advantages of having a rental contract form. As you can see, the rental contract form is less an option than it is a requirement for a successful property rental business.
I showed you the reasons it’s necessary to create a valid rental contract form. Here they are again:
- Ensures payment conditions are met.
- Help establish the tenancy’s rules and conditions.
- Clarifies that rule violations lead to certain sanctions.
- Verifies the property’s validity and establishes its “pre-tenancy” condition.
- Establishes if changes are permissible or not.
These are all vital when running a rental property business. That’s why the rental contract form is so important when you want a smooth-running rental property.
If you found this blog post informative or have further concerns about the rental contract form, please feel free to leave a comment below!
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