It is imperative property managers make sure rental agreements are complete and have all necessary clauses in them when renting out any and all properties. Any detail left out of a lease agreement will not be applicable to the tenant so making sure all items are in the agreement is imperative. The lease agreement is not only a legal contract, but it is also valuable information. The agreement allows the property manager and the tenant to understand what is expected of one another throughout the term of the lease. The five basic pieces information that should be included in a lease are listed below.
This part of the lease agreement should not only include the amount of rent that is expected from the tenant, but also the acceptable payment method, the timing of the payments, and any late fees that could be applicable.
Term of Tenancy
The contract should state whether it is a rental agreement, which usually runs month to month and self-renews, or a lease agreement, which is a fixed period that must be renewed at the end of the agreed term. The longer a lease agreement is, the more a property manager can rely on the continual rental income. However, if a lease term is shorter, the property manager has more flexibility in changing the price to adapt with the market, which may be a risk.
The contract should list all tenants within the rental space and should include an occupancy limit. If the rental agreement is for a residential property, this section can allow the property manager to evict any additional tenants that has not been approved.
Deposits and Repairs
The use of deposits is a common friction between a tenant and the property manager, therefore, this part of the contract should be very detailed. It should include the amount of the deposit, what the deposit can be used on, non-refundable amounts of the deposit, when a deposit will be returned to a tenant, and how that deposit will be returned. A property manager should also clearly write out what is expected of a tenant and the property manager for repairs and maintenance. Restrictions on repairs and improvements made by the tenant should also be included.
In order to avoid litigation, it is best to include restrictions on any illegal and disruptive behavior within the property. This section should also include any rules about parking or common areas as well as pet restrictions. Property managers should add their own restrictions on entry within the rental property and how much advanced notice a property manager must give before entering the property.
There are many additional items that should be added to a rental or lease agreement before finalizing and signing with a tenant. Property managers must make sure all necessary items are included in order to protect themselves as well as their tenants.
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Photo Credit – Tanamera Construction