Understanding Leases and Rental Agreements & Their Legal Implications
Most rental agreements are in writing, and while oral agreements are enforceable, they often lead to disagreements. Since a rental agreement is a legal and practical document, it is crucial that it cover basic terms. State laws cover issues central to rental agreements, and they must be adhered to in the contract.
Periodic Agreements and Lease Agreements
A rental agreement creates the tenant’s right to live in the rental unit. There are two kinds of rental agreements: periodic rental agreements, often known as month-to-month agreements, and leases. A periodic rental agreement expires at the end of the period, and it is renewed by the next payment. In a periodic rental agreement, the tenant continues to live in the rental unit as long as they pay rent and the landlord does not ask them to vacate.
A lease agreement states the number of months the lease is in effect, typically six or 12 months. A lease binds the tenant until the expiration of the time period, unlike a periodic rental agreement. One advantage to having a lease is that the landlord cannot raise rent or evict you while the lease is in effect. The disadvantage of a lease is that it is difficult to terminate, and if a tenant needs to move it can be challenging to find another person to take over the lease. The landlord may have a claim against the original tenant for the remaining rent if they move before the lease ends.
Periodic agreement = a rental agreement that renews each time that the tenant makes a payment (usually once a month) and that may be terminated if the landlord asks the tenant to vacate at the end of the payment period
Lease agreement = a rental agreement for a certain amount of time (usually one year) that binds both the tenant and the landlord for the entire period
Provisions of a Rental Agreement
Typically, the landlord begins the negotiation process by presenting the terms of his written lease. Key issues in the lease include the length of the tenancy, the rent amount and security deposit, the maximum rental occupancy, and sublease conditions, as well as restrictions, such as pet size or number. Any other restrictions should be listed in the rental agreement, as well as rules regarding parking and the use of common areas.
Rental agreements should specify the amount of rent, when it is due, and how to make payment (by mail to the landlord’s office, for example). The agreement should include acceptable payment methods and the consequences of late payments. Consequences of late rent payment may include penalty charges, and if late payments become a repeated habit, an eviction notice.
If the tenant will be protected by rent control, these details should appear in the rental agreement.
The rental agreement should also include details of the tenant’s responsibility for repair and maintenance. Typically, this includes the duty to keep the rental clean and sanitary, in a similar condition to how it appeared at the beginning of the tenancy. Instructions regarding how to alert the landlord to dangerous conditions on the property should be laid out in the agreement. Finally, it should be clear in the agreement exactly what restrictions exist on tenant repairs and changes to the unit.
Terminating a Rental Agreement
It is important to provide advance notice to the landlord when you are planning to terminate a periodic rental agreement or end a lease before the lease term ends. In a periodic rental agreement, the time between rent payments establishes the amount of notice the tenant must give to the landlord to terminate the tenancy. This same amount of time is required if the landlord decides to change the terms of the agreement or terminate the tenancy.
Terminating a lease can be complicated. Since a lease is a contract, tenants are obligated to pay rent for the entire term of their lease. But even if a tenant breaks the lease by leaving early, the landlord must take reasonable steps to re-rent. Most state laws require the landlord to make this effort, but tenants may have to pay the costs of advertising the unit, and the landlord can be selective in choosing their next tenant. Sometimes it is advantageous as the tenant to find a replacement tenant, with good credit and rental history.