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Understanding Your Rental Agreement
Omaha home rentals, Omaha rental homes, houses for rent, rental homes, rental houses, apartments, condos, townshomes, mobil homes, tenants and landlords...
The rental agreement is a legally binding contract between the landlord and the tenant. The landlord agrees to give the tenant possession of his property in return for rent. Once the landlord and the tenant agree to the terms, both are usually bound by the terms of the agreement providing the terms do not violate the landlord-tenant laws, fair housing laws, or other applicable laws.
Oral Rental Agreements. Are oral rental agreements legally binding? In most states, yes, but it is always better to have the rental agreement in writing. If it is in writing, no one can claim loss of memory or misunderstandings. Likewise, according to the Statute of Frauds, any rental agreement in excess of 1-year is required to be in writing.
Rental Agreement Provisions. There are certain provisions landlords must ensure are included in a rental agreement. At a minimum, the rental agreement should include the following:
The Property Address. Make sure it is the address that is being rented. Believe it or not, I have seen rental agreements that omit the address of the property being rented. Read, the rental agreement lists the landlord or property Management Company’s address.
Tenancy. The rental agreement should indicate whether it is a month-to-month agreement or a fixed expiration agreement.
Contact Information. List the name, address, and the telephone number of the property owner or the management company.
Amount of Rent. Make sure the amount of the MONTHLY rent is clearly spelled out in the rental agreement. Be careful, many landlords include a provision in the rental agreement that states the total amount of rent owed over the entire rental period. For example, if the rent is $100 a month that is $1,200 for the year. There is no mention of the $100 per month only the overall annual amount of $1,200. Ensure the rental agreement reflects the monthly amount of rent. Such an error can result in an unenforceable rental agreement.
Rent Due Date. The rental agreement should indicate on what date of the month the rent is due. Likewise, indicate if there is a grace period. For example, the rent may be due on the 1st of each month, but the rent is considered late as of 5 P.M. on the 5th day of the month. If no such date is present in the rental agreement, most state laws require the rent due date to be the 1st of the month.
Bounced Check Fee. Indicate the nature and amount of any insufficient fund fee.
Applicable Late Fees. Specifically, indicate the nature and amount of any late fee or insufficient fund fee. For example, the rental agreement should indicate that the landlord will charge a $25 fee for any rent paid after 5 P.M. on the 5th day of each month or a $25 fee for any returned checks.
Security Deposit. The rental agreement should indicate the amount and nature of all deposits. For example, it should state $600 for the security deposit.
The pet deposit. Indicate how much and whether or not the pet deposit is nonrefundable.
Term of the Rental Agreement. For example, is it a tenancy for years (with a fixed expiration date) or is it a periodic tenancy (month-to-month)?
Utilities. The rental agreement should state that utilities shall be maintained on subject unit AND Who is responsible for paying utilities, trash removal, and general maintenance?
Termination Requirements. Notification requirements for ending the rental agreement (i.e., 30-days’ notice). Most states require the tenant to give notice even if on a fixed expiration rental agreement.
Number of Occupants. How many people will be permanently living there, and what is each of the occupant’s legal names?
Unenforceable Provisions. I have seen rental agreements include clauses that are not legally enforceable. Just because they are included in the agreement and both parties agree to them, this does not mean they are enforceable. Likewise, landlords and tenants have other rights that may not necessarily be expressed in the rental agreement. The fact they are not included in the rental agreement does not mean either has forfeited them.
Preprinted Rental Agreements. BEWARE of the pre-printed rental agreements many landlords buy from office supply stores. These forms tend to be generic and may not be in compliance with particular state laws, or they omit important clauses that protect both the landlord and the tenant. Never sign a rental agreement that leaves any blank spaces thus allowing someone to potentially fill in the blanks after it has been signed. I recommend you have an attorney draft an enforceable rental agreement for all your properties.
Use Ink. All documents should be fill out and signed using blue ink so you can identify the original documents. Likewise, ink prevents fraud by preventing changes to the documents.
Which one is best? Good question! Unfortunately, there is no magical answer. There are “pro’s” and “con’s” to both. Basically, it boils down to which one landlords feel is best for them.
Month-to-Month. As previously discussed, the basic difference between the two is that month-to-month agreements have no specific termination date. At the end of each rental period, the rental agreement automatically renews. To terminate the agreement, either the landlord or the tenant must give proper 30-day notice. In most states, notice must be given on or before the start of the new rental period. For example, if the tenants want to terminate the rental agreement January 1st, they would have to notify their landlord sometime before December 1st.
Fixed Expiration Rental Agreement. A rental agreement can have a fixed expiration date. Upon the date of expiration, the tenants must move unless the landlord and the tenants agree to a new rental agreement. A fixed expiration rental agreement can be converted into a month-to-month agreement if the tenants and the landlord both agree. There forward, either the landlord or the tenants must give the proper notice to terminate.
It depends on the situation. Most landlords automatically think the fixed expiration rental agreement is better because it ties up the tenant for a certain period of time, usually a year. If your tenant becomes a problem tenant, it is much harder to evict them. A month-to-month agreement only requires proper notice to be given. Regardless of the type of rental agreement, if the tenants refuse to leave, the landlord will need to start the legal process to evict them.
Because an increasing number of property owners are having their rental property seized for illegal drug activities, it is wise to have a clause in the rental agreement that states any illegal drug activity is grounds for immediate termination of tenancy.
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