What Is a Rental Agreement?
A Rental Agreement - often confused with a Lease Agreement - is a formal written agreement between the owner and a renter of certain property.
Rental agreements are usually shorter-term contracts that are made on a month-to-month basis. These must be either renewed monthly by the parties involved or are automatically renewed at the end of the month unless either the owner or the renter express their desire to end the agreement.
Any property or item may be leased out to a renter. There are land rentals, vehicle leases, and even short-term equipment rentals. Apartments and houses - both being the most popular among all of the types of leased property - fall under the category of residential rentals, while offices and commercial spaces are considered commercial leases. A lease - especially when talking about something as serious as renting out a house - is meant to protect both the owner and the renter (in this case - the landlord and the tenant) by securing their rights and responsibilities.
Types of Rental Agreements
There are three main types of leases based on the time limits specified within the agreement.
1. Fixed-Term Rental Agreements
These are written agreements that last for a specific agreed-upon period of time, with the most common time frame being a single year. Fixed leases restrict the owner of the item or property from changing the rules or increasing the rent half-way throughout the period of the lease.
Most states require leases that are expected to last over 12 months to be notarized and implement certain penalties for not following the certification requirements or breaking the conditions of the lease.
2. Month-to-Month Rental Agreements
Month-to-month Rental Agreements are verbal or written agreements that do not contain a specific time limit and are considered to be in effect until one of the parties issues a written termination notice. The notice period should be clearly stated in the rental contract.
The agreement must be done in writing if the lease requires the renter to provide any kind of deposit or fee to the owner.
3. One-Way Leases
A one-way lease is a month-to-month rental contract with an agreed-upon fee imposed on the renter by the owner if the renter decides to terminate the contract early. Some states explicitly prohibit these contacts and consider them illegal.
What to Include in a Rental Agreement?
There are certain basics that every lease and rental agreement should include:
- The names of all renters (for residential leases - the names of all adult tenants) that will be using the rented item or property. Listing all renters makes each of them legally responsible for honoring the terms outlined in the agreement.
- The term and type of the lease and the overall flexibility of the arrangement.
- The amount of rent, the acceptable payment methods, and the date the rent is due.
- Reimbursable and non-reimbursable security deposits and additional fees.
- Maintenance and repairs in case of any damages done to the rented property.
For residential leases only:
- Limits on tenant occupancy. This clause guarantees the right of the landlord to determine who lives in their property and to prevent any subleases attempted without permission.
- The landlord’s legal rights to access the rental property.
- The policies regarding pets and - if allowed - any restrictions on the size, type, or the number of pets the tenant may bring onto the property.
The lease is no longer considered legally binding if either one of the parties breaks any of the terms of the agreement.