When a homeowner wants to let a residential property, it would be advisable to reduce the rental agreement to writing.
An oral rental agreement is binding and enforceable. But either party would have a hard time proving what the terms of such a rental agreement are. That is why people say an oral agreement is not worth the paper it is written on. Put it on paper to prevent confusion and misunderstandings.
The written rental contract must contain all the terms and conditions of the rental agreement. Describing the rights and responsibilities of all the parties to the rental agreement as fully as possible will help to prevent possible future disputes.
Some general terms contained in the typical rental contract include:
- Details about the addresses and contact details for the landlord and tenant.
- The address and description of the rental property.
- Details about the deposit, rent, and rent escalation (if applicable).
- Landlord and tenant responsibilities and requirements.
- Rental cancellation requirements and procedures.
- A list of existing property defects, compiled at a joint inspection of the rental property, and signed by both parties.
Deposit
What happens to the deposit a tenant pays? Address this in the rental agreement. Nobody wants to do the other party in. So, put it in writing.
If a tenant is required to pay a deposit, the landlord has to pay the deposit into an interest bearing account, for the benefit of the tenant, for the full duration of the tenancy. If a rental agent is facilitating the rental, the deposit must be paid into the agent's trust account.
At the end of the tenancy, the full deposit, as well as interest earned, must be paid out to the tenant at the end of the term of the rental. The cost of repairing any damage the tenant might have caused to the property can, however, be deducted from the deposit. Any outstanding amount the tenant owes to the landlord, according to the rental contract, can also be deducted from the deposit.
Access to the rental property
The tenant cannot deny the landlord reasonable access to the rental property. But the landlord has give the tenant adequate notice of routine inspections of the rental property. The exact meaning of an "adequate notice" period can cause disputes and misunderstandings. So, it would be good to describe the notice period for inspections in the rental contract, to avoid any misunderstanding.
Renewal and cancellation
The renewal and cancellation of the rental agreement should also be set out in the terms of the written contract.
The rental contract can usually only be cancelled or renewed through written notice. And changes and ammendments to the rental agreement should also be reduced to writing, and sighed by both parties.
Proof of payment
Landlord's are usually quite religious about their bookkeeping of rents received. But errors do occur. The tenant should also keep record of his/her proof of payment for the rent. Provide for this in the residential rental agreement.
The tenant is entitled to a receipt from the landlord, containing the following information:
- Date of issue
- Address of the rental property
- A description of the reason for the payment. For example, "rent", "deposit", "late payment", etc.
- The period of payment, for example the month for which rent is being paid.
Credit checks
The landlord or rental agent has a responsibility to make enquiries to ascertain whether the prospective tenant will be able to afford to pay the rent, BEFORE entering into a legally binding contract with the tenant. The landlord could simply take the tenant's word for it, but the eviction of a delinquent tenant can be a long process, which can bring about some serious cost implications as well. So a landlord would be well advised to do an in depth credit and reference check on the prospective tenant.
Provide a clause in your residential rental agreement that states that the tenant agrees to a credit check by the agent or landlord. You don't want to go snooping in someone's business without their permission, after all.
