Is A Lease Agreement Really Important?
There are instances where a simple handshake or word of mouth may not be enough. Situations that involve a lot of money exchanging hands are especially sensitive to seal the deal. In this case, you’re talking about the relationships between landlords and tenants. Landlord-tenant relationships can be quite complicated. What with the many laws and regulations that are meant to govern all aspects of what renting residential property is all about. Here is where Lease Agreements come into play. Landlords have more responsibilities in this issue. Tenants, however, have more rights. You must develop a constitution that details all the rental agreements that govern both you and your tenants.
For such scenarios, you need to choose whether to draft a lease or a month-to-month rental agreement. As the landlord, you are in a position to select the option that makes the most sense for you and is more convenient for both you and your tenants. The best way to co-exist peacefully with your tenants is to draft a lease or rental agreement that suits every party.
Why you need a lease agreement
Here are instances where landlords don’t provide written agreements. In such situations, the landlords only have conversations with the tenants, take the tenants’ checks, and move in. However, in as much as oral promises can at times be legally binding, they are often a lot more difficult to prove to a judge. So, you don’t want to take the chance. You’ll only be like a pig setting yourself up for slaughter.
Use the legal, complete Lease Agreements to protect both yourself and your tenants from any legal issues that might arise. Most of which revolve around rents, deposits, and fees.
Here are other critical reasons why you need to use a written lease agreement
The result of not having any written lease is mostly chaos. Not having a clearly written agreement puts you at risk of having simple disagreements. You never know when chaos can erupt over repairs, late rent payments, or even deductions made from any departing tenants’ security deposit. All these issues, simple or grievous, can potentially escalate into nasty legal battles that might get you into more legal hurdles. Take, for instances, a situation where the lease explicitly says no pets allowed in the premises. But then the landlord turns a blind eye when you moved into the premises with your pet cat. That can be a recipe for some legal chaos brewing.
Deal with key issues
Besides heading off issues, Lease Agreements also help landlords to identify and deal with key issues. Issues that the two parties may have, otherwise, ignored as they were entering the rental relationship. Eventually, this usually results in a happier, more stable landlord-tenant relationship. Satisfied tenants will stay in your rental units for longer, and that’s good business too. So, you might want to work on keeping your tenants happy. And the best way to do that is by setting strict rules and regulations that both you and your tenants agree on.
Lease Agreements vs. Rental Agreements: Which is Better?
By now, you should be in a position to tell the difference between a lease agreement and a rental agreement.
Essentially work to establish a tenancy for a shorter period compared to a lease. Usually a month. And that’s why rental agreements are usually on a month-to-month basis. Therefore, they have to be automatically renewed each month. Not unless the landlord or the tenant gives proper notice to terminate the agreement. Typically, the notice is usually given 30 days before vacating the premises. For rental agreements, the landlord has the right to increase the rent as he/she deems fit or change other terms of the tenancy if necessary.
For leases, both the landlord and tenant are obliged to set a specific timeframe, usually a year, that the lease should be valid. During this time frame, you cannot change the rent amount or change any other terms in the agreement. Not until the lease agreement runs out. However, there are also other situations where the Lease Agreement may provide for the landlord to make modifications on the agreement. Or even when the tenant consents to the changes made in writing. Also, as the landlord and owner of the premise, you don’t have any right to ask the tenant to vacate the premises or evict him/her. Not unless the tenant fails to meet the initial terms set in the agreement or of state or local law. When the lease term ends, either party can then choose to either renew or decline the new lease agreement. Plus, there is also room for negotiating the terms of the lease at this point as well.
Which is better?
Studies have found that many landlords prefer to use rental agreements to Lease Agreements especially in the tight rental markets. Landlords prefer the month-to-month agreements especially in areas where new tenants are always available. Rental agreements are also a more favorable option in areas where rents are always trending upwards. This allows the landlords to have more control over the rent amounts and other terms of the agreement.
However, the flip side to rental agreements is that they almost guarantee more tenant turnover compared to Lease Agreements. There is also more work involved when looking always to keep all your rental properties full.
But then again, you find that landlords with properties in areas that have high vacancy rates prefer leases instead. You may want to opt for Lease Agreements in areas where finding a tenant isn’t an easy process.
Lease Agreements are crucial elements to ensuring that you, the landlord, and your tenants live and co-exist peacefully without any issues. It, however, depends on which agreement you decide to draft for your tenants. In essence, you’ll be looking for the best agreement that suits both you and your tenants. So, be it a lease or rental agreement, as long as everyone is on board with the terms, everything should be okay. But one thing is for sure. Lease Agreements are crucial to ensuring you, the landlord, don’t clash with your tenants.