The Benefits of Having a Strong Rental Agreement
In general, A Rental Agreement is an MOU signed between the Tenant and a Property Owner. The term “Rental Agreement” is also applicable to renting a Car, DVD Rental etc. So, let us make it clear, the topic we are looking into is about “Property Rental Agreement” and “The Benefits of Having a Strong Rental Agreement“. A strong Property Rental Agreement is a written contract, prepared to benefit and protect the legal rights of both Tenant as well as the Landlord.
“Rental Agreement” is also called as the “Lease Agreement”, in case the contract is valid for more than a certain period of time – say in years.
A Strong Rental Agreement Is A better way towards More Stable & Secured Private Renting
Once the deal has been struck between the tenant and the landlord, a rental agreement is generally prepared by the Land Lord before the occupancy of the tenant – with clear terms and conditions, such as do’s and do not’s in the rental property and common premises. The Rental Agreement is a legal bond agreed by both the parties so that there would not be any contradiction or deviation in future on the terms agreed. To strengthen the rental it should be signed by any two witnesses, each one from both the sides for the benefit of the rental agreement.
Types of Rental Agreement:
1. Short Term Rental Agreement for Airbnb Service
2. Long Term Rental Agreement
1. Short Term Rental Agreement
It is applicable for the paying guests taking up service apartments, Lodges, Function Halls on short term rentals, etc. Short Term rentals are paid on a daily or weekly basis. This agreement will generally be valid for a certain time duration. For example between 12 noon to next day till 12 noon. Beyond which the Agreement will get void or could be extended.
2. Long Term Rental Agreement
This is also called a Lease Agreement as already mentioned. It involves renting up the property (Commercial, Residential, Vacant Land, or Farm Land Property) for a longer period of time, mostly for more than a year. The difference between the short term and the Long term rental agreement is, the long term agreement is usually valid only up to 11 months. Beyond which agreement renewal is required in most of the cases.
What are the benefits of having a Strong Rental Agreement?
The following rental agreement includes the necessary terms that will provide you with the essential security and protection to your valuable property investment. This is applicable for renting a Room/Home/Shop/ Commercial establishments or a Vacant property.
Top 8 Benefits of Having a Strong Rental Agreement – in Detail.
1. Name all the occupants in the agreement:
The rental agreement should include the detailed names of all the occupants of the property with their surname and reference/witness names. This will ensure that all the occupants of the house take up the responsibility to abide by the Tenant terms and conditions agreed. Such as payment of rental in time, Clean maintenance of the property, Not causing any damage to the property or not using the property for the defined purpose, like carrying over illegal activities etc. In case if the tenant violates the lease terms, then the property owner can strongly terminate the legal rental agreement.
2. Tenancy Term Agreement:
The tenancy term is fixed based on the type of terms such as Short term – Airbnb Property Management Company rental accommodation Stay or the long term lease type. The term of the agreement must include the number of days clearly set to be occupied by tenants on Short term renting. The term is fixed for a minimum of 1 year for the long term leasing. The condition for renewing the agreement in case of expiry should be clearly addressed in the agreement itself.
3. Fixing up Rental Amount:
A strong rental agreement should have clarity on the rental amount to be collected on a daily or monthly basis. This should include the Caution Deposit to be collected for the short term rental and the Advance (3 months to 6 months – based on the landlord terms) amount towards the long term rental management company with the clear Advance amount returning policy on termination or expiry of the agreement. This also includes the mode of the rental to be paid – like bank deposit, issuing a cheque or pay by cash mode. The penalty amount for exceeding the rental due date should be defined.
4. Limits of the Rental Agreement:
This is the most important provision in the rental agreement. Ensuring the members, only those who have signed the agreement can live on the premises. That means, friends and relatives can only visit and cannot stay without approval. Additionally, the agreer (tenant) cannot further sub-lease the premises to the third party without the consent of the property owner. If keeping pets is not allowed or limited with clean premises. Pet rules should be strictly followed by tenants, if not the landlord has the full rights to terminate the agreement.
5. Advance Rental towards caution Deposit:
Collecting security deposits in terms of Rental Advance will act as a caution deposit for the benefit of the Landlord. In case of specific conditions like – the tenant damaging the physical property or not paying the rent in time or vacating without notice. This is one of the strong and valuable points to be mentioned in the rental agreement for the benefit of the landlord. The agreement should also cover how the Rental Advance to be collected and how and when the advance amount will be utilized and on what basis. The tenant should notify the property owner in advance to collect the advance amount.
Note: The amount of the caution deposit to be collected, not exceeding the state law guidance value.
6. Repairs and Property Maintenance:
Once the rental agreement has been signed, the tenant will be the legal responsibility for the maintenance of the property. Such as maintaining the clean premises, electrical appliances and switchboards, upkeep the furniture (if any), re-painting the walls at the time of agreement expiry. The tenant is abiding to return back the property as in the condition at the time of occupancy. The agreement should include the clause – the tenant should inform the property owner in case of an unexpected breakdown or repairs works that needed to be carried over.
7. Property Owners – Right of Entry:
The property owner has full rights to enter the leased or the rented premises with the knowledge of the occupant. The tenant not informing the essential maintenance issues which lead or cause damage to the entire building structure falls under the violation of the rental/lease agreement. For example – Using of faulty or heavy electrical appliances may lead to short circuit and damage the house wiring, not attending the leaky taps may cause seepage of water in the walls and concrete structure will further degrade the life of the structure, rainwater entering through the broken window panel, etc. Hence it is necessary to create a provision for the property owner to inspect the premises in the presence of the tenant.
8. Handling tenants disruptive behaviour:
During the time of occupancy, the tenant can enjoy their full freedom to stay with their family on the premises, without affecting the neighbours in anyways. Causing excessive noise or polluting the environment by burning of garbage or carrying over illegal activities like making & dealing with illegal items such as drugs etc. There should be provision to terminate the agreement for such behaviour in the rental agreement.
Why the Rental Agreement Should be Registered?
Registering the rental agreement will have certain legal benefits
1. A legal document under Indian Government Laws.
2. You can avoid Unwanted legal situation.
3. Law helps you to collect the rental dues from the tenant and gives you absolute peace of mind.
Conclusion: The Benefits of Having a Strong Rental Agreement
One common mistake that most of the property owner make while preparing the rental agreement. They generally get overwhelmed for acquiring a tenant. Without realizing the fact, on how disastrous could it become if something goes wrong or out of control with the tenant in future. According to Country Home – The property management company in India. The pioneers in Rental management Services and the professionals in Legal Documentation in India is always ready to help the property owner to understand the fact about the benefits of having a strong rental agreement. Gives you a hands-free property management service, even in your absence. Contact Country Home and enjoy your day by striking a happy deal.