Renting out your home when you are away can be a great way of generating income and deterring vandalism that usually plagues unoccupied homes. As a first-time landlord, it is essential to understand how to properly draw a rental agreement that will protect your interests and those of your tenant during the rental period. Failure to do so can cost you dearly and jeopardize your investment. Here are some of the key clauses that you need to include in your lease agreement if you want to protect your property during the lease period.
The security deposit is an amount of money that a tenant is required to pay before occupying a property. It is meant to cover the cost of repairs for damages during the tenancy period. If no damages are caused, the full amount of the security deposit should be refunded to the tenant. It is essential to include the following details:
- The amount of security deposit. This is usually equivalent to one month's rent. However, if the property furnishings considerably exceed the rental value, you can charge a higher deposit.
- The extent of damages that warrant denial of security deposit at the end of the period.
- The maximum period after expiry of the tenancy agreement within which the deposit should be refunded.
Limitations on occupancy
It is possible for your tenant to sublet your home to a third party if there is no clause in the rental agreement limiting this. Unless you encourage it, including an occupancy limiting clause is essential. The rental agreement should precisely state the legal occupants of the property. You should be consulted by your tenant before any attempts to sublet the property.
Maintenance of property
You should have a clause clearly outlining the property maintenance obligations of the tenant, such include taking care of costs of utility maintenance and tenant-triggered damages. Failure to do this will cost you dearly for maintenance at the end of the period with no chances to take legal action. In your clause, you should limit the tenant from renovating or replacing furniture and furnishings.
Mitigation of rent arrears
Every tenant has the obligation to pay their rent in full. You should have a clause in your agreement that spells out the mitigation measures for default in paying rent. The most effective method is by subtracting the amount from the security deposit. However, other measures such as confiscation of property can be taken if the rent in arrears exceeds the security deposit.
A rental agreement can protect your interest and investment as a landlord. Consulting the services of a professional when drawing up your lease can ensure that you will not suffer losses as a result of the tenant's behavior during the rental period. For more information, contact a property manager.Share