• United States Guide to Rental Contracts: Everything you need to
    When renting out a property, it is advisable for both the landlord and the tenant to enter
    into a rental agreement. This ensures that both of them are aware of the terms
    governing the landlord-tenant relationship. The agreement lists down the rights and
    obligations of the tenant as well as the landlord thereby rendering clarity to the
    arrangement. This avoids disputes which may prove to be costly to both the parties. All
    these factors make the rental agreement an important document to understand. Both
    the landlord and the tenant stand to benefit from a comprehensive rental agreement.
    While a landlord is free to include terms as per his discretion, there are some clauses
    that are required by law to be incorporated into a rental agreement. For example, in
    some states, it is mandatory to make disclosures if the property had lead-based paint.
    However, most rental agreements have certain terms that are common to them. Before
    entering into the agreement, one should understand these terms and their implications.
    These are discussed below.

    Security deposit

    Almost all landlords collect security deposit from the tenants. It is an amount collected in
    addition to the first month’s rent and is refunded when the agreement ends. If the tenant
    causes any damage to the property, a commensurate amount can be deducted from the
    security deposit to cover the damage. The landlord has to provide the tenant with a
    detailed list of damages and the repairs done to rectify them and also with documentary
    evidence such as bills or invoices stating the estimated or actual cost of the repairs.
    Different states have different rules regarding security deposits. Some states, like
    Texas, do not have any cap on the maximum amount of deposit whereas others, like
    New York and Iowa, limit it to a maximum of one to two month’s rent. Some states
    require it to be deposited in an interest bearing account and mandate the landlord to
    issue a security deposit receipt to the tenant within thirty days of his moving in. It has to
    be returned within the time prescribed by the laws of the concerned state.
    Term of the agreement
    It is important to state for how long the agreement will remain in force. If it is a rental
    agreement, it will run from month to month and will automatically renew every month
    unless terminated by either party. It may also be for a fixed term, usually for one year.
    The date when the agreement starts and the date when it ends, both should be
    mentioned clearly.
    Monthly rent
    This clause should state not only the amount of rent but also the date when it is to be
    paid and the manner of payment (personal cheque or online bank transfer). Mention if a
    late fee will be charged in case there is a delay in making the payment.
    Building rules and special clauses
    Many buildings that house a number of tenants have their own special rules which the
    tenants have to abide by to live peacefully. These may be included in the contract.
    Some examples of the rules include time restrictions on excessive noise, responsibility
    of keeping common areas clean and rules concerning pets.
    This clause prescribes who will pay for what utilities. The landlord usually pays for
    garbage. All other utilities such as gas, electricity, water, internet, air conditioning and
    telephone is paid by the tenant. This clause should be meticulously drafted so that it
    covers all items and mentions the person who is responsible to pay for them.

    Conditions for increasing the rent

    A landlord cannot arbitrarily increase the rent agreed upon. This clause offers a layer of
    protection to the tenant by mentioning the circumstances under which rent can be
    increased. Before it is done, the landlord has to give a written notice to the tenant, with
    the period in most states being thirty days. The increase has to be for a legally valid
    reason. It cannot be used as a retaliatory measure against the tenant for enforcing his
    legal rights.
    Landlords have the right to prohibit pets on the property. They may also restrict the
    types of pets allowed and the areas they can be confined to. If the tenant has a pet, it is
    important to go through the pet policy clause in the rental agreement as well as the pet
    addendum, if attached, to understand the obligations and duties it will entail. Whether
    pets are allowed also depends on the rules of the building.
    Landlord’s right of entry
    As per this clause, the landlord has a right to enter the premises of the rental property
    only during reasonable hours and after giving notice to the tenant. However, no such
    notice is required in case of an emergency. The landlord may enter the property to carry
    out an inspection, make necessary repairs or see that the tenant is complying with the
    terms of the rental contract.

    Severability of the contract

    Having a severability clause in the rental contract ensures that if in a dispute, the court
    rules that a particular provision of the contract is invalid, the rest of the contract will still
    be considered valid. The invalid clause will be severed from the valid part of the
    If there is any confusion regarding the rental contract, the tenant must consult a lawyer
    before signing it. He must ensure that any change negotiated between him and the
    landlord has been incorporated in the contract.

    Author Bio:

    Roxana, a writer by calling and an academic has created scintillating and remarkable
    content for dozens of websites in the purview of the Business Sector. She has a fair
    understanding of the inner workings of several business establishments, making her the
    foremost expert in this field
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