“Written And Unwritten Tenancy Agreement”
Looking to learn the differences between a written and unwritten tenancy agreement?
The most important document you agree to with your tenants renting your properties is the tenancy agreement. Every property manager should provide a tenancy agreement according to the law because it will serve as the legal document of your agreement with the newly accepted tenant.
Usually, the information included in this document is about the tenant and the terms for renting the property. Everything that you discuss in your agreement with a tenant is written in this document.
Are you looking for more information about the tenancy agreement? Then read on as Iâll be telling you everything you need to know about a tenancy agreement in this article.
Learn More About Tenancy Agreement
If you are new property manager or a seasoned professional in the business, you should know the importance of tenancy agreement and how it affects your relationship with a tenant. With a written tenancy agreement, you and your tenant will have a better understanding and a bindable contract of the agreed terms for the rented property. Everything agreed to prior to renting the property to the tenant will be included in the tenancy contract or agreement.
What Is Tenancy Agreement
Tenancy agreement serves as the legal document or contract between the property manager and the tenant. The basic information about the tenant is always present in this document. This includes the tenantâs name, address, the amount of rent, and the duration of the residency. Aside from the tenantâs information, the property managerâs name and address are also included. It is important to list both parties to the agreement to make it a legally binding document.
Aside from the basic information, the tenancy agreement also includes the rights of the landlord or property manager and the tenant. The tenancy agreement serves as a roadmap to solving disputes or requirements of the tenant and property manager.
Every detail governing or detailing of the tenantâs residency should be written in the tenancy agreement. Items would include all agreed terms, policies, or activities and requirements to fulfill the contract by both parties to the agreement. The tenancy agreement is a legal binding document and should be a complete as possible when detailing the rental requirements. However the tenancy agreement may still need to be interpreted according to the law of their state for eviction and other legal purposes or challenges.
What Can You Find In A Tenancy Agreement?
To give you a better idea of what to include in the tenancy agreement, here are some of the specific information that should be included:
- The type of the renterâs contract: Fixed-term or month to month
- Determines if the rent covers the bills for electricity or water
- The specific date of the month when paying the rent is due
- Forms of payment accepted for rental payments
- Whether the tenant is responsible for repairing or decorating the rented property
- Whether the rented property is furnished or not
- Number of allowed tenants, children, pets etc
- Late fees on rent
- Amount of deposit and terms for deposit uses
- Additional Fees (If necessary)
All of the above listed terms and regulations for renting your property should be included in a tenancy agreement. This will help your tenant to fully understand what kind of behavior you require inside your property.
Unwritten Tenancy Agreement
A very uncommon, but legal, tenancy agreement is when a property manager decides to rent a property to an individual executing a unwritten tenancy agreement.
There are very few property managers that are accepting new tenants without a written tenancy agreement. However since it is a possible choice regarding tenancy agreement we will discuss the advantages and disadvantages of an unwritten tenancy agreement below.
Is it Legal?
Just like written tenancy agreement, an unwritten agreement is also valid and it will become legal once the tenant has started to paying the rent.
Even though is is legal, unwritten tenancy agreement presents a lot of disadvantages. Since specific requirements and an understanding of what is going to happen during the rental is all verbal there can be many misunderstandings that could arise during the rental of the property. The disadvantages could lead to problems and it will cause damages to your rental property businessâs reputation. Any unresolved issues or complaints can make your tenants feel unsatisfied, unhappy, or disappointed.
Disadvantages Of Unwritten Tenancy Agreement
As the property manager, your primary responsibility is to take care of your tenant and property. A tenancy agreement is a document that proves that your tenant agrees to terms and knows the responsibility of the property manager and themselves when renting the property.
Since the agreement is not written, there is a possibility that the tenant will forget everything youâve agreed to during the tenant screening or interview process. This could cause confusion and misunderstanding between the two of you.
For example, you might have told the prospective tenant that whatever happens to the rented property, it is the tenantâs responsibility to repair the damages. As time goes by, it is hard to remember if this issue is discussed or not. If there is damages upon leaving the property this could become an issue when you without the deposit to fix these damages. Â Not having a contract to follow can cause confusion and misunderstandings that could easily cause friction between you and your tenant. More likely with an unwritten tenancy agreement you are more likely to end up in court with the tenant over major disagreements.
Since there are too many disadvantages to list here with an unwritten tenancy agreement, we would highly recommend never to use an unwritten tenancy agreement for you business.
There are many tools to the property management business that can help your business run more efficiently.
A rent book is one of the best if not under utilized tools available in a rental property businesses. We would highly recommend that you consider providing a rent book, detailing rental payments and dates of payments due to tenants in any type of tenancy agreement. The rent book will be the proof of the renterâs tenancy in your property.
You should sign the rent book whenever the tenant pays the rent and have corresponding banking documents showing payment of rent. Another way to verify rental payments is to require tenants to pay rents only with a personal check with detailed line stating dates of rents paid for.
Aside from the rent book, you should also give the tenant a written statement of terms and it should include the following information.
- Start date of the renterâs tenancy
- Amount of the tenantâs rent
- End date of the tenancy
- Type of tenancy (fixed term or not)
Final Thoughts About Tenancy Agreement
Youâve just read about the essentials about a tenancy agreement. Â The tenancy agreement must include personal information about the tenant and every detail about their residency.
We also talked about the differences between an unwritten or written tenancy agreement. Â Whether you made a written or unwritten tenancy agreement, make sure that the new tenant had clearly understood the terms and responsibility for renting your property before you approve their rental application.
If you still canât choose between unwritten and written agreement, just keep in mind that the oral or unwritten agreement presents a few challenges that can bite you down the road. Be careful with every decision you make and choose only the best for your tenants and property.
Be sure to write any questions you may have in the comment section below.
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