Leases and Rental Agreements
The Most Important Thing is to Have One!
None of the landlords we know would dream of renting their property without a legal agreement between themselves and their tenant. However, difficulties such as too many vacancies, cash flow problems or even friends and family who call on us for help can lead to changes in procedures—like agreeing to rent an apartment or house without a formal agreement.
This is a mistake. There are too many ways that this arrangement can harm the property owner—and there are few advantages to renting without an agreement. Landlords must follow rental laws, and tenants have more rights than ever before. If a dispute arises—even with someone you know and trust—the lack of a rental agreement will work against you. Oral agreements can be legally binding, but difficult or impossible to prove.
A rental agreement is used when the tenancy is for a short period of time, such as a month-to-month agreement. A lease binds the parties for a set period of time—usually a year. During this time, the rent cannot be raised, and other terms of the lease are in place until it expires.
Month to month leases are beneficial to the landlord during good rental markets—because an unstable or difficult tenant is easier to replace with a better one. In difficult markets or in areas with high rental turnover, many landlords prefer the security of knowing the tenant is bound to a one year lease.