What is a Rental Contract?

Anyone following the markets recently will understand that the real estate market has now become a hot topic and almost everyone is now interested in how it works. Because of current trends, more and more people are seeking education as to how to buy or rent property. This interest is two way; from owners and those who rent property. When it comes to property, people generally fall into two categories; one either owns or rents. But whether you are an owner or a renter, there is a time when you have to come into some sort of binding agreement with either the person you are renting to or the person that is renting to you. This agreement is what is known as a rental contract and it is a binding legal document.

A rental contract is an agreement that a landlord and a tenant draft and that governments the terms and conditions that govern the rental agreement. In some cases the rental contract is oral although legal experts usually discourage this as it can create problems in the event of a lawsuit. The contract identifies a few major components namely, the identity of the two parties. The identity of the two parties will mostly consist of the name or representative of the owner of the property who is legally known as the lessor and the name or representative of the person who is renting the property and in legal terminology he or she is known as the lessee.

The contract also identified the property that is being agreed upon. By property, the document in most cases will state the type of dwelling it is and its actual location which can be the full address and zip code. The contract also identified the amount of money that the property is being agreed upon and in most cases the currency is one that is common and agreeable to both parties. When talking about costs, the rental contract will also state the fees involved in the rental agreement. By fees we mean that in the event that the lessee is late on his or her rent, what costs are involved in way of late fees and surcharges.

The rental contract also identifies the frequency of the rental payments. For instance, is the rent due bi-weekly or once a month. In this same paragraph that stipulates the frequency of the rent remittances, the contract will also state the due date for the rental amount. Here is it important that the agreement state what is the final day that the rent is due without late fees. In most rental contracts, the rent is due on the last day of the month but the tenant may have until the 3rd or the 5th of the following month to turn in the rent.

The other very important aspect of the rental contract is the term. How long is the contract for? It is vital to remember that this is a legally binding document and in the event that the tenant vacates the property before the stipulated term is over then he or she will be held in violation of the lease and therefore liable for penalties.