Business & Finance Small Business

Advice on Tenancy Agreements

    Rental Fees and Deposits

    • A well-drafted lease will state the amount of the periodic rental payment, list the exact dates due, specify the method of payment and set out any penalties for late payments. The starting and ending dates of the tenancy should also be listed. The lease should list the amount of the security deposit and what types of damages or debts will result in forfeiture. A term that requires total forfeiture of a large security deposit for minor damage or normal wear and tear is unlikely to be enforced in court.

    Repairs and Improvements

    • Repair obligations can be spit between landlord and tenant if both parties so desire. In residential leases, the landlord typically handles major repair obligations and expenses, such as repairing plumbing fixtures, while the tenant takes care of minor matters such as changing light bulbs. If the tenant is willing to handle major repair obligations, he could demand a discount on the rental amount in compensation. The lease should require advance permission from the landlord before the tenant performs any construction or alterations on the property, even if these changes raise its market value. This is particularly important for commercial leases, because tenants often desire to remodel the property for business purposes.

    Landlord's Right of Entry

    • A landlord does not enjoy the unlimited right to enter property he has rented to another. Unless the lease provides otherwise, however, the laws of most states allow the landlord to enter, with advance notice, to perform inspections of the property and to show the property to prospective tenants. The lease should provide specific advance notification deadlines for landlord entry.

    Eviction

    • The laws of most states restrict the terms under which a landlord can evict a tenant before the expiration of the lease. Check the landlord-tenant law of your state for its restrictions, and comply with them. Generally, minor violations of a lease will not justify eviction, particularly in the case of a residential lease. Nevertheless, the landlord might have special concerns, and these should be clearly listed --- the landlord might not allow the tenant to sublease the property, for example, or may reserve the right to evict if the tenant brings third parties to live on the property without the landlord's consent.



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