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Types of Rental Agreements
A rental agreement between the landlord and tenant sets down the terms to be
followed while the tenant lives in the rental unit. The following is a description
of the two most common types of rental agreements: leases and month-to-month
rental agreements.
Whatever a rental agreement is called, it is important to read the document
carefully to learn its exact terms.
Month-to-Month Agreement - This agreement is for an indefinite period
of time, with rent usually payable on a monthly basis. The agreement itself
can be in writing or oral. If any type of fee or refundable deposit is required,
the agreement must be made in writing.
A month-to-month agreement continues until either the landlord or tenant gives
proper notice to end it.
The rent can be raised or the rules changed at any time, provided the landlord
gives the tenant proper notice.
Lease - A lease requires that the tenant stay for a specific length
of time and restricts the landlord's ability to change the terms of the rental
agreement. A lease must be in writing.
During the lease term, rent cannot be raised or rules changed unless the landlord
and tenant agree.
Leases of one year or more are exempt from the Landlord-Tenant Act, but only
if the tenant's attorney has approved such an exemption.
Illegal Provisions in Rental Agreements
Some provisions that sometimes appear in rental agreements or leases are not
legal and cannot be enforced. These include:
- A provision that waives a tenant's rights under the Landlord Tenant Act
- A provision requiring tenants to give up the right to defend themselves
in court against a landlord's accusations.
- A provision limiting the landlord's liability in situations where the landlord
would normally be responsible.
- A provision allowing the landlord to enter the rental unit without proper
notice.
- A provision requiring tenants to pay for all damage to the unit, even if
caused by someone other than the tenants or their guests.
- A provision requiring stating the tenant will pay the landlord's attorney's
fees under any circumstances if a dispute goes to court.
- A provision that allows the landlord to seize a tenant's property if the
tenant falls behind in rent.
- A provision requiring the tenant to agree to a particular arbitrator at
the time the rental agreement is entered into.
Deposits and Other Fees
When a new tenant moves in, the landlord often collects money to cover such
things as cleaning or damage. The money collected may be refundable or nonrefundable.
Refundable Deposits
Under the Landlord-Tenant Act, the term "deposit" can only be applied
to money that may be refunded to the tenant.
If a refundable deposit is being charged, the law requires:
- The rental agreement must be in writing. It must say what each deposit is
for and what the tenant must do in order to get the money back.
- The tenant must be given a written receipt for each deposit.
- A checklist or statement describing the condition of the rental unit must
be completed. The landlord and tenant must sign it, and the tenant must be
given a copy.
- The deposits must be placed in a trust account in a bank or escrow company.
The tenant must be informed in writing where the deposits are being kept.
Unless some other agreement has been made in writing, any interest earned
by the deposit belongs to the landlord.
Nonrefundable Fees
These will not be returned to the tenant under any circumstances. If a nonrefundable
fee is being charged, the rental agreement must be in writing and must
state that the fee will not be returned. A nonrefundable fee cannot legally
be called a "deposit."
