What is a Rental Agreement?

A rental agreement is a contract between the owner of a property (or the landlord) and the person to whom the property is being rented out to the tenant.

Through this agreement, the landlord gives the tenant the right to occupy the premises for a certain amount of the time.

A rental agreement specifies the rent to be paid, security deposit amount, restrictions upon the client’s use of the property and other rights and responsibilities of both tenant and the owner.

Types of Rental Of Agreement

There are two types of rental agreement

1. Residential: When property is being rented out for the purpose of personal occupation.

2. Commercial: When the property is being rented out for the sake of carrying on business. Generally, commercial rental agreements have more conditions and term regarding the use of the premises. It is better to lay down the terms as certainly and clearly as possible in order to avoid damage to the property and any disputes later.

Another term that is used in connection with “Rent” is “Lease”

Lease agreement is an agreement whereby property is “leased” to another person or entity, for commercial or residential purposes.

  • There are 2 types of Lease Agreement and they are Long term and short term lease agreement.
  • There is hardly any difference between rent and lease agreement in practice and often is used interchangeably.
  • In short term rental agreement is preferred for about 11 months or 12 months.
  • In case of a longer period, especially for commercial purposes, lease agreement is preferred for about 99 years.

Lease is also used to transfer the property to another person without actually selling it.

Advantages of Rental Agreement

  • A rental agreement is beneficial for the landlord and the tenant.
  • It lays down the rent and other conditions clearly so that both the landlord and tenant understood the terms of the tenancy.
  • The landlord has the stability of receiving monthly payments for the specified amount of time.
  • It protects the landlord in the event that tenants damage the property or vacate it.
  • This agreement is an essential document to seek payment in court settings
  • On the other hand, the tenant is also well protected. They have rights to inhabit a property during the lease, and that the property remains in the conditions that were previously specified.

 

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