The Importance Of Having A Tenancy Agreement

A tenancy agreement is a written or oral contract between a tenant hiring out a property and the landlord who is renting out that property. It is a very important document because it sets out the terms and conditions of the tenancy clearly as well as protects the rights of the landlord as well as the tenant.

The agreement gives the right to the tenant to reside in the property for the duration of the contract while the landlord acquires the right to collect the rent. It also forms the basis for the court to settle any disputes that may arise between the two parties and provides the framework which governs the arrangement between them.

Why is it Important?

The most important function of the tenancy agreement is that it proclaims the rights and responsibilities of the tenant and landlord. Both know where they stand and what are their limits in regard to the tenancy. In the absence of a tenancy agreement, there is ambiguity about how far each other can go.

For example, the tenant may start making some alterations to the house according to his taste and convenience, which may not be liked by the landlord. On the other hand, the landlord may start encroaching upon the privacy of the tenant, which may be resented by the latter.

Therefore, it is very important that the rights and obligations of each party are clearly set down so that it becomes easy to establish who is in the wrong. Though the tenancy agreement can be written or oral, the written one is obviously much easier to execute in a court of law. It should ideally be prepared and signed before the tenant has moved into the house.

One thing that has to be borne in mind while preparing the contract is that the tenant as well as the landlord both have some rights given to them by law. Regardless of what is contained in the tenancy agreement, these rights cannot be violated. Any clause that violates these rights is unenforceable in a court of law.

Contents of the Tenancy Agreement

Like any contract, the tenancy agreement too covers information like the name of the tenant, the name and address of the landlord as well as the address of the property that is to be rented out. Some landlords may also demand a couple of guarantors from the tenant who will pay the rent if the latter is unable to do so for any reason. If this is the case, then the name and address of the guarantors should also be included along with their signature agreeing to this provision.

The rent amount, the date in each month when it has to be paid and how it has to be paid – cash or cheque – should be clearly mentioned along with the duration of the tenancy (start and end date). Most landlords want a cash deposit – usually a month or two’s worth of rent – to be kept with them as security in case the tenant defaults on payment. This amount should be mentioned as well as conditions in which it can be forfeited.

Break clauses are a very important part of the agreement. If the tenant wants to vacate before the tenancy duration has run its course, how much notice is required? Same with the landlord – if he wants the tenant to leave early, how much notice has to be given to the former so that he can look for a new house?

Repairs are the reason for many disputes between the two parties. The agreement should clearly specify who will carry out running repairs. Also, can the property be sublet by the tenant and can he invite paying guests, lodgers and relatives for staying? It is critical for the agreement to include an inventory of movable furniture and other fixtures inside the property so that there is no dispute about theft or damage later.

Obligations

Both tenants and landlord have some rights and obligations.

Tenants: Tenants are obliged to pay rent and all utility bills promptly, not do any damage to the property, not be a nuisance to the neighbours through loud music or dangerous pets and tell the landlord before going outstation for a long time.

Landlords: Landlords are obliged to ensure that the property remains in a good condition and major repairs are carried out regularly, not to violate the privacy of the tenant or his family, insure the house against natural disasters like earthquakes and fire and generally give respect to the tenant if he is meeting all the terms set in the tenancy agreement.