A rental contract is a highly important document specifying the terms that a landlord and tenant are agreeing to. All tenants should carefully read and understand their rental contracts before signing them. This guide points out the main elements of rental contracts that you should keep an eye out for, including the security deposit. 

1. The Owner of the Property

One important aspect of any rental contract is information about who the registered owner of the property is. You can use this information to verify that the person renting to you is the legal owner of the property. 

If the person handling the rental is not the property owner, you should verify that the person listed on the lease as the property owner is indeed the owner and that the rent money is going to be transferred to them. If you can, try to obtain a document certifying that the property owner has authorized the rental if they are not the one who you are in communication with. 

2. The Rent 

Perhaps the most important part of the rental agreement is the sum of the rent, which should be specified in detail. This includes the frequency of payment, mode of payment, and whether or not the rent is linked to an index. The contract should also specify if there are any additional payments the tenant must make such as management fees or utilities.

3. Responsibility for Repairs

The lease should specify which repairs the landlord is responsible for and which must be paid for by the tenant. It should also specify the payment or reimbursement process for repairs that the tenant pays for out-of-pocket. Generally speaking, a landlord should not require the tenant to pay for any standard repairs unless it is for unusual damage that the tenant caused. 

4. Security Deposits

Another important part of a rental agreement is the security deposit, which it is common for landlords to require as part of the contract. The exact amount of the security deposit varies, though it is customary for it to be equal to one month’s rent. Some states, like California, have laws establishing a maximum security deposit amount that landlords may charge.

It is important for all tenants to inspect a property before moving into it and document any existing damage. This will ensure that the landlord is not able to charge a new tenant for existing damages. It is in the tenant’s best interest to co-sign a statement of condition with the landlord. This statement should include a complete list of existing damages identified by the landlord and tenant. 

Each state has different laws that regulate how a landlord can and cannot use security deposit money. Most states prohibit them from using the security deposit to cover normal wear and tear. Any damage that exceeds the ordinary wear that occurs through regular use can be charged from the security deposit. 

In most states, landlords can use security deposits for these purposes:

• Repairing damage not resulting from normal wear and tear
• Cleaning the rental unit
• Covering the cost of a tenant’s default on rent 

It is equally important to inspect the property after moving out. Some states require landlords to notify the tenant of a scheduled move-out inspection and allow the tenant to be present during the inspection. Tenants can protect their security deposit by performing or participating in a move-out inspection and using photographs to document the property’s condition. 

Each state also has its own laws on how long a landlord has to return a security deposit. It is standard for landlords to be legally required to provide tenants with an itemized statement of repairs made and return any money remaining from the security deposit to the tenant within 14 to 60 days. To ensure the landlord can return the security deposit, tenants are advised to provide the landlord with a new address upon moving out. 

5. Lease Renewal

Another rental contract element you should look out for is the option for lease renewal. The contract may state who has the option to renew and under what conditions. It is favorable to the tenant that the contract allows them the option to renew.

6. Early Move-outs

A final aspect of the lease agreement that you should look out for is the policy related to moving out before the lease expires. Some contracts may allow tenants to move out early if they are able to replace themselves on the lease. Other contracts do not allow early move-outs at all. 

Reviewing Your Rental Contract

A rental contract is an important document with serious financial implications for the tenant. This is why it is so important to review your rental contract closely before signing. It is highly recommended to have a lawyer take a look at your rental contract to make sure the terms are legal and fair to you.