FINE PRINT

Rental agreements: Nine common provisions

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How well do you understand your rental agreement? For many folks, not as well as they should—regardless of whether they are the tenant or the landlord. That’s understandable enough. Many rental agreements are saturated with jargon, verbosity, and lakes of legalese seemingly ripped straight from the pages of a 19th century contract.

Let’s see if we can reduce the confusion. Below are nine clauses that should be in your rental agreement.

First, include the names of every tenant and occupant. Doing so protects both the tenant and the landlord. Why? Because only the people who sign the rental agreement are bound by it. So, if someone lives at an apartment, but has not signed a contract, they are not legally liable for the contract (though there may be other legal avenues for holding them accountable). In other words, having less than all the tenants is bad for the signing tenants because they are taking responsible for the non-signing tenants. And it’s bad for the landlord because they have less people to hold liable, including in many cases the tenant who was actually responsible for the problem (whether damaging the property or not paying rent).

Second, describe the rental property as clearly as possible. If the property is a single home, use the lot number and village name (since the CNMI doesn’t have street addresses). If the property is a building, say the building, unit number, and village name. If the rental comes with parking spaces or storage areas, say so—including the stall or spot number. If part of the property is off-limits such as maintenance sheds for the property manager, state that too.

Third, write when the rental agreement will start and end. In some cases, this period will be for a set amount of time such as one year. Other times it will be a rolling period such as month to month. If the agreement is for a set time, say whether the agreement can be renewed and, if so, how to do so.

Fourth, spell out not just the rent amount but other key details like when to pay (usually in advance on the first of the month), where to pay (online or at an office), and how to pay (cash, check, or credit card). Also, address what happens if payments are late or checks get bounced (assuming checks are allowed). For instance, is there a grace period before late fees kick in? And how much is the fee for dealing with a bounced check?

Fifth, have a detailed security-deposit clause that covers how much the tenant will pay, what the landlord can do with the deposit, under what circumstances a tenant will need to replenish the deposit, and the procedure for the landlord returning the deposit when the tenant moves out. If the landlord is charging any nonrefundable fees (such as for cleaning or changing locks), say that too. And if you want to get extra marks, also state whether the deposit will accrue interest during the tenancy. Usually it won’t.

Having a solid a security-deposit clause prevents stress. That’s because disagreements over security deposits are among the most common sources of friction between landlords and tenants. And most of these dust ups could have been avoided with a thorough and plainly drafted clause setting clear expectations about how the security deposit was going to be handled.

Sixth, state what repairs the landlord is responsible for and, conversely, what repairs the tenant needs to do. For example, the tenant may need to keep the property clean and take care of standard maintenance like changing light bulbs while the landlord would maintain common areas and cover larger maintenance issues such as a broken oven or refrigerator. It’s also typical for these clauses to prohibit the tenant from modifying the property (such as painting walls and other more-extensive alterations) without the landlord’s prior written approval.

As with a thorough security-deposit clause, having a well-drafted repairs-and-maintenance clause eliminates many arguments before they start. That’s because maintenance issues are a breeding ground for reasonable but differing expectations between landlord and tenant. And those are the kinds of disputes most likely to snowball into bigger problems.

Seventh, describe when a landlord can enter the property. For instance, this clause should say that a landlord can enter immediately in an emergency such as a fire, with 24-hours written notice for repairs, and a longer time frame for other situations. Without this clause, every situation becomes case by case, which invites disagreements.

Eighth, each property should spell out its policies for pets and smoking. Landlords can prevent pets (except for service and emotional-support animals). So, if you want a pet, or want to steer clear of pets, check the property’s policy. Likewise, landlords can prohibit smoking. If that’s important to you, check the property’s policy.

Finally, make sure that the agreement contains everyone’s contact information, especially an email or mailing address. This information is key because all important communication should be in writing. This paper trail becomes huge if there’s ever a serious dispute.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.

Jordan Sundell | Author
Jordan Sundell is a lawyer primarily practicing business, real-estate, estate-planning, and asset-protection law. He formerly worked for the CNMI Supreme Court and Bridge Capital and is now general counsel for several real-estate companies, including JZ Group. His columns—focused mainly on real estate, small business, and estate planning—are published every other Tuesday. Be sure to like the Fine Print on Facebook! Contact Sundell via this newspaper at editor@saipantribune.com or 235-6397/235-2440.
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