Top 10 Tenancy/Lease Terms You Should Have Before Renting
Tenancy is created for a term not exceeding three years, whereas leases are for period longer than 3 years. Tenancy at will is an agreement where a tenant occupies a property with the consent of the owner, but with no written agreement between the parties, but this gives less protection to both Landlord and Tenant. It is highly recommended that you have a signed and written tenancy/lease agreement, which is a legally binding document to protect your rights. These are some of the most important terms that you should have in your tenancy/lease agreement before signing:
- The list of tenants:
If there are multiple people living under the same rental, it is crucial to get the name and signature of every single of tenant, so that each tenant is bound by the terms and conditions under the agreement. This gives you the right to collect the rent from any of the tenants, and you may terminate the entire tenancy/lease if one of the tenants violates material terms of the tenancy/lease.
- Rental amount and payment method:
Besides specifying exactly how much is the monthly rent, include also in your agreement the acceptable forms of payment, where the payment should be made, whether any grace period exists and what are the late payment penalty.
- Define the tenancy/lease term:
You need to be specific as to what type of agreement you are creating. It can be a fixed-term tenancy, which has a definite commencement date and ending date, and may include an option to renew. You may want to put a clause specifying that no parties have the right to unilaterally terminate the tenancy earlier than the agreed date unless in the event of default, and the tenant is liable for the full rent for early termination. On the other hand, you may also create a periodic tenancy/lease as determined by the term of the payment of rent. Periodic tenancy can be from year to year or month to month. Specify the circumstances in which early termination is allowed, and what are the notice period that must be given to the landlord to notify the intention to end the tenancy.
- Security and utility deposits:
In addition to defining the amount of security deposit and utility deposit, include also in what circumstances the deposits can be used by the landlord to repair damage/defects caused by the tenant, and how and when the deposit will be returned after the tenant moves out.
- Define the purpose and limits of occupancy:
Put a clause stating that the Tenant(s) can only use the Premises for purposes stated in the agreement and not for any other purposes without the written consent of the Landlord. Specifies that only people who have signed the agreement (and their minor children) can legally live on the property. This prevents tenants from moving in their relatives and friends in, or subletting your premises for without your permission. It also gives you grounds to terminate the agreement if the tenant does not comply.
- Right to entry:
Spell out exactly when and under what conditions the landlord can lawfully enter the tenant’s unit for inspection purposes, or to put up notices boards for re-letting or for sale purposes.
- Maintenance and repairs:
Spell out the rights and obligations for both parties to maintain and repair the Premises. Tenants typically have a duty to keep the premises in good and tenable state, and are responsible for any damage to the premises caused by neglect or abuse. Landlords typically have a duty to maintain the property in a liveable and structurally safe manner, and are responsible to make necessary repairs for defects not caused by the tenant (such as repairing a leaking roof or fixing termite problems).
- Restrictions on illegal behaviours:
Spell out that behaviours or conducts which are illegal or may interfere with the peaceful enjoyment of land by adjourning neighbours are strictly prohibited, and are grounds for terminating the agreement. A typical clause may look like this: “the Tenant shall not to use the Premises or any part thereof for any illegal, unlawful or immoral purposes in accordance to the laws of Malaysia, and must observe and comply with the House Rules and any other laws, rules or bylaws imposed by the Joint Management Body or Management Corporation throughout the Tenancy Period.”
- Miscellaneous terms and restrictions:
Spell out other things that require written notice or permission by the landlord, such as rights on subletting, rights to renovate the property, rights on parking, common areas and whether the property rented is subject to GST. You may also want to add a no waiver clause, sale subject to tenancy, jurisdiction and severability clause in the agreement.
- Force Majeure clause:
A force Majeure event means an event beyond the reasonable control of, and without the fault or negligence of the Party, such as but not restricted to floods, earthquakes, hurricanes, tornadoes, riot, act of terrorism and others. In your agreement, state clearly what happens in the occurrence of a force majeure event, whether it shall be mutual responsibility to repair the damage caused, or the Tenant shall have the right to terminate the tenancy earlier, or the Landlord shall exclude liability for any disruption or damage caused by a force majeure event.
