So, your mid-term rental business is going well. You have set up your property, listed it, and now you have an interested tenant – great! But how will you make sure your tenant knows exactly what to expect from you and your property? And how can you clearly set out what you expect from them?
Enter the mid-term lease agreement, possibly one of the most important documents you will have to set up as a property manager. It may sound daunting, but do not despair! We are here to let you know exactly what your mid-term rental lease should include, as well as what it should not.
What is a mid-term rental lease agreement?
A mid-term rental (MTR) lease agreement is a legally binding document that sets out all the terms and expectations for a mid-term tenancy. A lease agreement should be read, understood, and signed by all parties who will be involved in the tenancy to make sure everyone is on the same page about important matters relating to your property: from house rules to your payment schedules.
Why are lease agreements important?
“Who cleans the tub?”
It may sound silly, but the question “Who cleans the tub?” encapsulates exactly why writing a lease agreement is so important for MTR owners.
Without thinking about it too hard, our instinct tells us that, in a short-term rental, it is the property manager’s responsibility to clean the tub. In a long-term rental, meanwhile, that responsibility clearly falls on the tenant.
But who cleans the tub in an MTR?
One tenant might think that responsibility falls on them after a month into their new rental. Another might think it takes three. Consider, too, that an unclean tub can also lead to dangerous and unhygienic situations. Imagine that not cleaning the tub leads to mold accumulating on the walls of the bathroom. If that mold makes the tenant sick, who is liable for the damage, the property manager or the tenant themself?
To avoid these tub-related conundrums, it is very important that property managers lay out each party’s rental responsibilities in a rental agreement so that they will be clear from the get-go.
Guest vs Tenant
While laws vary from state to state and country to country, most guests can begin to claim tenant status after just 29 days of renting a property in the United States. This change in label comes with new legal requirements that you should be aware of as a property manager. Specifically, while lease agreements are not necessary when it comes to housing guests, they are required when providing lodging to a tenant. This means that knowing how to write a good lease agreement for an MTR is not just a boon, but a necessity for many property managers around the world.
10 Things to Include in Your Mid-Term Lease
1. Parties and Property Details
First and foremost, it is important to define the parties beholden to the lease and provide a suitable description of your property at the start of the lease period. When it comes to defining the parties in question, make sure you include your tenant(s) full government name and contact details, as well as your own. As for the description of your property, do ensure that it is sufficiently detailed, stipulating your properties amenities and, of course, its address.
2. Governing Law
Early on in your lease, you should set out what governing law it will be beholden to. This means setting out exactly what state or jurisdiction would rule over any disagreements so that, if any do occur, both you and your tenant will know where to turn. No one wants to be in a situation where the law must get involved but, if you do find yourself having to turn to the authorities, adding this information to your lease agreement will help you resolve your legal troubles with some much-appreciated agility.
3. Rental Period
Making your rental period clear as day is particularly important for MTRs, as these tend to be quite limited and may not always be flexible or easy to change. Include the lease’s rental period in clear, bold lettering, providing both a start and end date. If you will be renting out to international clients, it is recommendable to use month names instead of numbers to avoid any confusion regarding day/month/year and month/day/year formats.
4. Payment Terms
This is another aspect in which MTRs can demonstrate more variability than other kinds of rentals. Depending on your particular circumstances, such as your tenant’s rental period, the two of you might agree on weekly payments instead of monthly payments, for example. Whatever you decide on, your lease should be very clear about your rental’s price, the payment method you would like your tenant to use, and the payment schedule they must follow.
5. Other Applicable Fees
Alongside your payment terms, it is also important to clearly set out any other applicable fees your tenant will be or has been subject to, as well as what those fees entail. For example, if you have asked your tenant for a damage waiver or deposit, you should clearly state how much money has been/will be paid to satisfy those conditions. In the case of a deposit, you should also set out how these funds will be protected and what their return conditions are, including how long it will take for your tenant’s deposit to be processed after the end of their tenancy.
6. Use of Premises
Make sure you clearly define what uses are and are not appropriate for your property. Of course, one would assume that residential living would be permitted at a MTR, but do consider whether you would be happy with your property being used for business purposes, for instance. It is worth familiarizing yourself with local laws on the topic to ensure your rental is operating by the book.
7. Right to Entry
If there are any visitor limits you would like to establish, make sure to do so. Likewise, if you are planning on conducting in-person inspections of the property every once in a while, establish how much notice you will give your tenants before your visits. You should also specify how the entry of maintenance or cleaning staff will be regulated.
8. House Rules
It is important for you to lay out any house rules that you would like your tenant to be aware of. These can include guidelines about noise levels and quiet hours, non-smoking areas, and the property’s pet policy. If your property is located in an apartment building or gated community, you should also inform your tenant about any building or community rules they should be aware of to ensure their stay is smooth and your relationship with the community remains positive.
9. Responsibilities and Expectations
When renting out a MTR, it is particularly important for property managers to establish exactly what you expect from your tenant, as well as what your tenant can expect from you. In your lease agreement, specify who will be in charge of maintenance duties, utility payments, and fixing accidental damages. Ensuring that all parties agree on what their responsibilities are will be sure to save you many a headache in the future. Here, it is also a good idea to clearly state how your tenant will be able to contact you, at what times you will be available, and what emergency services they can call in the case that you are not able to help them, including emergency plumbers and locksmiths.
10. Lease Termination and Renewal
Finally, you should clearly lay out any and all conditions upon which you or your tenant can choose to terminate your lease early. For instance, failure to pay rent could constitute grounds for eviction. Do make sure you are aware of what your local laws stipulate in regards to lease terminations so that you know what your and your tenant’s rights are in these unfortunate situations. Conversely, you should mention whether lease renewals are possible at your MTR and, if so, establish under which conditions this is available.
5 Things Not to Include in Your Mid-Term Lease
1. Illegal Terms
Well, duh! This might seem like an obvious one to start with, but it is important for all your lease terms follow the law. Otherwise, your lease agreement may not be legally valid. Check local regulations for your property and make sure that your terms do not conflict with any tenants’ rights. You should also be ready to make exceptions to some of your policies to avoid discriminatory practices. For example, if your property does not allow pets, you will have to make sure to include an exception clause for tenants with certified service animals.
2. Extensive Policies for Long-term Stays
MTR tenants will stay at your property for a significant length of time, but they will likely not become long-term guests. For this reason, it is not worth including lengthy policies that involve new landscaping features or extensive remodeling of your property. Do not waste time (and words) specifying that your guest should install a pet door if they get a pet during their stay at your property, for example. Aside from this being an unlikely occurrence, those kinds of expensive, time-consuming alterations to your flat should not be decided upon by your tenant in the first place.
3. Subletting Rules
Complex subletting clauses should not be necessary when it comes to leasing a MTR. This is because your guests will not stay in your property long enough to seek out subletting opportunities. Nevertheless, you should clearly lay out whether subletting your property is or is not permitted in a short clause to make sure there is an understanding between you and your tenant in this regard.
4. Unreasonable House Rules
While the definition of “unreasonable” is wildly subjective, you should still aim for your house rules to allow for a general sense of comfort, privacy, and freedom for your tenant. For example, try to be as gracious as possible when it comes to establishing quiet hours. 10-11pm might be considered a reasonable start to quiet hours by most, while 6pm would most likely be considering overly limiting. A good question to ask yourself when setting house rules could be: “Would I be able to follow these rules and still feel in control of my life?” If the answer isn’t a resounding “yes”, then tweaking said rule is probably in order.
5. Unclear or Conflicting Clauses
To ensure that your lease agreement is as clear as possible, make sure that you use simple, straightforward language and avoid clauses that contradict each other. Be as precise as possible when it comes to your tenancy rules and conditions to avoid any confusion. If at all possible, have a lawyer read through your lease agreement before you hand it to your tenant to check for inconsistencies or unclear clauses.
How else can you protect your mid-term rental?
While having a good MTR lease agreement on hand will save you many a headache, it is still important to protect your property in other ways. After all, even if your lease agreement stipulates what to do in the case of accidental or intentional property damage, the reality is that you will still be the one left to deal with the mess, which can be both stressful and expensive. There are several ways you can protect yourself and your property in these circumstances.
Some MTR owners opt to purchase insurance plans for their properties, usually in the form of landlord insurance with some additional protection packages attached. However, if you can’t find an insurance policy that works for you, don’t worry: this is normal. There are not many insurance policies out there that cater specifically to MTRs, after all. Other services exist to keep your property safe from harm.
Damage waivers and deposits are both options, for example. The first can give you and your tenant peace of mind knowing that potential accidents have already been covered. Meanwhile, taking a deposit from your guest at the beginning of their stay can give you a pool of funds to use when it comes to fixing damaged property or covering cleaning costs once their stay ends.
Finally, Truvi’s Damage Protection Service is a great an option in this regard, as it covers damages from US$500 to US$5,000,000. Thanks to its Swift Resolution Process, you can also expect a fast turnaround in every decision, usually within 5 business days, all of which can be easily managed through Truvi’s online platform.
We protect against:
- Stained linens
- Smeared towels
- Unintentional guest damage
- Unsolicited smoking damage
- Unapproved party damage
- Delivery expenses of the replaced items
We don’t protect:
- Cosmetic damage
- Pet damage
- Wear and tear
- Management fees
- Maintenance expenses
- Approved party damage
