Renting an Apartment
While it doesn't offer any investment potential, renting an apartment makes lots of financial sense for people in many different life situations.
Maybe you just can't afford to buy a home. Maybe you have your heart set on owning one in a few years, and want to start saving for a down payment. Or maybe you're simply not interested in the maintenance and repair requirements that come with being a homeowner. No matter why you're renting an apartment, you can greatly improve the experience by knowing more about the financial and legal aspects of this life choice.
A lease is a binding contract that lays out the conditions and responsibilities of a rental agreement, both for the owner and the renter.
It stipulates the monthly rental price, the payment due date, the length of the lease and the consequences if one of the sides breaks the agreement. Also contained in the lease is information outlining such minutiae as which of you pays the utilities, whether pets are allowed, and any other restrictions and requirements the landlord wants to include.
Read your lease agreement very carefully before you sign it. You will be held accountable for knowing everything on the agreement, even if you never read it. Also, keep a copy of the lease for your records. It may come in handy if you have a question about what you are or are not allowed to do.
Important Elements of Lease Document
- Length of lease
- Amount of rent per month
- Date rent must be paid
- Name of lessor and lessee
- Address where rent is to be sent
- Restrictions and obligations of the tenant and landlord
If the landlord is not convinced that you will be able to make your payments, you may be required to get a cosigner. This is someone who will share financial responsibility for the lease. If for some reason you are unable to make the payments, the cosigner will then be required to make the payments.
Breaking a Lease
You should avoid breaking a lease if at all possible. Each lease agreement has its own penalties for not honouring the outlined terms. Some only require the payment of a penalty. Some will require you to continue paying rent until the apartment is re-rented. Check your lease to make sure you can handle the financial ramifications that come with breaking a lease — before you break it.
Clauses To Be Aware Of
- Inability-to-sue clause
- Arbitrary clauses
Clauses You Might Consider Adding
- List of appliances that come with the apartment
- What facilities you may use
- Any verbal promises made by the landlord
- Lease-breaking penalty
- List of extras you want to install and take with you when you leave
- Any damages that exist when you move in.
Both the landlord and the tenant should sign the lease agreement. The landlord must give the tenant a copy of the agreement after the tenant signs and returns it. The tenant may be able to withhold rent until a copy is received.