Some people may adopt a rental agreement template while renting a property, some may even adopt a verbal agreement without signing a contract which stipulates the terms and conditions. As both parties did not define the rights and responsibilities clearly, in case of any disputes on the agreement, problems will emerge when they want to settle the issue. Check out 5 key points to note while signing a rental agreement!
Lease? Tenancy Agreement?
Rental documents usually include the term of tenancy, rent, payment date, deposit, purpose, etc. There are two types of documents, namely a Lease and a Tenancy Agreement.
A Lease usually applies to a tenancy for a term exceeding 3 years. It has to be established under the Conveyancing and Property (Amendment) Ordinance. The execution of a lease comprises the signature, stamping and delivery by both parties. A lease has to be registered at the Land Registry. As for a Tenancy Agreement, it refers to rental documents of a tenancy not over 3 years. The signing process is simpler as it only requires a written agreement
Information of Both the Landlord and the Tenant
The tenancy agreement has to stipulate the personal information of the landlord and the tenant to verify both sides’ identity. The information includes the name, company name, ID card number or Business Registration number, address, phone number, etc. The landlord could also ask about the occupation of the tenant and require him/her to provide income certificate to make sure the tenant has the capability to pay the rent.
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On the other hand, the tenant should also enquire if the landlord’s property is mortgaged. If the landlord rents out the property without obtaining consent from the bank, the tenant may no longer be unable to stay at the property and may lose the deposit in case of a confiscation of the property by the bank.
Description of the Rented out Property
The landlord bears the responsibility of providing the address, facilities and related documents, e.g. documents stipulating if the property is rented out together with a parking space, the furniture and electric appliances in the property, the plans of the property, etc. The tenant should ask about the public or clubhouse facilities he/she are entitled to. If the property is rented out together with the furniture and electric appliances, the tenant should inspect their conditions before establishing the tenancy.
Tenancy Term
Besides stipulating the start date and the end date of the tenancy, the rental agreement should also stipulate if the tenant enjoys priority right of tenancy renewal. If the rental agreement did not stipulate it clearly, the tenant has the right to negotiate with the landlord asking him/her to include terms of a priority right or advantage in renewing their tenancies.
Rent and Deposit
The landlord and the tenant could negotiate the rent freely without legal restrictions. But the rental agreement should stipulate the rent, the payment date, whether the rent includes rates, land rent, management fee and the responsibility of the expenses during the rent-free period. When the landlord received the rent, he/she should provide a receipt for the tenant, otherwise it is illegal.
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As for the amount of the deposit, the landlord would usually require the tenant to pay an amount equals to 1 to 3 months of the rent. The landlord has the right to deduct from the deposit the amount of rent and fees in arrears upon the end date of the rental agreement. The landlord would return the deposit to the tenant within the agreed period. Lastly, the tenant should read thoroughly the Notes on Signing a Tenancy Agreement published jointly by the Estate Agent Authority and the Consumer Council. But it is only for reference as it does not carry legal validity. Please seek professional advice from an estate agent when in need!
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