A tenancy agreement, also known as a lease, or rental agreement, is a contract between a renter and a property manager. A signed tenancy agreement, along with the agreed upon initial payments, typically clears the way for a renter to take occupancy of a rental property.
The tenancy agreement gives both the renter and the property manager a mutual understanding of the terms of the occupancy.
There are many variations of the items that get added into tenancy agreements. However, most pieces will fit into one of three main categories:
- Tenure and Rates: The length of time that the contract covers, the frequency of rent payments, and how much money each rent payment will be.
- Tenant Duties: The things the tenant will be responsible for paying for or activities the tenant must do.
- Property Manager Duties: Things the landlord or property manager will be responsible for, and how soon they will respond.
Express vs. Inferred terms
As you read over a tenancy agreement, it can be helpful to understand if the items are expressed or inferred. What do we mean by that?
Expressed Terms - An example of an expressed term would be something specific like: “The term of this agreement is six months. Starting on January 1st and ending on June 30th.”
Inferred Terms - While, you may not have a clause in your tenancy agreement which forbids explicitly, having a campfire in the living room, the inference is hopefully there; This may come from a provision such as, “The tenant agrees not to intentionally or negligently cause or permit any damage to the residential premises.”
Understanding the difference between expressed or inferred terms can be used to negotiate a tenancy agreement that is in your favour. For example, if there is an inferred term that says, “The landlord agrees to keep the residential premises in a reasonable state of repair”, this language would be to the benefit of the owner. Compared to an expressed term, which might say something like, “The landlord agrees to fix any maintenance issues within 48 hours of the issue being reported by the tenant”. That language would probably be better for the tenant. After all, what exactly is "reasonable"?
Starting a Tenancy in Australia - How to make sure a tenancy agreement is legally binding as a contract?
A tenancy agreement is the same as most other contracts, so when both the tenant and the landlord have consented to the arrangement, and both parties have received a signed copy, it turns into a legally binding contract.
However, there are many laws and regulations about what a tenancy agreement can legally have in it, most are specific to the governing state. You will want to speak with a legal professional to make sure that:
- The tenancy agreement contract has all of the clauses that are required to be included in your state
- The tenancy agreement contract does not contain any prohibited conditions, e.g. items you have added which you are not legally allowed.
- Whether or not the tenant must have moved into the premises for the contract to be valid.
What do the experts say?
We asked Cathie Crampton, Head of Property Management at Harcourts International, “What are some of the most important clauses to get right when preparing a tenancy agreement?”
She mentioned these extra points to consider as you prepare tenancy agreements:
Repairs vs. Maintenance
It is important for everyone to be on the same page about repairs and what is and isn’t urgent. It’s helpful if a tenant understands that most repairs will be addressed as per the owner's authorisation.
Outlining the tenants responsibilities and potential outcomes of not paying rent as agreed
How the tenant can pay the rent
What to do if they can’t - especially if there is a genuine hardship
What they are and why you have them
What is expected of the tenant
How they are conducted
Access and frequency
How bond refunds work
What happens at the inspection
When do you return your keys
- Yes or no and the expectations
Will advise/confirm that the owner’s insurance does not cover the tenants belongings. They require their own contents insurance.
To ensure you are compliant with current legislation and are across any changes that will be introduced, we recommend checking the REINSW website for updates.