Property Manager’s Guide in Creating a Tenancy Agreement

Property Manager’s Guide In Creating A Tenancy - Property, Tenant, Managers

It’s important for property managers to know how to make a tenancy agreement.

The tenancy agreement can stabilize or bring order to your rental property business. It can keep your tenants safe from criminals or illegal activities, and it can help in preserving your rental properties.

But to ensure the effectiveness of your tenancy agreement, you need to make it suitable for the rules of your rental property business.

Don’t worry if you’re not sure of how to do that. I’m here to help.

In this blog post, I’ll talk about the guidelines for creating a tenancy agreement. This will give you an idea of how you can make the best agreement for your rental property business.

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How to Create a Tenancy Agreement?

Creating the best tenancy agreement for your rental property business is simpler than you think. A fair bit of it actually boils down to common sense.

But before we talk more about that, let’s first discuss what a tenancy agreement is.

What is a Tenancy Agreement?

The tenancy agreement is a contract between the tenant and the property manager. It can be written or oral. 

But usually, many property managers prefer to provide a written document because it can minimize misunderstandings during the tenancy. 

In case of a dispute, it’s harder to refer to an oral tenancy agreement for guidance. That’s unless both parties have a reliable record of the oral agreement, e.g. a video or audio recording.
The agreement contains the terms and conditions of the tenancy agreement. It states the responsibilities and obligations of both parties.
Property managers provide the agreement before the tenant moves into the rented property. They usually discuss the content of the agreement with the tenant too. 

This is to ensure that the tenancy will be fair for both sides.

Importance of the Tenancy Agreement

Now the importance of the tenancy agreement can’t be overstated. It’s a legal reference that both parties can use for settling disagreements, as well as a binding guide to the terms of their contract.

Most property managers also choose to provide a written document so it can be brought into the court. They can use the agreement to prove that the tenant has committed violations inside the rental property.
Similarly, the tenant can use the agreement against the property manager. They can also bring it into the court whenever the property manager violates the terms written in the agreement.
So the tenancy agreement can help in sorting out problems in the rental property business. With that being said, make sure to provide a written agreement to all of your tenants.
Require your tenant to sign the agreement. Doing this will prove that you and your tenant both agree to the terms and clauses written in the document.

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Making a Tenancy Agreement

A tenancy agreement will be more effective if it’s made based on the rules and policies of your rental property business.
Providing an agreement that contains terms and clauses that contradict your rules and policies can cause a lot of problems. 

Therefore, make sure to provide an agreement that’s made specifically for your rental property business. Don’t just copy the first tenancy agreement you find online!
But before you start creating your tenancy agreement, it’s important to study the rental laws in your area. This is needed to ensure that your agreement will not violate any rental laws.


Write a Draft First

There’s a high probability that you’ll make a lot of changes while making a tenancy agreement. That’s why it’s advisable to write a draft so it can be edited easily.

Start doing your draft by adding the most important information about the tenancy. To give you an idea of how to do this, take a look at the following:


Add the Tenant’s Information

Your tenancy agreement should contain information about the tenant such as their name, age, address, and contact number.

Aside from that, the names of the people who will move in with tenant should be mentioned as well.

The individuals listed on the agreement are also required to observe the duties and obligations of the tenant. Be sure to note that in your tenancy agreement.


Details About the Property

The tenancy agreement should also include information about the rented property such as its complete address and the name of the owner.

Usually, property managers add a brief description of the condition of the rented property before the start of the tenancy. 

This information is added because, in some states, the tenants are required to fix the damage they’ve done to the rented property before they move out.


Information About the Tenancy

The tenancy agreement should include important details about the tenancy such as these:


  • Term of the tenancy.
  • Amount of rent.
  • Details about the security deposit. 


Make sure to state if the agreement is for a fixed-term or periodic tenancy. If it’s for a fixed-term tenancy, don’t forget to include clauses about renewing the contract. 

Be sure to specify your conditions if the tenant decides to extend their stay in your rental property.

Terms and Policies for Renting the Property

All tenancy agreements have details about the terms and policies for renting a property. So, when you’re doing this part, be certain to include all of the rules in your property.
Other than that, it’s also important to specify the following in your agreement:


  • Allowed activities inside the property.
  • Allowed changes or alterations to the property.
  • Responsibilities of both parties for the utilities.
  • Consequences if one of the terms written in the agreement is violated.

Adding the information listed above can surely prevent misunderstandings and disputes during a tenant’s stay in your property.

Consult a Rental Lawyer

Once you’re done adding the important terms, clauses, rules, or policies, don’t print your draft yet. 

Instead, present your draft to a lawyer and allow them to make the necessary changes.
It’s important to consult a lawyer because making a violation of the rental law could negatively affect the reputation of your rental property business.

It could even invalidate your entire tenancy agreement if you don’t have a severability clause. These are the sorts of things a rental lawyer can warn you about.

Final Thoughts on Creating a Tenancy Agreement

In this blog post, I talked about creating a tenancy agreement. Creating a tenancy agreement is important because it’s a legal record of the contract you use for your rental property business.
The tenancy agreement is a contract between the property manager and the tenant. It includes important information like details about the tenant, rented property, and the tenancy. 

Providing this document to your tenant can prevent misunderstandings and disputes. But to ensure that your agreement is effective or useful, it should be made specifically for your property.
Always provide a tenancy agreement that has terms and clauses based on the rules of your rental property business. In other words, you should customize your tenancy agreement to suit the needs of your business.
And that’s it for our guide on how to draft a tenancy agreement. If you have more questions about creating a tenancy agreement, leave them in the comment below. 

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Article: Property Manager’s Guide in Creating a Tenancy Agreement


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