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Signing a Lease or Rental Agreement FAQs

Answers to frequently asked questions about rent increases, late charges, rental terms, and security deposits.

Are there restrictions on how much a landlord can raise the rent?

Most states do not limit to the amount of rent a landlord can charge. However, rent control ordinances in some cities and counties do regulate how much a landlord can charge and increase rent. If a rent control ordinance does not apply, a landlord can raise the rent after giving the tenant a proper written notice. Generally, the landlord may raise the rent for a month-to-month tenancy by giving the tenant 30 days notice. It is important to check applicable states law because some states require a landlord to give 45 or 60 days notice to a periodic tenant.

To raise the rent on leased property, the landlord must wait until the end of the lease term, unless the tenant agrees or the terms of the lease allow it. At the end of the tenancy, the landlord and the tenant may enter into a new lease with new terms regarding the rent, or they may continue the expired lease on a month-to-month basis.

Rent control ordinances limit rent increases on rent-controlled properties. Typically, a landlord may raise the rent by a certain percentage each year. Most city and county ordinances also allow a landlord to raise the rent when a tenant moves out or if the landlord receives the Rent Control board's approval.

Rent control laws only apply to specific properties, usually older residential properties built before a certain time. Rent control ordinances exist in communities in California, Maryland, New Jersey, New York, and the District of Columbia. For more information about rent increases, you can refer to local rent control ordinances.

When is rent due?

A landlord can require a tenant to pay rent on any day of the month or even multiple times per month. For example, a landlord can make rent due on the day of the month that the tenant moved in or can have the tenant pay rent on the first and fifteenth of every month. In most circumstances, though, rent is due on the first day of the month. In many states, if the due date falls on a weekend or a legal holiday, the rent is due the next business day.

How much can a landlord charge for a security deposit?

A landlord can collect a security deposit from a tenant to cover the cost of damage and unpaid rent. Every state has different guidelines, but half of the states prohibit a landlord from charging a tenant more than one to two times the rent. Some states also require the landlord to place the security deposit in a bank account and to pay the tenant interest on the deposit after the tenancy ends. After a tenant vacates a rental unit, the landlord must return the unused amount of the security deposit to the tenant within the time specified by state law.

What is the difference between a rental agreement and a lease?

There is no strict legal difference between a rental agreement and a lease agreement, however in some instances a rental agreement, or a periodic tenancy, may refer to a short-term rental contract. The term can be for any amount of time, but month-to-month tenancies are the most common. Each month the tenancy automatically renews for a new term, unless the landlord or the renter ends the tenancy by giving a 30 day written notice. Changes to the terms of the rental agreement can be made by giving the appropriate written notice.

A lease agreement, also known as a fixed term agreement, allows the tenant to rent the property for a set term. Most lease agreements are for six months or a year. The terms are unalterable during the lease unless the tenant agrees to the changes. Unlike a rental agreement, a lease does not automatically renew upon termination. Instead, a lease becomes a month-to-month tenancy if the landlord allows the tenant to remain in the rental unit and pay rent after the lease ends.

What terms in a lease or rental agreement should a tenant be aware of?

A renter should be cautious when signing a lease or rental agreement that contains terms that unfairly favor the landlord.

The following provisions disfavor a tenant:

  • Automatic rent increases that are based on the landlord's increased operating costs
  • Shared utility meters
  • An agreement to obey future rules implemented by the landlord

There are some provisions that violate the law. In many states, the inclusion of the following terms will result in the invalidation of the lease or rental agreement.

  • "Hold harmless" clauses -- a tenant waiver of the right to sue the landlord
  • A provision that waives the tenant's right to a refund of a security deposit
  • A waiver of the landlord's duty to keep the premises habitable
  • A provision that permits the landlord unrestricted entry beyond what the law allows

A renter should also avoid signing a lease or rental agreement with blank spaces.

Is there a grace period for paying rent late? Can a landlord charge a late fee?

Most state laws do not recognize a legal grace period for paying rent late. In fact, a landlord can deliver a "pay rent or quit" notice the day after the rent is due. Some landlords, however, will include a grace period in the lease or rental agreement.

A landlord can charge a tenant a late fee when rent is received after the due date. A landlord must include the late fees in the rental or lease agreement. Some states limit the amount a landlord can charge in fees, but even states without limitations will prohibit charging unreasonably high fees. Typically, a late charge of 4% to 5% of the rent is acceptable.

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