Rental and leasing applications and contracts are full of legal language, most of which the average individual cannot read or understand. However, it is important to learn at least the important legal terminology as it pertains to you so you are certain of your rights and responsibilities as a renter.
Even if this is not your first time renting, it is a good idea to review the common terms used as each year new changes and updates are required. After all, a lease is a legally binding agreement that, if broken, could come with serious consequences, including a diminished rental history and a financial cost.
Each state has its own set of governing laws in addition to the federal housing regulations, so it is useful to review your lease even if you are staying in the same apartment or home each year.
Once familiar with the common vocabulary used in these types of legal documents, or referred to by the leasing agents, you can navigate the process for renting your apartment with relative ease. Use the following tips to understand what you are signing and to make sure your rights as a renter are protected.
People Involved in the Rental Process
The first thing to consider is from whom you are renting your apartment. If you rent directly from a family friend or your own family then a contract might not exist, other than a verbal agreement. However, consider drawing up a short but sweet version so that everyone is protected in case of some emergency.
Other than direct family members, in order for a rental contract to be legally binding it must be signed by any two of the following people:
- Rental brokers. These are agents who act as a go-between for the landlord and the renters. If you used a real estate agent, then he or she is considered a broker.
- Co-signers and guarantors. These are individuals who agree to back up your ability to pay your rent on time and have agreed to cover it in the event you do not. If your credit history is poor, or you have no credit history at all, then you most likely will be asked to provide a co-signer on the lease.
- Tenants, renters, lessees. That is you, the renter. Legally this is a person who is renting property belonging to someone else.
- Landlord/lessor. This is the person who owns the house or apartment or is the manager of the property.
Learn About the Types of Rental Homes
Different types of rental situations exist, and you must know the difference between them. Failure to understand usually results in you paying more than you planned, restrictions you were not aware of, or less room than you expected. The most common types of homes or apartments for rent include the following types:
- Rent Controlled/Rent Stabilized. These types of rentals have fixed rental amounts regulated and set by federal and state governments. You see this type of rental happening when apartments are converted to condos and the tenants are faced with losing their home.
- Studio/Single Apartments. These are some of the smallest types of apartments for rent and usually posses very few interior walls. It is just one large open space. However, due to their size, this type of apartment is generally one of the cheapest available.
- Market Rate Apartments. This is the most common type of apartment rental and the pricing is based on the rise and fall of the housing market.
- Bachelor Apartments. This is just another name for a single room home, usually very small with only a kitchenette and private bathroom.
- Townhomes. These types of apartments are usually part of a closed community and are two stories. Often there are more amenities with this type of rental.
- Duplex/Triplex/Fourplex. This type of housing has become more popular and prevalent in recent years. Housing is provided in a multi-family home where a specified number of “units” have been sectioned off from the rest of the home. A duplex has two units, a triplex has three units and a fourplex has four units.
- Efficiencies. This is a small studio apartment that does have walls dividing certain spaces. It is still quite small.
- Loft apartments. This type of rental is either an apartment with an upper loft area, or it is a studio apartment with vast ceilings. Very often they are reclaimed warehouse spaces converted into living areas.
The terminology of Rental Contracts
Rental contract terminology often seems designed to confuse the renter. However, it is important to take the time to understand what you are signing because these types of contracts are binding legal agreements. The following basic terminology helps you to decipher some of the jargon typical on a regular lease:
- Rental agreement. This is the lease or contract you sign agreeing to meet and follow the rules regarding the apartment, the grounds and the amenities.
- Length of term. This is the amount of time you are agreeing to remain in the unit and pay rent. Depending on your agreement, your length of term will most likely be 12 months, six months or a month-to-month contract.
- Lessor. The landlord or company owning the rental unit.
- Lessee. That is you, the renter.
- Key money. This is sometimes referred to as a waiting list payment or commitment money. Once your name rises to the top of the list and someone moves out, you receive a call.
- Application fee. This is the amount you pay for the apartment complex to verify and validate/process your application. This covers the cost of the office pulling your credit report, doing a background check and calling your references. Sometimes this fee is negotiable. Once paid, the fee is generally non-refundable, even if you do not qualify for the apartment or decide not to rent.
- Broker’s fee. If you used a real estate agent to help you find a rental, then this is the commission the agent makes.
- Credit check. This is routine with applications as the landlord wants to see how responsible you are with making payments on time.
- Security deposit. Upfront money you must pay, that the company holds in an account against any damages you may cause to the property or missed payments.
- Pet deposit. Pet deposits are common in rental agreements for properties that allow pets. This deposit is generally a refundable amount that is held to use for any damages that your pet causes to the property.
- Pet fee. Another common fee with pet-friendly properties, a pet fee is a small monthly fee that you must pay to have a pet live in the dwelling. Pet fees are typically charged per pet. Therefore, if you have more than one pet, you will likely accrue more than one of these fees each month.
- Sublet/sublease. If you rent out your rental unit to someone else, this is called a sublet. The renter who rents from you is taking out a sublease (a secondary lease to your own). You are still responsible for any damages to the property in most subletting instances.
Learn About Apartment Specifics
When apartments are advertised very often certain terms are used to describe amenities or features found in the apartment. This includes such terms as:
- Facility fee. This is a small fee you pay regularly for the use of the services and amenities offered by the apartment complex. It usually covers a parking space, maintenance of a playground or dog park, access to the gym and pool area or use of the clubhouse.
- Fixture fee. While not common, this is a charge for the various appliances in your apartment.
- Amenities. Amenities are the extras in an apartment such as pools, fitness centers, office centers and outdoor commons areas.
- Furnished apartments. The apartment comes with a basic collection of furniture.
- Utilities. This includes your electricity, water and often your garbage pick-up. Some apartment complexes include the price of utilities and other services into the overall cost of the rent for greater savings.
- Rental insurance. This is an optional type of insurance you can get to protect theft or damage of your own personal property within the apartment.
- Full- or half-bath. A full bath includes both a shower and a bathtub, toilet and sink. Half bathrooms usually only have a toilet and sink, or just a shower, toilet and a sink.