The Importance of a Well-Drafted Tenancy Agreement

‍INTRODUCTION

A tenancy agreement is a fundamental legal document that governs the relationship between landlords and tenants in rental properties. Its primary purpose is to establish the terms and conditions under which the property is rented out and to delineate the rights and responsibilities of both parties.

A well-drafted tenancy agreement is not merely a formality but a crucial document that forms the backbone of a landlord-tenant relationship. It should include several key components to ensure clarity, protect the interests of both parties, and minimise potential disputes. This article outlines the essential elements that should be included in a comprehensive tenancy agreement.

TERMS AND CONDITIONS WHICH SHOULD BE IN A TENANCY AGREEMENT

A tenancy agreement clearly outlines the terms and conditions of the rental arrangement, including rent amount, payment due dates, and any additional fees. This clarity helps prevent misunderstandings and ensures that both parties are aware of their obligations from the outset. The tenancy agreement should clearly state the following:

1. Parties to the Agreement. The agreement should clearly identify the parties involved i.e. the full names, addresses and contact details of the landlord and the tenant respectively. This section ensures that both parties are properly identified and can communicate effectively throughout the tenancy period.

2. Description of the Property. A detailed description of the rental property should be provided. This description ensures that both parties understand the exact property being rented and what is included with the rental.

3. Term of the Tenancy, Rent and Payment Terms. The agreement should specify the duration of the tenancy. This includes the date when the tenancy commences and ends, as well as any notice period of termination. The rent amount, due date and payment method should be made clear in the tenancy agreement. From the landlord’s perspective, it would be advantageous to include a term for late payment penalties or interest charges.

4. Security Deposit. The agreement should include clear provisions regarding the security deposit. The usual rate for rental deposits in Malaysia is the sum equivalent to 2-4 months’ rental. Importantly, the conditions under which the landlord can withhold or deduct from the deposit (e.g., damage repairs, unpaid rent) must be clearly specified. Of course, the procedures and timelines for returning the deposit to the tenant at the end of the tenancy must also be stated. These terms protect the landlord against potential damages or unpaid rent and provide clarity on the return of the deposit to the tenant.

5. Rights and Responsibilities. Both the landlord and the tenant’s responsibilities should be clearly delineated. Some examples of the landlord’s obligations include maintenance of the property, ensuring it is habitable, and handling repairs promptly. In many cases, these are not spelt out and as a result, there is confusion as to whether the landlord or the tenant must bear the costs of the repairs. On the tenant’s side, he must keep the property in good condition, report maintenance issues promptly and adhere to any other house rules specified in the tenancy agreement. For instance, the use of the property may be specified to be only for residential purposes, and there may be restrictions on certain activities such as subletting, conducting illegal activities or keeping pets in the property. In some cases, tenants may

6. Double-rental. In Malaysia, the law allows for the landlord to claim for double rental for the period of holding over i.e. the period from which the tenant is supposed to deliver vacant possession until vacant possession is delivered back to the landlord. While it is arguable that the law may operate irrespective of whether there is a contractual stipulation, it is always advisable to make things clear in the contract so that it cannot be reasonably disputed. This will ultimately act as an incentive for the tenant to deliver vacant possession promptly.

CONCLUSION

In conclusion, a well-drafted tenancy agreement serves as a foundational document that outlines the terms and conditions of a rental arrangement, ensuring clarity and protection for both landlords and tenants. By including the essential components outlined above, landlords can establish clear expectations and procedures, minimise disputes, and create a mutually beneficial relationship with their tenants. It is advisable for both parties to review the agreement thoroughly and seek legal advice if needed to ensure compliance with applicable laws and regulations. This proactive approach helps to promote a harmonious and productive rental experience for all parties involved.

This article is written by  Raja Nadhil Aqran (Partner) and only contains general information. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.

For further information, kindly contact info@aqranvijandran.com.

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