As a landlord, you might be excited to rent your property out. But before you do, there are some important formalities that you need to undergo. These formalities will help you in the long run and protect both parties involved in the transaction.
As the number of rented properties is increasing, it has become essential for landlords to undergo formalities before renting out their properties. In 2021 alone, renters occupied roughly 44 million housing units across the United States.
While the growing number seems optimistic to landlords, they could mean additional responsibilities in the form of undergoing formalities and doing a thorough investigation before renting out their properties.
Landlords should be aware that after they have rented their property out, they are bound by certain legal obligations, and they must follow them. The following are some of the formalities that every landlord should do before renting out their properties:
Conduct a Background Verification Check
Conducting a background verification check is one of the most important steps a landlord can take to ensure that they are renting to the right tenant. A background check helps landlords make sure that their potential tenants have a clean criminal history and employment history. It also helps landlords determine if their potential tenants have any previous evictions or bankruptcies on record.
The importance of background checks become even more important in areas or states having more rental housing units. For instance, renters have occupied 588,023 housing units in South Carolina from a total of 1,921,862 occupied housing units.
With renters occupying a high number of housing units in South Carolina, it becomes increasingly crucial for landlords to conduct South Carolina background checks in order to ensure that their tenant has a good credit score, stable employment, and no outstanding debts or judgments against them.
This will ensure that you have all the necessary information about your potential tenants and what kind of people they are. Conducting a background check can give you an idea about whether or not your prospective tenants are reliable and trustworthy enough to rent out your property.
Purchase a Renters Insurance
Every landlord should purchase renters insurance. The reason for this is simple: the more protected you are, the less likely it is that you’ll be sued.
Renters Insurance protects you, your personal belongings, and your property from damage. It covers fire and smoke damage, as well as vandalism and theft. It also protects you if someone gets hurt on your property or if they’re injured while using your personal belongings. And it protects you against liability claims if someone gets hurt while on your property, even if they aren’t related to renting out space.
The average cost of renters insurance for landlords is not high. In fact, it’s roughly $179 per year on average. And it’s well worth the investment. Without renters insurance, you would be liable for all damage done to yourself or others by your own negligence or by third parties.
Don’t risk being sued for something that could have been avoided with a little bit of planning. Make sure to purchase renters insurance before you rent out your space, and stay protected.
Make Sure You Create a Rent Agreement
The rent agreement is an important document that both the landlord and tenant must sign. It is the document that contains all of the terms and conditions of the rental agreement. The rent agreement is similar to a lease but with some notable differences.
The most important thing to remember when creating a rent agreement is that it should be specific and thorough. This means that all details should be included, including how much rent will be paid and when it will be paid, what utilities are included in the rental price, who will pay for repairs and maintenance, who will be responsible for snow removal, etc.
It is also important to create a rent agreement because it serves as proof that you have entered into an agreement with your tenant. If any issues arise later on down the line between you two, this document can help show that there was indeed an agreement made between you two regarding different aspects related to rented property.
Be Clear on the Security Deposit Amount
The security deposit is probably the most important part of any rental agreement, and it’s important for both landlords and tenants to understand why.
As a landlord, you should know that the security deposit is intended to cover any damages or repairs that need to be done after your tenant moves out. Landlords can use this money to fix up anything broken in the apartment, from replacing a broken lock to painting over chipped paint on the walls.
It’s also there to cover any unpaid rent or utilities that come up during the course of your tenancy. The problem with this is that sometimes tenants don’t pay their rent on time, or they might not even pay at all.
For example: let’s say you have a tenant who never pays their rent on time because they’re always late. If they leave without paying rent, then you’ll have no way to pay for those things yourself. So as a landlord, it’s important that you make sure your tenants understand how important it is for them to pay their rent on time every month so you can keep this security deposit safe for when they move out.
Tenant’s formalities are the basic requirements that a prospective tenant must meet before renting a property. Landlords must be very clear on these formalities to avoid any future issues.
The main benefit of these formalities is that they help in reducing the number of tenants who are interested in renting your property but cannot because of their lack of creditworthiness or poor credit history. This helps you to find tenants who can easily pay rent and don’t cause trouble for you or your property.