Rental contract: find out how it works!
The rental agreement is the document responsible for signing and finalizing the process of renting a property , with the aim of legalizing the agreement that will be made.
In 2019 alone, for example, a survey carried out by IBGE found that rented properties represented 18.3% of family homes across the country.
But before it is signed, however, there are several steps that tenants must be aware of, pay attention to and analyze so that they are safe when closing the lease , and are sure that they have found their dream home.
These details are essential to ensure the condition and quality of the property, and so that, in the end, the guarantees of the rental contract are established as a way of protecting both the landlord and the rental company.
We know that the entire rental process can be laborious and generate many doubts, but don't worry, because we will make life easier for our citizens . In this text, we will explain all the rules regarding the rental agreement, what the law says, and all the duties and rights of tenants.
We have put together a brief summary of the topics that will be covered. See:
● What is the rental agreement?
● What does the law say? Tenancy Law;
● What guarantees does the rental contract provide?
● What are the tenant’s rights and duties?
Let's go!
What is the rental agreement?
As we briefly discussed in the introduction, the rental agreement is the document responsible for establishing and legalizing the lease of a property, ensuring legal security for both parties.
Governed by Federal Law No. 8,245/1991 , this document must contain several essential items to ensure this contractual relationship between the owner and the tenant, ranging from the rights and duties of each to the lease term.
Don't worry, we have set aside a special topic to explain exactly what this law says and everything that must be present in this document. But first, let's answer a very common question about this subject.
What types of leases are provided for by law?
Although the above Federal Law is considered the main one when we talk about property rentals, it has some limitations regarding its coverage.
In summary, we can state in its article 1 that this law only covers the leasing of urban properties, leaving the leasing of other types of properties governed by other legislation.
In addition, it also specifies three rental possibilities. They are:
● Residential:
● Non-residential
● Seasonal.
Residential leases are the most common type of lease. Their main characteristic is that they can be agreed verbally or in writing, for a fixed or indefinite term, and for a term of less than or more than 30 months. In this case, the contract can be terminated by mutual agreement between the parties.
The second modality, in turn, is intended for any type of activity that is not residential, such as commercial, industrial and office activities, for example.
Its main difference in relation to the previous item is that it provides the tenant with the right to renew the contract for the same period, as long as the contract has been signed in writing and for a specific period.
Finally, the seasonal rental is intended for the tenant's temporary residence, whether for leisure activities, taking courses, health treatments, carrying out works on their property, or any other purposes for a maximum period of 90 days.
To carry out any of these types of rentals, it is necessary to follow all the rules provided by law. In the next topic, we have separated the main points to be observed to help you in this process. Check it out!
What does the law say about rental agreements? Tenancy Law
Federal Law No. 8,245, better known as the Tenancy Law, is largely responsible for establishing the rights and duties of tenants and owners so that the lease of urban properties can be signed in Brazil, in addition to determining the rules for drawing up the rental agreement.
Since it was created, it has undergone some changes over the years to keep it up to date and maintain its objectives, with its last change approved in 2016.
Among all its rules, the main items that must be present in the rental agreement and that every tenant should know, especially if it is the first time they are looking for an apartment to live alone , are:
● Deadline;
● Fine;
● Adjustment;
● Fees.
Let's look at each of them in detail.
Term
According to the law, a standard residential lease agreement usually has a term of 30 months, and can be negotiated for shorter periods through negotiation. After this period, the owner has the right to review the rental value as he wishes, without following the adjustment rules defined in the contract that I will explain below.
In other words, it is the tenant's choice to accept the increase and renew the contract, or to vacate the property.
Fine
The second essential item that must be present in the rental agreement is the specification of the fine in case of termination of the agreement, as a way of guaranteeing security for the landlord.
The standard rule seen in rental contracts is to charge a fine if the tenant decides to leave the property before the agreed 30 months. However, it is very common to see landlords who relax these rules and waive this payment if the tenant has remained in the property for a minimum period of 12 months.
Let's assume that a tenant wants to leave the property after 11 months of living there. In this case, he will have to pay the fine corresponding to the remaining 19 months of the agreed rental period. If he decides to leave the property after 13 months of living there, on the other hand, payment of the fine is no longer mandatory.
To make it easier to understand, let's use an example of a R$1,000.00 rent established for a 30-month term and with a remaining term of 5 months. In this case, the calculation of the fine is as follows:
● Fine = (rent amount x 3) ÷ months of contract x months remaining on contract
● Fine = (1,000 x 3 ÷ 30) x 5 = 500;
● Fine = R$500.00.
Adjustment
The adjustment is nothing more than a change in the rental value of the property, which must also be clearly specified in the rental agreement. The adjustment rate is calculated using one of the inflation indexes available on the market as a reference. It is important to take into account that there will be an increase in rent each year when setting a budget and calculating how much it costs to live in São Paulo .
The IGP-M (General Market Price Index) has been considered the standard used by the real estate market for over 30 years. The problem, however, is that its value tends to fluctuate greatly depending on the variation of items that have little to do with the country's day-to-day life, such as the dollar's fluctuations, causing several problems, especially for tenants when terminating or renewing their rental contract.
As a solution, one of the indexes that has become most used in rental contracts is the IPCA (Broad National Consumer Price Index).
In an interview with the Terra portal , Insper finance professor Michael Viriato considers the adoption of the IPCA as being beneficial for both parties.
"With this strong increase that the IGP-M has shown, no one is actually managing to pass on this index, this increase is not feasible to be implemented. Using the IPCA benefits both the tenant and the owner, with more credible contracts", he said.
Fees
Finally, the last item that may be present in the rental agreement is the amount of fees or requirements that are made at the time of departure.
For example, it is quite common for a fee to be charged for painting/renovating the property, or for these services to be required directly from the tenant upon departure.
As prices end up being quite different from region to region, it is important that the tenant pays attention to whether the price requested is adequate and in line with the services required.
What guarantees does the rental contract provide?
Another item that should be highlighted in the rental agreement are the rental guarantees that this document offers, which aim to protect both the landlord and the tenant during this process.
In summary, the most common guarantees in this document are: guarantor; surety bond ( also known as rental insurance ); security deposit ; and the contract without guarantee . Let's look at each one separately.
Guarantor
A guarantor is simply a person who is directly responsible for paying the rent if you fail to pay. They are usually chosen as close relatives, such as your parents or a trusted friend.
Although the law does not require any criteria for the validity of the guarantor, the Brazilian Civil Code allows for the requirement of some criteria, such as the obligation for the person to have a property in their own name, paid off, and in the same municipality in which you are closing your lease.
surety bond
The surety bond insurance is a service contracted by the tenant through an insurance company. Its purpose is to serve as a guarantee in case the tenant fails to pay the rent, and in this case, the company passes on to the owner the amounts that were insured in the contract.
When activated, the amount required is equivalent to 12 months' rent, and can be paid in different ways, such as in installments.
This guarantee is often used by tenants who do not have guarantors, or who do not have the amount of money needed to pay the deposit.
Security deposit
Considered one of the most common guarantees in the rental process, the security deposit is an advance payment of the property's rental value. However, there are some rules that should be noted.
The main one is that the amount cannot be higher than the value of three months' rent, and must be deposited in a Savings Account authorized by the Public Authority.
Contract without guarantee
Finally, the contract without guarantee occurs when the tenant makes an advance payment of the rent amount month by month.
Many people find the purpose of this practice strange, but its great advantage is that it eliminates the need for an additional deposit, insurance payment or a property owner willing to act as guarantor.
In this way, in addition to the lease being less onerous for the tenant, the landlord himself benefits from accelerated legal procedures for eviction.
These are the main guarantees that can be seen in a rental agreement. Now, before giving some important tips before signing this document, other fundamental items that should be known in this process are the rights and duties of the tenant.
Do you know what they are? Check out the next topic!
What are the rights and duties of the tenant?
During the lease of any property, the Tenancy Law determines that every landlord has the right to certain rights and duties to guarantee the preservation of the property and to serve as a form of security for any problems that may occur.
To help you, we have separated the main items of each of these rights below. Let's see:
Tenants' rights in the rental agreement
Among all the tenants' rights provided for by law, some of the most important and which should be highlighted are:
● Receive the property in perfect condition for use
● Exemption from payment of extra condominium expenses
● Purchase preference
In order to prove that the property is in perfect condition for use, a detailed inspection and analysis is required. The inspection report must be attached to the contract, detailing the conditions of the property before the tenant arrives so that the tenant can commit to maintaining its preservation.
The second right provided for in our legislation refers to the obligation of the tenant to pay all ordinary expenses of a property that is part of a condominium, such as routine maintenance costs, salary payments, cleaning and caretaker services.
If the property requires renovation to maintain its habitability and the owner fails to do so, the tenant has the right to make the necessary changes and be reimbursed for the amount spent.
This is provided for in Article 35 of the law, which states the following:
Art. 35 - Unless expressly provided otherwise in the contract, necessary improvements made by the lessee, even if not authorized by the lessor, as well as useful improvements, provided they are authorized, shall be compensable and allow the exercise of the right of retention.
Finally, every tenant has the right of first refusal to purchase if the owner decides to sell his property. According to art. 27 of the law, the landlord must inform the tenant of the intention to sell and, from the moment of the communication, the tenant has 30 days to state whether or not he wishes to purchase the property and to carry out the procedures for the acquisition.
Tenants' duties in the rental agreement
The duties of tenants, in turn, can be summarized in the following topics:
● Property maintenance
● Rent payment on time
● Reforms
● Advance notice of change
Maintaining the property is one of the main duties of every tenant. This is because any carelessness can damage it and, consequently, affect its structure and cause damage such as water infiltration. However, if the damage was not caused by the resident, its repair will be the responsibility of the landlord.
Furthermore, every tenant must keep all payments of rent, condominium fees and other expenses established in the rental agreement up to date. Failure to do so may result in eviction or other sanctions provided for in the document.
Now, a very common question among tenants is regarding renovations. After all, is it possible to carry out any type of renovation in a rented property? The answer is yes, as long as it is previously authorized by the owner and authorized in the rental agreement.
However, it is worth noting that in these cases, the tenant will have to bear all the renovation costs, since the owner is only obliged to pay for such changes if they are essential to guarantee the habitability of the property, as highlighted above. Furthermore, if the owner does not authorize or like any of the changes, you will be obliged to return the apartment exactly as you left it! If you want to make a rented apartment your own, it is worth taking a look at these decorating tips that will save you a headache when you leave.
Finally, the last duty that every tenant must be aware of is in relation to moving. The Tenancy Law is very strict on this subject, and establishes that if the tenant wishes to leave the property, he must notify the owner at least 30 days in advance.
Failure to provide prior notice may result in the landlord charging the tenant one month's rent for the absence of notice.
Conclusion on rental agreement
Choosing your dream property is not always an easy task. After all, there are several points that must be analyzed and taken into consideration when making this choice, such as the condition of the property, neighbors, and even location.
Therefore, before signing the rental agreement, remember all the tips we have given throughout the text, and everything that should be included in this document so that the contractual relationship between the parties is the best possible. On our blog we also talk about the drawer contract , check it out there.
And remember: Citas offers all the help you need at every stage of renting your perfect property, with furnished apartments equipped with the best to guarantee your home.
Don't waste time, click on this link and come and see our apartments!