How to Avoid Disputes: Important Points to Watch for in a Rental Agreement
ERGO's legal aid insurance experience shows that most rental disputes originate from incomplete contracts. What should be paid attention to when renting an apartment, writes Maiko Kalvet, head of ERGO's legal aid insurance portfolio.
Account for associated costs
Usually, when entering into a rental agreement, a security deposit and one month's rent as advance payment must be paid. If renting an apartment through a broker, a broker's fee is added, typically also one month's rent. Therefore, at the time of renting, you should have at least three times the monthly rent available. The security deposit can also be larger, up to a maximum of three months' rent.
In addition to the monthly rental payment, you must account for many additional costs (electricity, heating, water, waste disposal, internet connection, maintenance service, etc.). To avoid surprises later, the contract should detail exactly what the tenant pays for, rather than agreeing to a vague clause where you agree to pay for "utilities" without knowing what that includes.
Take time to read through the contract
It is important that the rental agreement be concluded in writing. It should definitely contain the rental price, a comprehensive list of the tenant's monthly ancillary costs, the duration of the lease, and the conditions for terminating and returning the rental space. Sometimes it may be more beneficial to conclude a fixed-term rental agreement, which can only be terminated early in exceptional cases, for example in case of breach of contract. Moreover, the landlord cannot increase the rent during the validity of a fixed-term agreement (except if it is longer than three years). In the case of an indefinite-term agreement, rent can be increased – in justified amounts – once a year. However, an indefinite-term rental agreement can always be terminated by giving three months' notice to the other party.
It is very important to read through the contract carefully and ask immediately if something remains unclear. It would be good to have the contract reviewed by an experienced person or specialist. In addition to the rental agreement, an apartment handover-receipt act should also be concluded and signed, which describes what furnishings are in the apartment, the condition of the furniture, equipment and interior finishes, and what the readings on the meters (water, gas) are. It would be good to take as many photos as possible of the apartment and furniture condition to avoid later disputes with the owner.
Adapt to house rules and mitigate risks
It is wise to ask the owner about the internal rules and behaviors in effect in the building. For example, some apartment buildings have agreed on specific parking arrangements or waste sorting by type. It is a good idea to also insure your own risks. A tenant can insure both their personal property and liability if other residents suffer damage due to their actions, for example if they were to cause a water leak. When concluding a rental agreement, it is reasonable to ask whether there is a valid home insurance in the rental apartment, who it covers and what insurance protections have been selected, as there is no point in double insuring.
ERGO's legal aid insurance helps in situations where the insured person or their family has been treated unfairly and this is accompanied by financial expenses or lost compensation. The insurance covers legal aid-related costs, protects rights in court, and provides guidance on how to handle the situation that has arisen. Learn more about legal aid insurance here.
