DFW Fine Properties

Description

This document explains how to complete the rental process once you have found a property that you want to rent, and the landlord has verbally accepted your offer. The formal offer is done in form of a 'Letter of Intent'. The landlord officially accepts your offer by signing the 'Letter of Intent'. Your agent or the landlord's agent will typically prepare the necessary documents for the rental. Letter of Intent The 'Letter of Intent' is a proposal from you to the landlord to lease the apartment with the conditions set by you. By signing the document the landlord accepts the conditions, which normally has been agreed verbally beforehand. The tenant typically gives the landlord one month's rental as a good faith deposit at this point. Typically the Letter of Intent specifies the following: Term of Lease - Usually 12 or 24 months, with optional renewal of another 12 or 24 months - but not necessarily with same rent). Also the date when the lease is supposed to start. Generally, landlords are reluctant to accept leases less than 12 months, and when the market is good, they actually prefer to have 24 month leases and the tenant may have to pay premium for shorter term lease. Monthly rental – The 'Letter of Intent' usually only states the amount of rent to be paid. Good faith deposit – usually one month's rent. Once the landlord signs the Letter of Intent and accepts the deposit, the landlord promises not to lease the apartment to anybody else. When the tenancy agreement is signed, the good faith deposit will be deducted from the first rental or security deposit. Security deposit – The amount of the security deposit is usually stated in the Letter or Intent, but not be payable until Tenancy Agreement is signed. The typical security deposit is one month's rent for every 12 months of lease. When the lease term ends, the security deposit will then be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs, damages and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement. Additional requirements – e.g. Diplomatic Clause, Furnishing. The Diplomatic clause is to safeguard the tenant in the event the tenant is no longer employed. Typically it states that you can terminate the lease after 12 months by giving 2 months notice. The 'Letter of Intent' may also state that the property is leased furnished or partially furnished. You should also state in the 'Letter of Intent' if you are planning to sublet any part of the property, or if you plan to have pets in the property. Standard tenancy agreement states that this is subject to landlord's written approval, and you may want to agree this beforehand in order to avoid problems later. Expiry of 'Letter of Intent' – The Letter of Intent has a clause that specifies a period which within the landlord has to sign it, or it otherwise expires. In case of expiry, the landlord has to return the good faith deposit back to the prospective tenant immediately. Tenancy Agreement The 'Tenancy Agreement' is the binding contract to lease the property. It will be signed by both the tenant and the landlord.

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