House Rentals Key Terms

Understanding rights and regulations when it comes to leasing or renting a house

Maybe you're searching for a house as a great location for your company offices — something historic and welcoming. Maybe you're looking to start a business investing in houses, fixing them up and making them available for rent. Whatever your connection to house rentals, it's important to know some of the key terms before getting in too deep, so you fully understand what you're getting yourself into.

Landlord

The landlord, also known as the lessor, is the individual or company that owns the property for rent. The landlord makes sure that the tenant meets all of the elements of the lease agreement and is responsible for any repairs that the property may need.

Tenant

The tenant, also known as the renter or lessee, is the individual (or company) that signs a lease, agreeing to abide by the terms of that lease, in order to rent the house owned by the landlord.

Lease agreement

The lease agreement, or rental contract, is the document the landlord and tenant sign in regard to the rental property, usually in effect for one year. While each state has different provisions and requirements for a lease agreement, it typically states the monthly rental amount due, the regulations the tenant will abide by while residing on the property, what happens if the tenant is in default of the agreement and the landlord's maintenance responsibilities.

Subleasing

If the original tenant wants to move out of the rental house, but the lease agreement has yet to expire, then the tenant may look into subleasing or subletting the property. A sublet (also known as a subtenant or sublessee) is an individual who moves into the property in the tenant's absence and takes over the monthly rental payments through the remainder of the lease agreement. However, the original tenant is responsible for the subtenant's actions.

Eviction

Failure to comply by the terms of the lease agreement may result in eviction of the tenant. Each state has a specific process for the proper conduct of an eviction, but most states require a 30-day eviction notice given to the tenant, typically followed by a lawsuit against the tenant for rent remaining due and the cost to repair damages to the house.

FMR

FMR stands for fair market rents. This is a system developed by the U.S. Department of Housing and Urban Development (HUD) that determines how much monthly income a particular house would produce if available for rent, including utilities. Determining factors include the market value of houses in the same area, the condition of the house in question and the average cost of utilities.

Keep in mind that landlord/tenant laws vary with each state. You may want to consult an attorney, or at least the state statutes, before signing a lease agreement.