The real purpose of a rental contract

Many people believe the purpose of a rental contract is to ensure each party commits to their part of the deal and to find a way to sue each other if the other party fails.

That is NOT the purpose a rental contract. Although contracts are designed for this purpose, but not rental contracts. The law in Canada is designed such that petty cash lawsuits are discouraged. Often times, you will spend more on the lawsuit than getting the rewards from the lawsuit.

Ensuring each party commits to their part of the deal should have been done during the tenant screening. The landlord should be carefully screening the tenant to make sure the property is a good fit and that the tenant is reliable and responsible enough to pay for the rent. As well, the renter would have also screened the landlord and property to make sure the landlord is a decent person and the property suits the renter.

The true purpose of the rental contract is to clearly communicate to each other what is expected of each other. Only during times (and this is especially rare) that the tenant completely destroys the house, would the landlord sue the renter. And during those times, the renter wouldn't even be able to afford to pay the landlord back anyways!

What I mean by clear communication is that the renter will need to know when to move in, when to pay the rent, with what method of payment, what services are included and how long the lease agreement is. There are additional clauses the landlord may also throw in.

A rental contract is especially important when it comes to rental property that doesn't apply to provincial regulations. This is often the case in room for rent where the landlord shares the same kitchen or bathroom. Since the provincial regulations do not apply, then the rental contract will set the official standard as to what is appropriate and inappropriate behaviour within the rental premises.

At RentBin.ca, I provide you with a sample rental contract. Further RentBin.ca also allows you to automatically generate a rental contract when you post a rental ad.

The other thing you will want from the tenant, which is not in the rental contract is some form of identification such as driver's license and an emergency contact. To sue someone, you have to identify him or her and locate him or her.If you do want to chose the lawsuit path, you also have to make sure the person has valuable assets. In Canada, you simply can't sue someone who has no money.

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