What is an Occupancy Agreement?
But first: what is an occupancy agreement? An occupancy agreement is a document you use to legally define the relationship between a tenant and a property owner. What am I talking about? Taking someone into your home as a house guest is not a legal agreement, taking in a tenant IS. In many cases, homeowners will charge rent, and in many cases remain on property; there is nothing "wrong" with this . However, if you have a disagreement with your tenant, or you have another issue that needs the intervention of a legal professional; an occupancy agreement in place means that your lawyer does not have to defend the legal relationship between you and your tenant, it means you can just point to the signed agreement, which clearly states the terms of your relationship, in the case of an argument. Thus, renting out a room in your home, or taking on a housemate does not have to be a hassle at all. It’s all about communication, and discussing the terms of your agreement with your tenant, and using an occupancy agreement to protect both parties.
Key Components of an Occupancy Agreement
An occupancy agreement template is designed to be a framework to be adapted for use by different organizations, in different contexts. Occupancy agreements can come in many forms. In housing, an occupancy agreement may be a tenancy agreement, a license, or a lease. In property development, it may be a right of first refusal to purchase, a bill of sale to purchase movable fixtures, or an easement. Occupancy agreements often include the following components:
- Terms of Occupancy – how long are the groups allowed to occupy the space? Group seeks to clarify this in writing.
- Rights and Responsibilities – what are the rights and responsibilities of the parties regarding use of the property?
- Payments – Will the group make payments and, if so, what amount? If the room or space is commercial, this may include information regarding utilities, management fees and property taxes.
- Termination – how can the agreement be terminated? What notice is required? How quickly must the property be vacated?
Advantages of Using an Occupancy Agreement Template
An occupancy agreement template saves time on what would be a labor-intensive process. The ability to open a document, fill in the blanks, and then have a fully functional, tailored occupancy agreement in front of them is amazing to real estate agents as well as property managers. The advantages of using an occupancy agreement template include the following:
First, a pre-built template shines a light on the legal requirements in your area. If you move to another state or province, a fresh template will get you in the habit of seeing which legal details apply to you.
Second, it’s easier to customize from scratch. Finding the loopholes is easy when you do it all the time, but you have to be aware you need them before you can spot what’s gone awry. A great template makes it fit into what you and the other parties require.
Finally, you will have everything a good occupancy agreement should contain before you even get started. It will help you remember every single section you didn’t know you needed. This is not only helpful now, but you can save the template and use it over and over again without having to start from a blank document.
How to Edit Your Occupancy Agreement Template
When adding or editing the content of your occupancy agreement template, consider the following:
- Type of Property: A furnished apartment agreement will likely have different terms than an unfurnished apartment agreement based on the extra measure of care required for an apartment’s amenities. In addition, a bed and breakfast may require additional terms from a furnished apartment agreement to protect your interests.
- Type of Tenancy: Terms for a short stay vacation rental agreement will differ slightly from a long term rental agreement. For instance, guidelines surrounding rent payment, maintenance, and termination of tenancy .
- State and Local Laws: Your state or local laws may afford tenants additional rights or have specific requirements for occupancy agreements. Look to your jurisdiction for additional requirements such as specific disclosures needed or agreement provisions that need extra wording.
Your occupancy agreement should specify the dates that the tenant shall be permitted to occupy the premises identified in their agreement. Be sure to add your own definitions for "occupy," "premises," and "tenant" in your occupancy agreement so that it is clear to parties involved.
Common Errors to Avoid When Drafting Occupancy Agreements
When creating occupancy agreements, many people make the mistake of writing clauses in an excessively ambiguous manner. Vague and unclear language obscures the intent of the parties. If there is a dispute, a court will have to guess what the parties intended. This can be avoided by writing clearly and making sure any documents used to register the tenancy (usually at the Land Titles offices) match the occupancy agreement.
Another common mistake is failing to consider the statutory requirements. There may be references to a statutory provision but these may be out of date. Make a point to check any obligatory requirements that have to be addressed under the Residential Tenancies Act. For instance, landlords of mobile home parks and land lease communities should be aware of the mobile home sites provisions of the Residential Tenancies Act.
Clauses should not refer to or use vague or common expressions. Phrases such as ‘reasonable notice’ or ‘reasonable time’ can mean different things to different people. A clause that reads, in effect, "the tenant shall vacate within a reasonable time," is subjective and can be subject to interpretation. While a landlord has the right to terminate tenancy, they cannot do so capriciously. It is important to always get the date and the reason in writing.
The identity of the parties is sometimes not adequately defined. Write the full and legal names of the parties to avoid confusion (and be sure to include complete contact information for both parties). Make sure these names are the same as on the identifying papers (certificates of title, personal orders, etc.).
It is also common for people to forget to update an occupancy agreement once it is signed. While there is no need to rewrite every agreement when the occupants changes (assuming it is a term lease), be sure to have a provision regarding the ability to assign the lease. A provision like, "Tenant shall not assign this Lease without the prior written consent of the Landlord…," expressly allows the landlord to consent. In this case, there would be no need to rewrite the agreement each time there is a change.
While these are some of the most common mistakes, speak with a lawyer if you have questions about the requirements when it comes to drafting an occupancy agreement.
Occupancy Agreements FAQs
Q: When should we renew an occupancy agreement?
A: A good time to renew an occupancy agreement is when it is about to expire, or in other words, 30-90 days before the expiration date with an electronic signature solution. If you don’t have an e-signature solution, play it safe and negotiate for a renewal three months before the expiry date.
Q: What happens if we don’t renew an occupancy agreement by the expiration date?
A: Not renewing an occupancy agreement can create post-expiry obligations. If the parties stayed on after the expiry of an occupancy agreement, they may be obligated to follow the terms that existed after the agreement expired. It’s called "post-expiry obligations", and it can occur when the parties knew that the agreement was going to expire, but did not terminate it.
Q: If both parties agree to end a deal early, is this automatically enforceable?
A: In general, parties cannot release each other from a contract unless they are the parties who are required to perform under it . For example, if your landlord and you agreed to end your tenancy early, and neither of you can afford to release the other party from the contract, you likely do not have an enforceable agreement.
Q: Does an occupancy agreement have to be in writing?
A: Maybe. In some jurisdictions, an occupancy agreement must be in writing to be enforceable. LTVCA requires that all contracts be in writing, while the Canada’s Animal Pedigree Act requires that a contract be in writing for an animal pedigree. The facts of your situation will determine whether your agreement needs to be in writing or not.
Q: Is an occupancy agreement the same as a license, or the same as a tenancy agreement?
A: No. An occupancy agreement is a type of contract that allows one party to occupy land temporarily. A tenancy agreement is a type of contract that allows one party to occupy land for extended period of time. You might have a particular purpose for wanting to use an occupancy agreement template over a tenancy agreement such as getting the legal terms you want, and not having to worry about mandatory terms.