It’s August now, thousands of students start their first or next year at universities, thousands of young adults start at their first workplaces and children from ten thousands of families start school or nursery school within a few days. And everybody’s looking for or offering a sublease. The prices are really high, the good ones are gone in a wink, young adults, parents and grandparents are worried: Do we have to sign a rental agreement? If yes, what should we include in it? What if the other party winds me up? In our story we’re going to describe a problem that probably you wouldn’t have thought of. Read our article in order not to make this mistake.

The basic rules of a rental agreement

Nowadays subletting and subleasing happen every other day and yet most people don’t even know the basic rules. First and most important that you always have to draft a written rental agreement. It’s best to do this in an official way – with a lawyer or a notary public. If you don’t choose this option, both the tenant and the landlord have to be very careful but this solution never provides full safety. Our client’s story is an example how not to do this.

An example to be avoided

Our client wanted to rent a non-residental property. They agreed about the rent and our client agreed to pay a security deposit as well. According to the agreement, the security deposit had to be paid at the time of the conclusion of the contract but transferring of the possession would had happened later. When the time of transferring of the possession came, our client was looking for the lessor for a long time but he could contact him in no way. Liquidation was ordered against the lessor and the liquidator didn’t find any property, therefore our client lost the security deposit and couldn’t take possession of the property.

What can you do in order not to make the same mistake?

  1. As we’ve already mentioned, you always have to draft a written rental agreement, if possible, with the help of a lawyer or a notary public. Furthermore, this agreement has to include the most essential things like rent, time of transferring possession, if it’s an indefinite or fixed-term agreement, rights and obligations of the parties etc.
  2. The parties often agree that the tenant pays a security deposit so the landlord could pay for the tenant’s possible debts and damages caused by him/her. If you agree on a security deposit, the payment of this guarantee and transferring of the possession should happen simultaneously, it protects both the tenant and the landlord.
  3. If you’re a lessor, you should frequently check if your lessee pays the rent and other charges, furthermore, if he/she uses your property properly and in accordance with the agreement. If you have a well-drafted written agreement, you can demand the tenant to leave the property immediately and pay for the caused damage. Finally, you can go to court in order to enforce your claim.
  4. If you’re a tenant, you should keep in mind that according to the Hungarian Civil Code if you enter into a fixed-term contract, both the landlord and the tenant can only terminate the contract with extraordinary termination. If you enter into an indefinite period contract, you should always stipulate a notice period, which should be kept by both parties. This way, you can avoid your agreement to be terminated without finding a new sublease.

Summary

If you enter into a rental agreement, trust is important but observing basic formalities is essential. In order to avoid to be tricked, always be informed, take your time and don’t forget to include the essential elements in your agreement!