Reading an entire tenancy agreement or contract without any legal knowledge or with a lawyer next to you can be quite exhausting.
It’s a good reason to familiarize yourself with the legal lingo so you can at least, to a minimal, understand and differentiate between certain phrases.
In this article, we’ll take a look at some of the more common terms and conditions in a tenancy agreement to help you understand the contract better.
Security deposit
- This is usually a one or two month upfront payment. The security deposit is meant to cover any damages you may cause to the property or items listed in the inventory when you take it over. It may also come into play if the tenant terminates the contract before the end date. The security deposit would help the landlord tide over the absent months while he searches for a replacement. If no issues arise, the security deposit must be returned in its entirety at the natural end of the tenancy.
Utility deposit
- Usually, electricity and water fees are included in the rental amount. In some cases however, the landlord will expect you to make your own payments. Similarly, he might ask for a utility deposit. This deposit is used when you fail to make utility payments. The utility deposit must be returned in its entirety or whatever balance is left at the natural end of the tenancy.
Earnest deposit
- This is also called a ‘good faith’ deposit. When a person shows interest in the property but is unable to move in soon, he will be asked to make an earnest deposit to not only validate his interests but ‘reserve’ the property. This is more common when you buy property. This deposit will either be returned or used to offset the security deposit. However, it would be best to confirm the future state of the earnest deposit with the landlord before you hand it over.
Contract details
- This is the bulk of the contract and will cover everything from duration of tenancy to the restrictions imposed on you and the property. Be sure to go over this carefully. Things like if pets are allowed or if you can have house parties and friends stay over for a short period of time will be determined and detailed here.
Payment medium & details
- How you intend to make monthly payments, whether through cash, cheque or credit card. For security reasons, unless you are absolutely sure that the landlord is trustworthy, do not give your credit card details. It is far better to pay with cheque or do bank transfers as the paper trail will verify your payment should the landlord claim no payment has been made. You should avoid making any payments in cash.
Address & particulars
- Your personal particulars and next of kin address and contact details go here. In case of an emergency, the landlord can contact your family member(s). Your personal details are what go on the tenancy lease and binding you to the contract for the length of the tenancy. This will keep you from being evicted should the landlord sell the property to someone else during your tenancy.
Stamp duty
- This is paid to the Inland Revenue Board of Malaysia. Whether you pay it or not depends on your rental amount and the duration of your tenancy. You should consult your agent about stamp duty to avoid any lapses or mistakes. Alternatively, you can read more on stamp duty by reading ‘Working out my rental budget’ and ‘What Is Stamp Duty In Malaysia’.
The tenancy agreement is not restricted to just these points. There are many other clauses you and your solicitor will have to go through. These are just some of the more important things you can take note of.
Trying to get the contract changed will be time consuming and difficult so make sure you scrutinise everything in the contract carefully before signing it.
Remember that once you sign, you’ve legally agreed to abide to all rules.
Read more about tenancy agreement here in the guide below.
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