The Rental Agreement

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Establishing a Rental Agreement

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Statement of the Condition of the Premises ( MCA 70-25-206 )

At the beginning of the tenancy the landlord must provide the tenant with a written statement of the condition of the premises. The landlord is also required to provide a list of damage and cleaning charges assessed to the previous tenant upon the tenant's request. Many landlords choose to have their tenants fill out a "check-in" sheet or like the condition of premises form in our sample & model rental forms page in order to comply with this requirement. The condition of premises report is important because without it there is no evidence of the condition of the unit when the tenant moved in. The report protects the tenant from being charged for conditions that existed prior to the beginning of the tenancy and provides the landlord with the evidence necessary to withhold money from the security deposit for damages caused by the tenant.

If the landlord fails to provide a statement of the condition of the premises, s/he relinquishes his or her/his claim to withhold cleaning or damage charges from the security deposit when the tenancy ends. Without a written condition of premises the legal burden of proof is on the landlord to prove by "clear and convincing evidence" that the tenant is responsible for the damage in question. This evidence must be presented before any part of the deposit can be withheld.
Also see Security Deposits .

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The Rental Agreement

Montana law defines a rental agreement as any written or verbal agreement adopted in order to clarify the rights and responsibilities of both the tenant and the landlord ( MCA 70-24-103 ). The landlord and the tenant must decide between a verbal or written agreement; and must choose a standard, term, or lease agreement. Finally, they should carefully outline any special provisions such as additional repairs to be performed or tenancy rules.  See our Model Rental Agreement in our sample & model rental forms page .

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Verbal Versus Written Rental Agreements

Though they differ in significant respects, a few characteristics are common to both verbal and written rental agreements. Each is legally binding on both parties. No rental agreement may contain provisions which violate the law, or waive or forego the rights or remedies of any party under the law ( MCA 70-24-202 ). The court also has some discretion in finding certain provisions of a rental agreement to be "unconscionable". These are provisions that, while not violating the letter of the law, are unfair or repressive to one of the parties. Neither party is required to abide by a rule in a rental agreement that is contrary to Montana law or has been found by a court to be unconscionable.

Aside from these shared qualities, verbal and written rental agreements differ significantly. Verbal agreements are those agreements in which there is no written documentation of the terms of your tenancy. You and your landlord simply decide upon the amount of rent, when it will be due, the security deposit amount, and perhaps a few simple rules. Issues not covered by the agreement are determined by state and federal law.

Verbal agreements are convenient to the extent that they are usually short and do not involve reading fine print. Technically, they are just as legally binding as written agreements. However, verbal agreements can be difficult to enforce. First, you must prove that some agreement exists; then you must prove what the terms of that agreement are. If a dispute arises later on, it is likely to deteriorate into an argument pitting the tenant's word against the landlord's. If witnesses are present, some of these difficulties may be avoided later.

If the person you are entering into a rental agreement with does not wish to sign a written agreement, make notes as to witnesses present and the substance of the agreement. Send a signed and dated letter identifying the key points of the agreement to the other party. Keep a copy of the letter for your records. By sending this letter, you not only document your understanding of the agreement, but you also create an opportunity for the other party to clear up disagreements.

A written agreement is a signed document listing the terms and provisions of your tenancy. The terms of written agreements are easier to enforce because: 1) they are clearly defined, and 2)the signatures indicate that both parties understand and accept the terms of the agreement .

Before signing an agreement, make sure that you read and understand all of its provisions. Under certain circumstances, a written agreement need not be signed by both parties to be binding. If either the landlord or the tenant does not sign and deliver a rental agreement which has been duly signed and delivered by the other party, but acts as though s/he did, then the agreement has the same effect as if it had been signed. If a landlord accepts rent money, or if a tenant takes possession of the dwelling unit, then s/he acts as though the rental agreement was signed ( MCA 70-24-204 ).

Montana law requires that rental agreements be written in plain and understandable language, but if you are unsure of the implications of a certain term or provision, ask an attorney about it or call MontPIRG's Tenant/Landlord Hotline. If there is something you do not like in an agreement, cross it out and initial the modification with your landlord. After negotiating and signing a rental agreement, be sure to retain a copy of it for your records. Be aware that a tenant cannot be bound to provisions in a lease agreement which are prohibited by the Montana Residential Landlord Tenant Act ( MCA 70-24-202 ). The law always takes precedent if there is any doubt. Refer to our sample & model rental forms page for a model rental agreement.

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Standard (Month-to-Month) and Lease Agreements

There are two kinds of rental agreements: the standard month-to-month agreement, and the lease. Standard month-to-month agreements can be terminated by either the landlord or the tenant on 30 days written notice FOR ANY REASON, unless the termination is discriminatory or retaliatory (see the sections on discrimination and retaliation ). In addition, the landlord can change the terms of the rental agreement (including rent) on thirty (30) days written notice.

Leases are rental agreements which do not allow either the landlord or the tenant to vary the terms of the rental agreement for a term specified by the lease (for example, six months). Thus, neither party can terminate the rental agreement until the lease expires, or unless the terms of the lease are violated. If either the landlord or the tenant wish to terminate the lease at the end of the term, a thirty (30) day notice must be given to the other party. If a lease expires, but the tenant continues to pay rent and live at the rental unit and the landlord continues to accept rent, the rental agreement continues, but it then becomes a standard month-to-month agreement. Montana law does not allow for lease agreements of more than one year. If a lease is signed for a period longer than one year, the lease expires after one year and the rental agreement becomes month-to-month ( MCA 70-24-204 (3) ).

Sometimes a rental agreement will be referred to as a "term agreement." Provided neither the tenant nor the landlord can change the terms of the agreement for the term specified in the rental agreement, then the "term agreement" is for all purposes a lease. Occasionally, however, a "term agreement" will prohibit the tenant from terminating the rental agreement before the term specified, but will allow the landlord to terminate the rental agreement, raise rent, or otherwise change the terms of the agreement within the term specified. Clearly, such an agreement is in almost all circumstances not beneficial to the tenant and should be avoided.

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Special Provisions

Many times the landlord and tenant will make special agreements regarding repairs, pets, subletting, etc. These provisions should be spelled out in a written agreement.

1. Repairs. If the landlord has agreed to perform repairs, the repairs and the dates by which they will be completed should be listed on the rental agreement. Each party should initial each repair that is added.

2. Pets ( MCA 70-24-422, 1(b) ). If a tenant plans to have a pet, they must get written permission from the landlord first. Sometimes the landlord will request an additional pet security deposit to cover cleaning or damage costs which may be associated with the pet. If so, tenants should make sure the terms of the deposit agreement are clear, and keep a copy for their records. Under Montana law, pet deposits are subject to all of the same rules and regulations as security deposits ( 70-25-101 (4) ). Pet deposits cannot be "non-refundable" or have other terms associated with them that violate the Montana Residential Tenants' Security Deposits section of the Montana Code ( MCA 70-25 ).

If a tenant has a pet which is not allowed by the rental agreement, the landlord may give the tenant a 3-day notice specifying that the tenant must either get rid of the pet or vacate the premises. For the tenant, temporarily removing or "hiding" the pet is not a good solution. If the landlord discovers any unauthorized pet in the rental within the next six months, s/he can give the tenant a five day notice to move out, with no opportunity to remedy the situation. If any unauthorized pet causes damage, the landlord may give the tenant a 3-day notice of termination for destruction of property, in which case removing the pet would do no good and the tenant should find another place to live.

3. Managing Premises For Landlord ( MCA 70-24-303 (3) & (4) ). Tenants may arrange (in writing and separate from the rental agreement) with the landlord to perform repair and maintenance tasks themselves, providing all of the following conditions are met: a) the agreement is not made in order for the landlord to evade her/his responsibilities ; b)the work the tenant does is not necessary to bring the dwelling into compliance with the housing code ; c) the agreement does not diminish the landlord's responsibility to other tenants . However, in buildings that contain more than three dwelling units, these kinds of arrangements are prohibited in order to protect the tenant from becoming a general maintenance person for the complex.

4. Subletting Agreements ( MCA 70-24-305 ). Some landlords allow tenants to sublet, or rent, their rental unit to someone for a specified period of time. Tenants cannot sublet unless their landlord has given them written consent. Tenants normally sublet in order to hold a rental unit for a period in which they will be gone (as in the case of a tenant who leaves for the summer but wants to keep her/his apartment), or in order to complete the time remaining on a term agreement or lease.

If a tenant decides to sublet, they retain all their rights and responsibilities as a tenant, but you also take on all the rights and responsibilities of a landlord - the tenant also becomes a landlord . Thus, the tenant is still responsible for the timely payment of rent, and for any damages caused by the person subletting from them, but as a landlord they also take on significant new obligations to, for example, keep the rental unit fit and habitable and to give adequate notice for terminating or changing the rental agreement.

A tenant may not sublet their rental property unless 1) they have written permission from their landlord and 2) the subletting agreement is for no longer than the period of the rental contract (i.e. the sublet agreement cannot extend past the end of the lease or no more than one month's time for a month-to-month agreement. )

If you sublet, use a written rental agreement and include in it all the terms of your rental agreement with the landlord (see the model rental agreement on our sample & model rental forms page ). Draw up a separate, written agreement stating the amount and terms of a security deposit (see the model security deposit agreement on our sample & model rental forms page ). Sublet only to people who recognize the unique nature and responsibilities of the situation and will conduct themselves accordingly.

5. Special Uses of the Premises. If a tenant wishes to use the premises in ways other than as a home to live in-e.g. as an office, day care center, wood-shop, etc. they must get special permission from the landlord. The tenant and landlord should put the terms of this permission in writing as part of the rental agreement. Residential rentals must be used primarily as residences. Small businesses may be run out of a residential unit only if this activity is secondary the use of the unit as a residence. The information in this guide only pertains to residential rental situations. If you rent space for a business, for storage, or for an art studio, etc., the information in this guide will not be valid for your rental agreement.

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Bargaining

As you find generally desirable rental units, remember that you can bargain with the landlord for acceptable terms. For example, a landlord might be willing to lower rent, spread the security deposit over several monthly payments, or alter a "no-pets" policy with an additional "pet security deposit". Too often, tenants mistakenly assume bargaining is unacceptable. On the contrary, many landlords are willing to bargain for a good renter. See what the landlord offers, and if it doesn't match your needs, tell her/him what you want to negotiate for the rental agreement you want. If you do make any special agreements, remember to put them in writing on the rental agreement 

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Changing the Rental Agreement: Raising Rent or Altering the Terms of the Agreement ( MCA 70-24-311 )

If the landlord wants to substantially change the rental agreement, s/he must give the tenant 30 days written notice before the changes can take effect. In the case of a lease agreement, the landlord may not alter the terms of the rental agreement until the end of the term. If a landlord wishes to alter the terms of a lease agreement upon expiration of that agreement, s/he must provide the tenant notice of his/her intent to change the terms of the agreement 30 days before the lease expires.

Montana law does not place any restrictions or ceilings on how much a landlord can charge for rent or how much a landlord may raise rent. Generally, the landlord may charge whatever the rental market will bear. However, rent increases may not be allowed if they are determined to be retaliatory or intended to discriminate against the tenant (see sections on this site about discrimination and retaliatory conduct ).

If a tenant with a lease receives a rule change letter from his/her landlord before the expiration of the agreement, the tenant should send a letter, refusing to recognize the change. Doing this will prevent the rule change from taking effect. This only pertains to those residential tenants with leases. If the tenant wants to change the terms of the agreement or sublet s/he must negotiate a new agreement with the landlord.