Must know terms for first time renters
Renting for the first time can be an exciting process, especially when you find the perfect apartment.
What’s less exciting is being hit with the wave of renter terms included with each contract. While common renter terms such as lease, roommate, and landlord are likely to come up in everyday conversation, terms such as quiet enjoyment, prorated rent, and arrears are not.
To become a savvier renter, it's necessary to have a working knowledge of common terms used heavily in rental agreements and more specific terms unique to certain types of apartments or living conditions. In addition to improving your understanding of your lease agreement, knowing these terms can also take some of the pressure off renting for the first time.
The following is a glossary of frequently used renter terms grouped in common versus uncommon terms:
Table of Contents
- Common renting and lease terms
- Uncommon and legal-based terms
- Other important rental terms
Common renting and lease terms
You’ve probably heard of these terms or at least seen them thrown around. Most leases or rental listings may include some of these terms.
Accessible apartments must be inhabitable by those with physical disabilities. These can include wheelchair users or people with limited mobility, or those who are hearing impaired. Some such structural accommodations include ramps, elevators, lower light switches and visual smoke alarms. Under the Americans with Disabilities Act, reasonable accommodations must be made for those with disabilities.
This term can also refer to rules on keeping communal areas clear.
Apartment amenities refer to any features, services or facilities offered on a property that are not essential. Swimming pools, gardens, play areas, or special appliances would be considered amenities. Amenities are usually intended to improve the experience of living at a complex, so it is important to discuss the apartment’s amenities as part of the lease agreement.
The process of renting begins with becoming an applicant. This involves filling out a document known as a rental application. These applications usually ask for key information such as your previous addresses, Social Security number, employment history and/or employer. Since the landlord or property manager will be using this application to determine whether you are a suitable renter, they also usually ask for more specific information such as your credit score, pay stubs, and references from previous landlords.
When you agree to rent an apartment in “as-is” condition, you are agreeing to rent the space in its current condition. This also means you accept any defects or flaws. It is important to note that in most states, these defects should be identifiable through an inspection of the property.
BR is short for bedroom and BA is short for bathroom. So, an apartment with 2 bedrooms and 2 bathrooms would be listed as 2BR, 2BA.
What is a broker?
Brokers, (also known as apartment brokers, rent brokers, or apartment brokers) are a type of real estate agent that serve as an intermediary between potential lease-holders/tenants and property owners.
It’s important to note the difference between brokers who charge fees and so-called “no fee” brokers.
It’s somewhat obvious, but brokers who charge a fee receive their income up front from the potential tenants who hire them.
One of the ways no -fee brokers can appeal to potential clients is by emphasizing that there is no additional fee for their services. However, this is not entirely true. No-fee brokers also receive income because their fee is paid by the landlord, property manager, or company who owns the property. Thanks to no-fee brokers, the landlord gets to fill their space, and thanks to landlords, no-fee brokers get paid.
Building codes are a set of standards dictating building safety, design requirements, and how buildings are maintained.
What is a commission?
Most brokers and real estate agents receive a payment for bringing tenants to sign lease agreements. Usually landlords pay the commission. Since commissions can be a percentage of annual or monthly rent, the amount paid out varies.
What is credit history?
Your credit history is a public record of how you’ve managed your debt, including loans, leases, and credit cards. Landlords may request your credit history from a number of credit bureaus to make sure you can pay your lease and have a history of paying your debts.
What is a security deposit?
Tenants pay landlords or property managers a fixed sum known as a deposit (or security deposit) to cover losses in the event of damages. Deposits are usually calculated based on various factors including the apartment’s amenities, rent, and state laws. ‘
Deposits can also be paid for various purposes such as a pet deposit or rent deposit.
What is a fixed-term lease?
A fixed-term lease refers to a lease that covers a specific period of time. One of the most common types of fixed-term leases are one-year leases. In addition to upholding the conditions of the lease, tenants also have to reside in the property for the duration of the lease before moving. Fixed-term leases also expire at the end of this period.
A landlord is anyone who owns the property or is leasing it out on behalf of the property owner.
Besides holding the title to the property, landlords also must maintain the conditions outlined in your lease. This includes any maintenance requirements. Landlords can also evict tenants for breaking the terms of their rental agreement.
A lease is a contract between the landlord or property owner and the tenant. This agreement covers terms for both the landlord and the tenant such as the rent, lease rules, and each party’s responsibilities under the lease agreement. While most leases are written contracts, some leases can be oral agreements. Both tenants and landlords must uphold the terms of the lease.
Lessee and Lessor
According to Allstate, lessee and lessor are used to refer to the two parties involved in a rental lease agreement. More specifically, the lease-holder or tenant is the “lessee” while the property manager, company, or landlord (in short, whoever owns the property) is the “lessor.”
While most rental or lease agreements last for at least 12 months, a month-to-month lease agreement typically lasts for 30 days. These types of leases automatically renew unless the tenant or landlord opts for a non-renewal. Month-to-month lease agreements usually require a 30-day notice from either landlord or the tenant, although this can change based on state and local laws.
A pet policy dictates whether tenants can have pets in the apartment. Some policies inhibit pets altogether, while others limit what breeds or animals are allowed. Either way, having a pet that is not allowed can seriously impact your lease agreement. Tenants who have pets when they are not allowed could be asked to move or surrender their pets.
The legal definition of rent is a payment made at fixed intervals by a tenant to their landlord. Besides a happy landlord, the benefits of paying rent on time can be big.
Similar to a credit report, a rental history gives information on your past renting arrangements. They typically note any evictions, late payments, or criminal record. Landlords usually request rental histories as a way to determine if a tenant is a good fit for the complex.
Renters insurance covers a tenant’s personal property. Most landlords have insurance that covers structural damage, but these policies do not account for potential damage to their tenants’ property. Some lease agreements require tenants to have renters insurance. Overall, these policies cover tenants in cases of unexpected damages such as theft and natural disasters.
Landlords typically ask for a security deposit when you sign your lease or before you move in. This deposit is usually a sum that the landlord holds onto until tenants vacate the apartment. Once you move out, landlords study the condition of the apartment and will either refund the deposit in full or keep part of it for any damages they see.
Some security deposits are the same amount as one month of rent and can be used as a tenant’s last month of rent.
A sublease is an agreement between a tenant and a sub-tenant. In these agreements, the renter rents out either part or all of their apartment to the other party. For example, some subleases cover a single bedroom, while others let the sub-tenant stay in the apartment while the primary tenant is away.
Most landlords do not allow tenants to sublet without their permission. Moreover, the primary lease holder must cover any damages from the sub-tenant.
Utilities are expenses outside of rent that the tenant can be responsible for, although some utilities are covered by the landlord. Heat, water, electricity, internet service, storage, parking arrangements, rental insurance, and cable are all types of utilities. Sometimes utilities are included in rent, and other times they are split between roommates.
Wear and tear
Wear and tear (otherwise known as normal wear and tear or reasonable wear and tear) refers to deterioration from a tenant’s normal living. These damages are usually covered without a financial penalty.
Uncommon and legal-based terms
These terms are also included in leases but aren’t so well-known. To become a pro renter, it’s worth familiarizing yourself with these terms.
Abatement or rent abatement is a clause that can be included in a lease agreement or added to an existing lease if both the landlord and tenant agree to it. This clause allows tenants to suspend their rent payments if the apartment they are renting is uninhabitable. While the definition of inhabitable varies from state-to-state, most state laws establish that tenants have a right to live in properties that meet certain safety, health, and structural requirements.
These clauses have no set timeline. Instead, they end when the property becomes livable again.
All bills paid
Usually, all bills paid apartments refer to when landlords pay for basic utilities while tenants pay a flat rate.
Sometimes, all bills paid means that the utilities such as electricity or water are already included in the monthly rent. In these cases, all bills paid means that tenants only have to pay one unified bill a month.
Either way, it’s important to know what you’re signing up for.
Addendums are separate legal documents or clauses that accompany the main lease. Sometimes an addendum is used to provide additional information about certain complex rules such as pets or smoking. Others are required by law (such as addendums designed to notify tenants about lead paint or other structural details). True to their name, addendums can also note amenities that have been added to the property such as laundry facilities.
Arrears refers to the status of a payment. It is a legal and financial term that describes overdue payments. As the tenant, if you are behind in rent payments or utility payments, these payments are in arrears.
The base rent is the cost of rent without any added utilities or costs. There are usually fees that a tenant must pay on top of the base rent including for utilities and amenities. For example, an apartment’s base rent can be $1100 plus a $100 fee for utilities or certain amenities.
Certificate of occupancy
A certificate of occupancy confirms that a building complies with developmental codes. It also confirms that the space has been inspected and is a quality place to live.
Concessions are also referred to as rent concessions, tenant credits, write-offs, or discounts. They are adjustments a landlord or manager of the property can make to the rent or fees like the security deposit.
Application fees can also be subject to concessions.
Sometimes, landlords grant concessions to tenants in exchange for a service provided by the tenant.
Even if you have strong credit, stellar references, and meet every other qualification, it can be difficult to secure an apartment with no prior rental history. For first-time renters, landlords may ask for a co-signer to sign the lease.
When a co-signer signs a lease, it signals to the landlord that even though they won’t be residing in the apartment, they will uphold the terms of your lease if you can’t. This affords many landlords and property managers peace of mind and encourages them to take a chance by offering their apartments to first-time renters.
Eviction is a formal legal process in which the landlord, property manager, or property owner terminates a tenant’s lease and removes them from the property before their lease period is over.
Before evicting a tenant, landlords must terminate their tenancy. Typically, landlords or property managers will send tenants written notice of eviction. These notices inform tenants that they have violated the terms of their rental agreement and are consequently being evicted. Common types of notice include pay rent or quit notices, cure or quit notices, or unconditional quit notices.
A grace period refers to the time period after rent is due that a tenant can pay their rent without any penalties or late fees. These periods vary state-by-state. If a tenant doesn’t pay rent before the end of the grace period, they are usually charged a fee or incur a different penalty.
Like co-signers, guarantors assume the renter’s financial responsibilities and obligations if they are unable to pay rent or other charges.
Even though they are on the lease, guarantors do not live in the apartment.
In certain situations, a landlord has the right to hold onto a renters’ property for money owed. In these situations, the landlord may take and hold the property until the debt is cleared. However, landlord liens have been challenged as unconstitutional in some courts, so it is always good to check your specific area’s laws regarding them.
In renters’ terms, mediation is when a neutral party (the mediator) is employed to resolve any disputes between a landlord and their tenant. A mediator’s job is to help both parties reach a legally binding agreement that benefits everyone who is involved.
Notice to quit
As per Cornell Law School, a notice to quit is when a landlord sends a tenant with a written notice with a demand to vacate the premises within a certain time period. Most state laws require landlords to provide such a notice only under certain circumstances and to give tenants a certain amount of time before they must vacate.
Notice to vacate
Conversely, a notice to vacate is given by the tenant when they intend to vacate the rental property. Most lease agreements provide a window for tenants to vacate without penalty.
Occupancy rate refers to the amount of units being occupied versus the total amount of units.
When tenants occupy a rental for only part of a term, the rent charged is known as prorated rent. For example, if you move in in the middle of the month, landlords will charge for the part of the month you occupied the rental.
Prorated rent is usually charged based on a monthly rate.
Also known as covenant for quiet enjoyment, this term outlines that tenants have a right to peacefully occupy their apartment. Quiet enjoyment protects tenants from disturbances such as overly involved landlords or noisy neighbors.
Rent control laws protect tenants by limiting the amount of rent landlords can charge for an apartment. These laws vary state-to-state and from city to city. However, some states prohibit rent control laws. In some cases, rent control laws cover more than just rent, such as the terms under which landlords can terminate a lease. Rent control laws were originally intended to lower living costs and make certain areas more amenable to low-income residents.
Renters’ rights or tenant rights are laws at the local, state, and federal level that protect renters from a variety of predatory housing practices such as discrimination based on certain traits and factors and rent gouging.
Termination refers to when the landlord or the tenant decide to end the rental agreement. Eviction or non-renewal of the lease are types of termination.
Other important rental terms
Fair housing laws
These laws are meant to protect people from discrimination when they rent or buy homes. Originally passed as the Civil Rights Act of 1968, the Fair Housing Act was meant to expand the scope of protections afforded by previous acts, especially when it came to housing.
According to the U.S. Department of Housing and Urban Development, characteristics protected by the Fair Housing Act include race, color, national origin, religion, sex, sexual orientation, gender identity, familial status, and disability. Discrimination based on any of these characteristics is prohibited. As such, landlords cannot discriminate against tenants based either in part or wholly on the basis of any of these characteristics.
Market rate housing
Market rate housing refers to the prices of existing apartments based on the cost of apartments in the surrounding area or similar complexes.
In development, mixed-use refers to areas that blend residential and commercial uses. Apartment complexes that are mixed-use will usually include residential and office space, or retail. The retail and office spaces are usually on lower levels, while the residential areas are on the higher levels.
Move-in specials are usually special, limited time offers designed to attract tenants.
Some examples of move-in specials include waiving fees (such as application fees or security deposits), first month free deals (where rent is discounted or prorated over the year), or better rates on longer leases.
The parking ratio is calculated by how many parking spaces are available per tenant or, in some cases, per unit.
Studio apartments are an increasingly popular type of apartment. These apartments consist of one large room rather than separate, walled off spaces. This means that the living area, kitchen, and sleeping area are all in one room, although some studio apartments have a separate kitchen.
The vacancy rate refers to the number of apartment units that are available to rent versus the total number of available units in the property.
Even after you find the perfect apartment, the sheer amount of renters’ terms can be daunting. Knowing even some of these terms can help you have a more positive renting experience. It’s also important to note that the terms of lease agreements can be negotiable. Being an informed renter will help you have the best rental experience possible by preparing you to interpret your lease agreement and negotiate on your own terms.