Most Tenancy Disputes Arise from Incomplete Contracts and Unspecified Agreements
Most tenancy disputes begin with incomplete contracts and unresolved agreements, and tenants often don’t know their rights—such as the fact that mortgage payments and the repair fund are the landlord’s responsibility. HUGO legal consultant highlights the key points every tenant should know.
The rental process begins with searching for a property that meets the tenant’s needs. Often, offers from the property owner are preferred because no broker’s fee is required, which can save up to one month’s rent. Once a suitable apartment is found, negotiations begin, and then a rental agreement is signed—the most important part of the process.
According to HUGO legal consultant Merike Roosileht, tenancy disputes often arise from the absence of a written rental agreement or insufficient contract drafting. Many disputes can also be avoided by creating a handover-acceptance act. “I highly recommend always taking possession of a rented living space based on a mutual written handover-acceptance act that records the condition of the rental property at the time of transfer. The meter readings for electricity, gas, and water should also be recorded. This helps avoid future disputes between the tenant and landlord, especially regarding the condition of the rental property. It’s important to document what items the landlord provides to the tenant and their condition. Any hidden defects discovered by the tenant when accepting the rental property and its items should be immediately recorded in the act to avoid future disputes,” said Roosileht.
Important for Tenants to Know:
- Contract – always sign a written contract and record all agreements. The contract should specify the rent payment date, method (cash or transfer), and the amount. If rent is paid in cash, the tenant should request confirmation of the payment each time. This confirmation can be recorded in the tenant’s copy of the rental agreement, where the landlord signs to confirm three things: 1) the payment made, 2) the payment date, 3) the amount paid.
- Additional Costs (fees for services provided by the landlord or a third party) – tenants must pay additional costs related to the rented property only if agreed upon. The landlord must allow the tenant to review the documents proving these additional costs upon request.
- Security Deposit – the landlord may require a security deposit of up to three months’ rent. The tenant may pay the deposit in equal installments over three months, with the first payment due after signing the rental agreement. The landlord must keep the security deposit in a separate account at a financial institution, accruing at least the local average interest rate. The interest belongs to the tenant and increases the deposit amount.
- Rental Agreement Duration – either fixed-term or indefinite. A fixed-term rental agreement ends when the term expires unless terminated early. For an indefinite agreement, both parties must give three months’ notice before termination.
- Repair Fund and Loan Payments are not directly related to the use of the rental apartment and should not be paid by the tenant; they are the landlord’s responsibility. Even if such an agreement is written into the contract, it is void, and the tenant has the right to demand a refund for any payments already made.
- Penalty Clause in the Contract – an agreement requiring the tenant to pay a penalty for breaching the contract is void.
- Through a Broker or Directly from the Owner – if the rental property is found through a broker’s offer and services, the broker is entitled to a commission from the tenant. Finding a rental property through a broker is more expensive for the tenant but generally ensures the correctness of the rental agreement.
- Broker’s Fee – a broker’s fee can only be charged if the rental property is brokered by a real estate agent. The landlord cannot charge a broker’s fee themselves.
- Compensation for Expenses to the Tenant – if, upon termination of the rental agreement, the value of the property has significantly increased due to improvements or changes made with the landlord’s consent, the tenant may request reasonable compensation. If improvements are made to the property, the costs must be immediately coordinated and documented in writing with the landlord. It can be agreed that the costs will be offset against future rent payments.
