As a homeowner, you are entitled to require several documents to protect your real estate investment and to secure your rental income.
Guarantees to protect you
Like any homeowner, your main concern is having a tenant who stops paying rent or who commits significant damage to your home.
To prevent this kind of problems, start by requiring the payment of a rental deposit, as well as a rental guarantor and a certificate of home insurance.
1/ The security deposit
First and foremost, make sure to get a security deposit upon signing the lease! Specify its amount in the contract and be sure not to exceed a month of rent excluding charges for an empty rental or two months for a furnished rental.
This security deposit must be returned to your tenant within one month after departure. However, in case of non-payment of rent, charges, rental repairs or damage, you are entitled to withhold the amount corresponding to the prejudice. You then have 2 months to return the rest of the deposit to your tenant, but you must justify the amount retained by invoices detailing the repairs incurred, provided that the damage or lack of maintenance have been duly noted in the inventory of the premises done upon departure.
For more information, click here.
2 / The various guarantors (or guarantees)
In addition, you can ask your tenant to provide a guarantor. A guarantor is a person or a legal entity (bank) who agrees to pay the rents, charges and rental repairs owed by the lessee in the event of default. An act of garantee may set a maximum amount for which the guarantor agrees to pay all of your tenant's potential debts.
Namely: The guarantor (s) must provide proof of identity and income in the same way as the tenant.
In case the tenant can not present a guarantor (person), you have the option to request a bank guarantee (legal entity).
Bank guarantee
A bank guarantee covers the risk of unpaid rent by asking the tenant a sum of money corresponding to x months of rent which will be blocked on an account during the duration of the lease. In general, this amount corresponds to one year's rent and the bank guarantee is renewable every year.
How much does it cost ?
In addition to having to block money, you will have to pay about thirty Euros per month for service, or € 360 a year. This amount is partially offset by the interest that the tenant gets on the money deposited in the blocked account.
Advantages and disadvantages
For the landlord:
+ Even better than a Garantor
- The lessor must write explicitly to the bank to raise the deposit.
For the tenant:
+ No need to solicit relatives
- High fees
- Delay in recovering the amount of the blocked money after departure from the dwelling
Advice: At the time of the inventory of the premises, the tenant should request the documents concerning the lifting of his bank guarantee from the owner.
3/Home multi-risk insurance
Your tenant is required to insure the rented premises against the rental risks (fire, explosion, water damage ...). If he does not provide a home insurance certificate, you can legitimately take action to terminate the lease or purchase insurance at his own expense.
Other precautions to take as landlord
In order to protect you to the maximum, choose your tenant carefully by verifying that he earns at least three times the rent and that his income is regular. Do not forget to include a “resolutive clause” in the lease in the event of non-payment of rent, and at the entry do establish the “Inventory of the premises” with meticulousness.
You also have the possibility to take out an insurance for unpaid rent (GLI) which would then replace the deposit, because the two are not cumulative. This insurance has a cost ranging from 2.75% to 4.5% of the amount of the rent including charges, depending on the insurance companies and of the guarantees taken.
Also, you could request from a potential tenant that he/she works with GarantMe, the rental Garantee for the tenants who do not have a Garantor!
Photo by Darío Gutiérrez
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