You have decided to invest in rental property and have either just purchased a property or are on the verge of doing so. You have selected the property with great care, considering factors such as location, equipment, parking, proximity to shops and schools, etc. Nothing has escaped your attention.
It is perfect, but that doesn’t mean you can relax just yet.
Before you begin, you need to consider one more thing: drafting the standard contract for your furnished rental property. In the following paragraphs, you will discover the rules you must know for creating the lease. Indeed, to prevent any issues with the tenant, it’s crucial to understand the information that must be included in the contract to ensure its validity.
The furnished rental contract
The tenant and the owner must sign a lease to formalize a furnished rental. This lease is a contract that outlines the characteristics of the accommodation, the payment terms, and the tenants.
Since May 29, 2015, the ALUR law has issued the decree n°2015-587 which defines the mandatory contents of this lease contract.
Additionally, a decree from the same day specifies the contents of the informative notice that must accompany the lease. This approximately fifteen-page notice is in addition to the extensive list of documents you must provide. This includes technical diagnoses, such as energy performance diagnosis, the state of the internal electricity and gas installation, etc. It also includes the extract from the co-ownership regulations, the inventory of fixtures, and the receipt, among others.
Drafting the furnished lease
When signing the lease, the lessor and the tenant must establish their agreement on the following obligations:
- Determining the lease duration.
- Specifying the notice period.
- Setting the rent amount excluding additional charges.
- Allocating the rental charges.
- Establishing the security deposit.
- Defining the living area.
- Special clauses: These are optional but must comply with applicable laws; otherwise, they will be considered abusive and hold no legal value.
Lessees typically include three main clauses in rental contracts:
- A solidarity clause (for example, in shared apartments) where all co-signatory tenants and their guarantors share joint and several liability in case of non-payment. This means the landlord can demand fulfillment of contractual obligations, such as rent and service charges, from any co-tenant.
- A resolutory clause, allowing the landlord to terminate the contract in case of noise pollution, non-payment of the security deposit, or lack of home insurance. This clause must specify the conditions leading to termination.
- The annual rent review clause allows the landlord to adjust the rent based on the previous year’s Index of Reference of Rents (IRL). This can be done once a year, on the anniversary date of the contract.
You must attach certain documents related to the accommodation and co-ownership to the rental contract:
- The information notice outlining tenants’ and landlords’ rights and obligations.
- A technical diagnosis file, accessible in the digital logbook, to monitor installations conditions. It includes an energy performance diagnosis (DPE), a gas and electricity installations condition report (for buildings built before 1975 or since January 1, 2018). Also, a statement on natural, mining and technological risks (ERMNT) for properties in risk zones, an asbestos diagnosis and a lead explosion risk report for properties built before 1949;
- An inventory of fixtures detailing the dwelling and its equipment, including their condition upon tenant occupancy;
- An obsolescence scale if both parties opt for it;
- A list of equipment providing access to information and communication technologies (ADSL or optical fiber, TNT, etc.);
- The co-ownership regulations;
- A joint and several guarantee for each of the tenant’s guarantors.
Duration of the furnished lease
The duration of a furnished rental contract varies based on the tenant’s profile. There are three different types of rental contracts in furnished rentals:
- The furnished rental contract, which has a duration of one year and is renewable.
- The student rental contract, which lasts for 9 months. Note that the tenant must prove their student status to benefit from this type of lease.
- The new mobility lease, which can range from 1 to 10 months. It is available for individuals under 30 years old or those in need of accommodation for professional training, internships, or apprenticeships.
Please be aware that if the accommodation is not the tenant’s primary residence, a standard contract for a secondary residence should be used.
The contract should be completed in as many copies as there are parties involved. In the case of multiple tenants for the same property, such as roommates or a couple, each tenant must sign the contract. It is not a legal requirement to provide an original copy of the contract to each roommate, nor is it necessary to register the contract.
Renewal of your lease
- In a classic rental contract, the lease renews automatically unless one of the two parties expresses a desire to terminate it.
- In a student contract, renewal is not guaranteed.
- In a mobility lease, renewal is not an option.
Termination of a furnished lease
Terminating a rental contract isn’t an instantaneous process. In fact, both parties involved in the contract must adhere to a designated notice period. The legal notice terms are specified within the contract.
For furnished rentals, the notice period is shorter compared to unfurnished rentals.
- For the tenant, one month’s notice is required before vacating the premises, and there’s no obligation to provide a reason for ending the contract.
- For the owner: a three-month notice period must be observed. Failure to comply with this period results in the contract being tacitly renewed.
However, the landlord has the option to decline contract renewal if they can justify one of the following reasons:
- He/she intends to sell the dwelling.
- He/she plans to occupy the dwelling themselves or lend it to a family member.
- The landlord must have a valid and substantial reason for not renewing the lease, such as non-payment or neighborhood issues.
A legal notice always has to be sent through registered mail with acknowledgment of receipt or delivered in person.
Regarding termination clauses, typically, only the tenant has the right to terminate the lease during its term. The landlord is permitted to do so if the tenant fails to comply with any of the resolutive clauses that were pre-established in the contract.
There are four types of resolutive clauses that can justify terminating the lease:
- The tenant fails to pay the rent and/or the charges.
- The tenant neglects to pay the security deposit.
- The tenant does not possess home insurance.
- The tenant does not use the accommodation peacefully, causing disturbances noted by a bailiff, either during the day or night.
As for abusive clauses, below are the primary clauses prohibited by law in a furnished rental contract:
- Terms of payment. Any clause that mandates direct debit as the sole payment method or adds fees to the rent and charges for the tenant is prohibited.
- Home insurance: The owner cannot impose their choice of home insurance on the tenant.
- Living in the dwelling: Any clause that forbids the tenant from temporarily hosting individuals in their home is prohibited.
- Termination of the furnished rental contract. The landlord cannot include a clause that grants them the right to terminate the contract with a summary order without allowing the tenant to contest this termination.
The comprehensive list of abusive clauses is available on the public service website. Such a clause may appear in the lease contract signed between the landlord and the tenant, but it will hold no legal validity.
- Dwellings located in tense zones: since March 27, 2014, lessors can no longer freely set the rent if the dwelling is said to be in a “tense” zone. In these zones, the rent of the new tenant may not exceed that of the previous tenant, revised according to the “IRL” reference index.
However, landlords who carry out major works may take into account the cost of works that have improved their dwelling in order to increase the rent upon re-rental.
Furthermore, the landlord has the option to reevaluate the rent for the new tenant if it was underestimated.
- The property was not previously rented or if the previous tenant has been gone for at least 18 months. The rent is set freely unless the property is located in a city that has decided to establish a rent ceiling with increased reference rents that cannot be exceeded.
In that case, a rent cap is applied as soon as the property is rented for the first time.
- For dwellings located outside tense zones, landlords can freely set the rent.
The rent is then annually adjusted based on the variation of the “IRL” reference index. To do this, the landlord must include the indexation clause in the contract when signing it and indicate the last known index. The landlord must then make a formal request to the tenant each year.
Tenants are required to pay an additional amount in addition to the rent. These charges correspond to the reimbursement of expenses paid by the owner, such as the elevator, the lighting of common areas, and other related costs.
These charges cover the expenses that the owner incurs on behalf of the tenant for services or equipment from which the tenant benefits.
In the case of furnished rentals, charges can be determined in two ways:
- Flat-rate charges: In this scenario, the landlord sets a fixed sum that remains constant, regardless of the actual expenses. The lump sum can be adjusted annually per the contract, as long as it’s not unreasonably high compared to recoverable lessor expenses.
- Actual expenses: The tenant pays a monthly provision for expenses. Once a year, the owner adjusts this provision based on the actual expenses determined by the property manager.
The security deposit
The landlord can freely determine the amount of the security deposit. In practice, landlords often set it at two months. In the case of furnished rentals, the landlord can include in the lease the tenant’s payment of various subscriptions. You can think about internet, cable, telephone communications, and taxes (audiovisual fees, housing tax, etc.) on a pro rata basis. He can also claim the reimbursement of these costs on a receipt basis, at the end of the lease.
Alternatively, the landlord can also choose to incorporate these various invoices into the total rent amount and not require any separate payments from the tenant.
It is essential to clearly define in the lease how the costs will be divided.
The rule that mandates charging only minor and rental repairs to the tenant does not apply in furnished accommodation.
Therefore, the landlord can include a clause in the lease, specifying that they must deliver the equipment in good working order. The tenant is responsible for covering all repairs related to this equipment during the lease. This responsibility changes only if it is determined that the tenant is not at fault or that the damages result from force majeure or obsolescence.
In the case of furnished rentals, landlords typically charge agency fees to the tenant. The owner is responsible for covering the costs of drafting the lease.
If the hiring party dies
In the case of a furnished lease, the lease terminates upon the tenant’s death if the lease includes a termination clause. Otherwise, it is transferred to the heirs.
In conclusion, drafting a furnished rental contract can be challenging. The Alur law mandates this contract for furnished apartment rentals and outlines the rules, rights, and obligations of both the landlord and tenant. Careful drafting is essential for maintaining positive tenant-landlord relationships.
You can find the model of the lease contract applicable to renting or sharing a furnished apartment. This draft can be used when it serves as the tenant’s main residence.
Click here to download the document in PDF format.