What is the difference between written and verbal tenancy agreements?

We are often asked this question by our landlords, “Do I really need a written tenancy agreement, as I know the tenants personally, could I not just agree it verbally?”

The simple answer is yes, a verbal agreement is as legally binding as a written agreement, however, we would never advise you enter into one.

How is a Verbal Tenancy Agreement Created?

In order for a verbal tenancy to exist it must have three essential elements;

1. An offer
2. An acceptance of the offer
3. Some payment – known as the legal term consideration

If these three elements exist then a verbal tenancy agreement can be created. This contract is binding on all parties involved.

There are other elements to consider:

• Both parties must agree to be legally tied to the agreement
• Both parties are capable of making an agreement i.e. not under the age of 18, drunk or insane.
• Both parties must be acting freely and not under duress
• The contract being made cannot be contrary to law

How to avoid creating a verbal tenancy agreement

It is very important to document all communication between a landlord and a tenant. The problem may arise in a verbal contract where a tenant may argue that they never accepted the terms of the contract and therefore a contract was never actually created.

If you are discussing a potential let or renewal of a contract, you should always make sure that that you do not create a verbal tenancy agreement.

You can avoid this by using the words ‘Subject to Contract’ on any correspondence relating to potential lets and when leaving messages on answering machines or speaking with prospective tenants.

We would be very interested to hear about your experiences of verbal tenancy agreements (positive or not).

If you would like to discuss our tenancy agreement drafting service, please call us on 0330 660 1020.

 

If you are a landlord and would like to know more about this service or any of the other services available please visit lettingaproperty.com or call us on 0844 567 0578.