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The Importance of a Valid Contract

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The Importance of a Valid Contract

When you purchase a vehicle through a lending institution there’s a contract you have to sign before purchasing. When you buy a house, there’s definitely a contract. When you get professional renovations and remodeling done to a property, there’s a contract. So when you rent a property or have a tenant you better make sure there is a contract involved.

                Let’s play a little game. Here’s an example of a fairly common scenario and you tell me what should be done: Your brother’s girlfriend needs somewhere to live because they aren’t ready to move in together. You happen have an extra room in your apartment. You tell her she can live there for $400/month (an affordable $100/week) if she can pay you on the 1st of every month. She says that sounds good and agrees. She moves in and doesn’t pay the first month, or the second and leaves the heat on over 80 degrees and takes 2 long hot showers every day. What do you do?

A.      Call the electric company to cancel service, she’s not paying anyways

B.      Text her and tell her she hasn’t paid and needs to get out, then threaten to take legal action

C.      Beg your brother for rent money for her

D.      No paperwork or lease was signed, so throw all her belongings out

                    E.       Call the police


The possible solutions above are not the best solutions unless you have all kinds of time on your hands and like pulling your hair out. I don't recommend doing any of these things, but they are common mistakes a landlord or landlady makes. The answer is tricky and a bit complicated, especially since it is your brother’s girlfriend. Mostly importantly, clear communication is of the utmost importance. Having a written contract with all exaptation’s, do’s and don’ts clearly written out for all to understand is what I recommend.  

In NH, a verbal contract IS a valid and enforceable contract. It’s much harder to prove in court what was said and what the terms were. In the court room, if you actually have to go there, it comes down to hard evidence and not the he said/she said game.  Maybe it’s worth your time to wait it out and let her figure out different living arrangements, or maybe you have a lawyer friend who can file paperwork and make a claim. Small claims court is anything under $10,000 and in this scenario per the verbal agreement, she owes you $800. But after you’ve researched a law firm, filed the paperwork, waited for the date- is it really worth all that trouble?

Having a written contract makes this a lot easier on the mind and wallet. Bottom line- there should be a contract between you, the owner and whoever lives in or rents your property. Your brother’s girlfriend cannot write the contract and have you sign it while you’re sleeping; both parties need to be coherent.

If you have any questions about this, talk to a Realtor. A Real Estate firm will have valid contracts and a professional can help guide you through and help prevent messy situations.    

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