A tenancy agreement is a legally binding contract governing the terms on which a landlord will let and a tenant will occupy property.

Even though a landlord and a tenant may have reached the stage where they wish to proceed with a tenancy agreement, this does not necessarily mean that they are in agreement on all of the terms and conditions of the tenancy.

The governing legislation (for a property not covered by rent control) is the Landlord and Tenant Act 1974 (“the Act”), which will imply certain conditions into a tenancy, some of which are not overridden by the express terms of the tenancy agreement.

For example, landlords cannot unilaterally contract out of certain repairing obligations that apply to short residential tenancies.

Certain fundamental terms will appear in most tenancy agreements. These include: ?the amount of the rent and how it will be paid; ?the period for which the tenancy will last (the “term”); ?whether a security deposit will be paid and, if so, how much; and whether the property will be let furnished, unfurnished or part furnished/ “with appliances only”.

Tenants will want to consider the terms of the tenancy agreement carefully to determine whether the landlord is attempting to pass on financial or other obligations for which he, as the owner of the property, would ordinarily be responsible.

Two examples are land tax and the costs of maintaining the grounds.

Unless the parties agree otherwise, the Act indicates that the rent should be paid monthly in advance.

Once agreement is reached about the rental amount, the parties will need to agree on the term of the tenancy.

Landlords will often seek a right to bring the tenancy to an end if certain circumstances arise. For example, a landlord who is considering the sale of his property may wish to reserve the ability to break the tenancy if a buyer is found.

A non-Bermudian tenant, on the other hand, may seek to ensure that he can break the tenancy in the event that his contract of employment is terminated or his work permit is not renewed.

In such cases, the tenancy agreement will specify an agreed period of notice which must be given by the party wishing to break the tenancy in order to bring the arrangement to an end.

If there is no provision for early termination in the tenancy agreement then, in the first scenario outlined above, the landlord would be obliged to sell his property with a sitting tenant, which could reduce the purchase price.

In the second scenario, the tenant would technically be obliged to continue to pay the rent for the remainder of the term, even after moving out of the property.

If there is no written tenancy agreement and the rent is paid monthly, the Act will imply that the parties have a month on month tenancy.

Such a tenancy continues until either party gives the other at least one clear month's written notice that the tenancy is at an end. The notice must expire on a rent payment date.

Landlords will often ask for a security deposit, usually of an amount equivalent to one month's rent. At the end of the tenancy, the landlord will deduct from the deposit any expenses that he incurs as a result of the tenant's failure to comply with his part of the tenancy bargain.

Most often, this occurs when the property is returned to the landlord in an unsatisfactory state.

If the security deposit is substantial, the tenant might ask for the sum to be held by the landlord's agent or attorney or placed in a separate, interest-bearing account, with interest being returned to the tenant.

If the property is rented furnished, the parties should agree an inventory that will be attached to the tenancy agreement and the tenant should ensure that any existing defects in the furnishings are noted on the inventory.

The Act will imply certain additional terms into a tenancy agreement for three years or less, unless there is a written agreement to the contrary.

For example, the tenant will be responsible for utility bills, must use the property only as a private dwelling, must carry out running repairs to the interior of the property and may not alter the property without the landlord's consent.

The landlord, meanwhile, is responsible for repairs to the exterior and main structure of the property and must keep the service installations in working order.

As mentioned above, the landlord cannot pass on these repairing obligations to the tenant in a written tenancy agreement, except where he has the consent of the tenant and the court.

A formal written tenancy agreement would deal with a lot more issues than I have described here. If you are considering letting or occupying rented property, ask around and find out whether what is proposed is usual or, better still, speak to an attorney.

Clare Whitaker is an Attorney in the Property Law Department of Appleby Spurling Hunter. A copy of Ms. Whitaker's column can be found on the Appleby Spurling Hunter website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters described herein, persons are advised to consult with a lawyer.