Would an oral agreement with a tenant be legal if he understands the terms of my rental policy?
You should research what your state’s statutes say regarding the issue. An oral lease in most states is a legal contract enforceable against landlord and tenant if the rental term is month-to-month or for a term of one year or less. However as a practical business matter, all leases of any duration should be in writing because the written document provides a record of the terms of the landlord-tenant relationship so that lease terms and conditions can be easily and clearly understood by the lease signers, their heirs, or assignees.
Oral leases can cause problems for both landlords and tenants because many important rental issues are not covered or discussed in detail during a brief landlord and tenant conversation. A number of problems can potentially result if either landlord or tenant misunderstands the initial offering of terms and conditions of the rental agreement, misremembers or forgets certain terms during the tenancy, or one party makes false claims against the other regarding what was said in the conversation. As example, the tenant could claim the landlord made certain promises regarding rent terms or waiver of fees. A landlord would be limited in his defense of the claim because there was no writing of important rental terms and conditions. A dispute regarding terms of an oral agreement if taken to court may end up with a decision based on circumstantial evidence, oftentimes a decision more favorable to a tenant.
In almost all states the Statute of Frauds laws require that contracts related to most real estate transactions be in writing. Real estate contracts for terms of more than one year must be in writing.