A lease agreement is a formal agreement between two or more parties, allowing one party to take temporary possession of a piece of property in exchange for rent. In real estate, this treaty will be between the property owner and a renter referred to as the landlord and tenant respectively.
The tenant agrees to pay the landlord for a property or asset that will be used for a certain period of time depending on the terms of the agreement. If you’re about to sign your first lease agreement, and are wondering just what you’re getting into, here is some basic information you should know:
#1. What is the purpose of a lease?
A lease is designed to protect both the landlord and the tenant. It explains the length of the agreement, as well as the conditions and terms that both parties must comply with. If the landlord or tenant breaches the terms of the lease, the offending party may face legal consequences and the financial penalty for breaking a clause in the contract.
#2. Who signs the lease?
The lease is usually signed by the landlord or the landlord’s agent, as well as tenants over the age of 18 who will be renting the property. It is essential that all adult members residing in the property sign the contract. Here is an example why this should be done: If a couple move into your property, and only the husband puts his name on the lease, he is then accountable for paying the rent after the couple move in. But if the husband dies, his wife is not obligated by the terms of the lease because she never signed it.
#3. Do you need a lawyer to create the lease?
Several lease templates could be found online, and many of them do cover the bases quite well, but you should never rely solely on them. Each region has specific laws concerning fair housing and security deposits that have to be followed precisely.
It is recommended that you have a lawyer go over the contract before you sign it. It’s very important that your lease is legally accurate and well detailed so that you do not end up having problems in areas where you thought you were legally covered. If you’re a landlord, you will want to protect yourself from ‘very smart tenants’ who quarry on inexperienced landlords, and try to take advantage of flaws in lease agreements, and vice-versa.
#4. What to include?
Leases can contain several pages depending on the amount of details included. The more detailed your lease, the better shielded you will be. Notwithstanding, don’t confuse a long lease with a good one.
There is some information that should be in every lease agreement, but if you’ve hired a lawyer, you will not need to worry too much about this. As you gather more experience as a landlord, you will learn better what to include in your lease agreements and may not even require the services of a lawyer anymore.