When you have a property and you think about renting it out, you need to have lease agreements to will protect both you and the tenants’ rights. The agreement would act as a legal document that will clear things up when things go south.
When you have the agreement, you have a legal rights (and power) that will protect everything. So, what should you know about the agreement?
What to Know about Lease Agreement
So, what is a lease agreement, anyway? It refers to the legal document that outlines the rental terms between the owner (known as lessor or landlord) and the tenant (known as lessee or renter). The terms are typically concerning the property, whether it’s residential or commercial type. The agreements can also be referred to as lease forms or apartment leases.
The key to successful real estate investment is creating an effective (and also thorough) agreement. You want to protect your rights as the owner, but you also need to make sure that the tenants’ rights are covered and protected too. The document should be clear and thorough, with easy to understand language.
It’s possible to negotiate the terms, as long as both parties don’t mind. But if you (as the landlord) don’t want to negotiate the requirements and terms, that’s still okay and acceptable. Basically, once both parties agree and sign the agreement, then it becomes a (legally) binding document.
Lease vs Rental Agreement
Most people think that lease agreement is just the same as rental agreement. Both of them are often used interchangeably. But in reality, both of them are different. They aren’t much different, but they do serve different objective and purpose.
As it was mentioned before, a lease agreement is a written document, or a contract, between the landlord and tenant, giving the tenants the legal rights to live and stay without a property within a certain fixed time period, generally between 6 months to 12 months period.
A rental agreement, on the other hand, is almost similar to the lease contract. However, the biggest difference would be about the length of time period. Whereas the lease agreement would be long term (6 to 12 months), the rental agreement is for shorter time, typically only 30 days. That’s why rental agreement is often referred to as month to month contract.
The rental agreement would renew automatically at the end of each month (or each term period), unless the landlord or the tenant has something to change. Tenants and landlords have a flexible freedom with rental agreement, as they can change the terms (of the agreement), provided that appropriate procedure notice is done and implemented.
In reality, you can lease all kinds of property, even boats or cars. However, lease agreement is most commonly used for property – whether it’s for commercial or residential. There are some most popular and also common lease types:
- Condominium lease, for residential property sharing some amenities of the buildings with other inhabitants or tenants
- Commercial lease, for properties for business, such as offices
- Parking space lease, which applies for parking a car (or any vehicle) within a private property
- Month to month lease, or also known as the rental agreement
- Weekly lease, which is often used for vacation properties, such as a villa
- Standard lease, which usually applies for single family apartments, homes, or other types of residential properties
- Room lease, which is about leasing one room located within a house
Lease Agreement’s Elements
Depending on the lease types, the terms within the lease agreement can be different from one another. It also depends on the landlord and tenant’s specific needs r requirements. However, every agreement should include some of these basic elements:
- Contact information. The information is about the landlord and all adults living at the property
- Property details. It should describe the property completely: the square footage, the address, amenities, and also other crucial identifiers
- Lease specifics. It includes the lease type (residential, commercial, etc), the terms (like beginning and end date)
- Rent details. You should include the amount of the monthly rent and also the due date on every month
- Obligations and rights. The information should include the rights for both tenants and landlords written in detail, like giving notices or entry
- Fees and deposit. The information should be about the security amount or other extra fees or other deposits
- Occupancy limits. It should provide the specific info about how many people are allowed to live within the property and who they are specifically
- Dispute resolution. It should outline the steps that would be taken to resolve dispute over the lease agreement or the property
- Pets. It should provide information whether pets would be allowed or not within the property. And if pets are allowed, there would be specific regulations concerning the pets within the property
- Restrictions. You should list the restrictions that tenants shouldn’t do, like making changes that can cause permanent outcome to the property or installing extra appliances that may also change the structure
- Utilities. The agreement should state who would be responsible for paying (which) utilities
- Repair and maintenance. You can list what kind of repair and property maintenance to provide, and whether the tenants have the rights to request for checking, repair, or maintenance.
Never underestimate the power of an agreement because it is actually legally binding. If you are clueless about drafting the proper lease agreement, you can hire and consult a real estate lawyer to help you.