What Is A Lease

Category: Finance, Real Estate.

Whether you re a new landlord or property manager just getting your feet wet in the business for the first time, or a seasoned pro who has been dealing with renters for decades, it s vitally important that you have an in- depth understanding of the lease agreement. If you re considering breaking into the property management business, learning about leases is the single most important thing you can do.

Your level of familiarity with the basic lease agreement and its components is a factor that can make or break your career. If you have years of experience in the field, but you ve always used basic, or verbal rental, informal agreements, there s no better time than the present to upgrade to a written, comprehensive lease agreement that will help protect your property, and your livelihood, your investment. What is a lease? Let s start with the basics. Generally speaking, it s a specialized form of the standard contract. Most leases spell out the terms of the relationship between the owner/ manager of the property and the tenants.

Rather than spelling out the terms of a sale or a service agreement, the lease documents an agreement to allow the renter( or" lessee" ) inhabit the property for a specified period of time. Common elements included in lease agreements are the duration of the lease( month- to- month, a year, six months, etc. ), the lease renewal process, rules for the rental property, whether pets, payment terms, smoking, and other activities, businesses are allowed in the property, late- payment and non- payment penalties and procedures, and guidelines for vacating the property and returning the property to move- in condition at the end of the lease. However, it s important to make sure that the lease agreement you are using is in compliance with all of the local, and federal jurisdictions, state that apply in your area. Based on the needs of both the landlord and the tenant, the terms of a lease can vary considerably. Otherwise, you may be opening yourself up to legal liability if the lease is ever challenged in court. You also are agreeing not to change the terms of the lease until the current agreement has expired. As a landlord, you pledge to uphold your end of the responsibilities and duties set forth in the lease, as well as to adhere to the policies and practices you have set forth in the agreement.

Your tenant s signature on the lease confirms that your tenant will comply with all of the rules and guidelines specified in the document, keep current with rent payments, and leave the property in the manner described in the lease. Some landlords may have gotten into the habit of using simple leases, perhaps believing that it s just not worth the time and effort needed to create a comprehensive lease package. A legally- binding lease can be as simple as a basic contract handwritten and signed by both parties, or it can be as comprehensive as a multi- page package covering all aspects of life in the rental property. However, most legal experts agree that a more comprehensive lease package is your best bet. On the other hand, if you rely on a comprehensive lease package that clearly spells out all of your policies and expectations, it is less likely that you ll end up in court over a dispute. If your lease agreement does not spell out your exact expectations, you are leaving a lot to chance, problems and misunderstandings, and chances are will inevitably arise. Furthermore, you ll be less legally vulnerable with a comprehensive lease agreement.

Even more importantly, they re your best defense against bad tenants. For beginners, leases may be a bit intimidating, they, but at root re nothing more than specialized contracts. Every minute you invest in the process of building an airtight, legally, comprehensive- binding lease will pay significant dividends down the road.

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