What is a Lease Agreement?
A lease agreement is a legally binding contract between a tenant and a landlord, which sets out the agreement between the two parties. When you rent a real property like a condominium unit or apartment, the landlord will ask you to sign a lease agreement to ensure you follow the rules of the lease.
Oftentimes, lease agreement is used interchangeably with rental agreement but you should take note these are two distinct agreements.
Lease agreements set out the rules regarding the term of the lease, which can be short-term (6 months) or long-term (1 year and beyond), including rules regarding pets, visitors, and maintenance. On the other hand, rental agreements cover personal property and shorter tenancy on real property– usually 30 days.
It is very easy to feel overwhelmed if you’re a first-time tenant. But you don’t have to be afraid of lease agreements. Here, we will take a look at a closer look at what you need to know in a lease agreement.
Purpose of a Lease Agreement
The main purpose of a lease agreement is to bind the tenant and landlord with the terms of the lease. A lease agreement is unique for every landlord but most of them contain similar provisions. Some examples might include:
- The name of the parties
- Term of the lease
- Amount of rent and acceptable payment method
- Repair and maintenance
- Activity restrictions
- Rules on pets and visitors
- Damages, penalties, and other fees
Normally, you don’t need legal assistance to understand a lease agreement because it is written in simple language. What is important is that you have a clear idea of what is expected of you as a tenant.
If you find ambiguous terms in the lease agreements don’t be afraid to raise questions and clarify information before signing anything.
A Legal, Binding Lease Agreement
A lease agreement is a bilateral contract which sets out not just the rights and obligation of the tenant but also of the landlord. For example, your obligation is to pay the rent and if you don’t, the landlord has the right to demand payment and impose necessary penalties in case you’re late.
Another example is that the landlord will ensure you have the right of privacy while you are staying in the apartment as you would have in your own home. Although not always expressed in a lease agreement, it is implied and provided for by legal statutes.
However, a lease agreement is only binding when you sign it. At the bottom of the document you should be able to see the signature block where you can sign. Signing it means you have agreed to all terms and conditions of the lease, and makes the document legal and binding.
A legal and binding lease agreement becomes a source of action. In case you violate the terms of the lease, it entitles the tenant to take necessary legal action. Conversely, you can sue the landlord if he violates your right as a tenant.
That is why it is very important that you understand what is contained in a lease agreement for your own protection.
Is there such a thing as a Verbal Lease Agreement?
While it can be tempting to skip all the paperwork, a lease agreement has to be written in order to be legal and binding. If your lease contract is oral, you are still protected under tenants-rights laws that exist in every state.
However, you should take note that an oral contract is hard to prove in court and oftentimes put tenants in danger. Some states do not allow verbal agreement lease agreement because of the risks associated with it.
Types of Lease Agreement
There are two types of lease agreement: commercial and residential. Commercial lease agreement is applicable for tenants who want to lease a space for business purposes.
Residential agreement is applicable if you want to lease a property where you can stay for over a period of time. The terms and conditions of the lease agreement may vary depending on the type of lease agreement.
Free Lease Agreement Template
Here is an example of a lease agreement form:
This Lease is made on ( DATE ) BETWEEN ( NAME OF LANDLORD ) AND ( NAME OF TENANT ).
- PROPERTY: The LANDLORD agrees to lease to TENANT and the latter agrees to lease from LANDLORD, The landlord agrees to rent to the tenant and the tenant agrees to lease from the landlord, ( DESCRIPTION OF PROPERTY AND COMPLETE ADDRESS ). This rental unit will be referred to in this lease as the ‘Apartment.’
- TERM: The term of this lease is ( months/years ) starting on ( date ) and ending on ( date )and will only charge from the date on which possession of the PREMISES is transferred to the TENANT. While the LANDLORD is not responsible for failure to give TENANT possession of property the TENANT may cancel the lease 30 days after the former fails to do so.
- RENT: The TENANT agrees to pay ( amount )as rent, to be paid as follows: ( amount )due, in advance, on the ( date ). The first payment of rent and any security deposit is due by ( date ) prior to moving in. The TENANT is responsible for a late charge of ( amount ) in case the monthly payment is delayed for more than 15 days, which shall be included in the rent payment for the month when the TENANT has remised the obligation to pay.
- SECURITY DEPOSIT: The TENANT will deposit the sum of ( amount )with the LANDLORD as security that the TENANT will comply with all the terms of this Lease provided further that such money shall be returned to the TENANT the day after the lease. The LANDLORD may use the security deposit to pay for repairs for damages in the property which are caused by the act of the TENANT. In case the LANDLORD sells the property, the LANDLORD will transfer the deposit for the benefit of the new owner who shall have the same obligations as the LANDLORD.
- OBLIGATION OF TENANT: The TENANT shall keep the Premises in good condition and shall be responsible for the necessary repairs, replacement, and damages caused by TENANT’s fault. The TENANT will refrain from storing in the property anything dangerous, flammable, explosive, or anything that will increase the LANDLORD’s insurance. The TENANT shall also be responsible for harm, injury, and damages caused to other persons in the property due to his or her fault or negligence.
- OBLIGATION OF LANDLORD: The LANDLORD will pay for the following utilities: Water and Sewer, Electricity, Garbage Removal, Gas, Oil.
- ALTERATIONS: The TENANT cannot make any alteration or improvement without the consent of the LANDLORD.
- NO WAIVER: Failure to enforce any terms of the Lease does not tantamount to the waiver of rights nor shall it be deemed to be an abandonment of the right to enforce the lease.
- NO ASSIGNMENT OR SUBLEASE: The TENANT shall not sublease the PREMISES or assign this Lease without the written consent of the LANDLORD.
- NOTICES: All notices provided by this Lease must be written and delivered personally or by certified mail, return receipt requested, to the parties at their addresses listed above, or to such other address as the parties may stipulate.
- SEVERABILITY: Should a stipulation of the Lease be declared invalid by the effect of the law, a judgment, a decision or a regular act emanating from a competent authority, the validity of the other stipulations will not be affected.
- ACKNOWLEDGMENT: The TENANT acknowledges having read all of the terms and conditions of this lease and the attached rules and regulations; and that no oral representation has been made to him or her other than what is contained in this agreement.
- ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereto and supersedes any and all prior understandings, arrangements, and agreements between the parties.
- SIGNATURES: The LANDLORD and the TENANT agree to the terms of this Lease.
LANDLORD’S SIGNATURE __________________________
TENANT’S SIGNATURE _________________________