Lease agreements are a big deal. No matter if you’re a landlord or tenant, both parties have to understand what they’re getting into. There are different types of leases that serve different purposes. A harmonious relationship between the two can be achieved through proper communication and understanding these different types. We’ll also take a look at all the crucial elements for a lease agreement, and some other terms you may want to include in there to make things easier.
Types of Leases
There are several types of leases, each serving a distinct purpose based on the needs of the landlord and tenant. Below are the common types of leases you may encounter:
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- Fixed-Term Lease: A lease that lasts for a specific amount of time. Commonly one year. It’s a straightforward option that provides both the landlord and tenant with stability.
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- Month-to-Month Lease: These leases offer more flexibility since they automatically renew each month unless terminated by either party. Great for short-term rentals.
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- Commercial Lease: Business agreements made between a tenant and landlord. Unlike residential leases, these have different terms, conditions, and aspects to them like zoning requirements and commercial use permissions.
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- Sublease: This is when the original tenant rents out their place to another person while still being under contract with the landlord. To make sure everyone understands their responsibilities, clear terms are required.
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- Lease-to-Own: At the end of this lease term, the tenant has the option to purchase the property. It’s perfect if you plan on buying something but need time to prepare financially.
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- Percentage Lease: The rent in this lease is based on a percentage of sales made by your business. Something common in retail businesses alike.
Elements of Lease Agreement
A Lease Agreement is so much more than just a piece of paper. It’s an important document that outlines the rights for both the landlord and tenant, and their responsibilities. Including clear and comprehensive terms is a must for avoiding misunderstandings and ensuring a smooth rental experience. Next are some essential elements that should be present in a lease agreement:
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- Rental Amount: The rental amount is due every month. It should be paid on the first of every month and can be done through a preferred method of payment.
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- Security Deposit: There will be a security deposit amount that you should know about. This will take care of any repairs that need to be made, and we’ll give it back once you move out.
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- Maintenance and Repairs: If something breaks let us know. We’ll take care of it! However, if anything was noticeably damaged by you then the cost will come out of your pocket.
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- Use of Premises: Do whatever you want here as long as it’s legal.
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- Pets and Alterations: Keep all alterations on hold until we talk about them, but don’t even think about bringing pets in!
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- Utilities: Electricity, gas, water, internet; all on us. Don’t go crazy though or else we’re gonna have to start charging you.
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- Termination Conditions: Either party can cancel if they want to. We just ask that you tell us when you plan on going so we can get everything straightened out.
5 Important Terms to Include in your Agreement for Lease
Once you’ve locked down the basics of a lease agreement, it’s time to go deeper. Consider other terms that could keep things harmonious between you and your landlord and protect your own interests. Here are 5 essential terms to consider:
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- Names of All Tenants: The names of all adults living in the rental space must be listed, making them legally responsible for the terms set out in this agreement. This includes the full amount of rent and fair use of the property provided. If any accidents or missed payments occur, legal firms can take action against these individuals. This is an extra security for you as a landlord.
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- Limits on Occupancy: The number of people staying in your unit should also be clearly mentioned. Only those who signed the lease, along with their minor children, should be allowed to live on your property. This prevents unauthorized usage and upholds your right to choose who stays there. It also gives you grounds to evict any tenant who decides to move in a friend, relative or random person without permission.
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- Term of Tenancy: You have two options here, a fixed term lease or month-to-month rental agreement. No matter what you choose, specify it and state any renewal terms if that applies to you. This gives both parties an understanding of how long they’ll be involved with each other and when it’s time to say goodbye or continue.
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- Rent Details: Be sure that every little aspect about paying rent is clear here. Amount due for rent, payment methods that are acceptable, late fees if there are any and others related to financial transactions that would bother you if misunderstood should be detailed here. Of course if there’s a grace period during late payments make sure you mention that too (if applicable). Lastly point out how you want bounced checks dealt with and what could happen if someone doesn’t comply.
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- Security Deposit: Have a section where the security deposit goes into detail. Here mention things like amount requested by tenants and how they could get it back after moving out as well as deductions made under certain conditions. Some non-returnable fees might have to go here too so this part won’t lead into confusion and disputes later on.
Conclusion
When agreeing on a lease, landlords and tenants must consider many things including a consultation with a Commercial Lease Lawyer In Sydney . All of which are important to avoid disaster later down the line. This includes understanding the types of leases, essential elements, and significant terms that need to be featured in the lease agreement. While doing this can be challenging, it is necessary to ensure that both parties’ interests are met. It’s also recommended that you consult with legal professionals too. They can make sure you aren’t missing anything and save your butt if something goes wrong.