A lease is an agreement between an owner of property and another party who wants to pay for the use of the property for a specified period of time. Leases can involve various real estate such as land, houses, condominiums, or apartments. A lease is a binding contract and is written to spell out all the terms agreed to by the parties to the lease.
Generally, the property owner is referred to as the lessor and the renter of the property is the lessee. A lease may be arranged for either a short or long term. In return for certain usage rights, the lessee agrees to pay a specific amount of money periodically, most often monthly. In most cases, the periodic lease amount will not change for the life of the lease unless there is a clause in the agreement that incorporates an inflation or acceleration rate at certain intervals. A lease will contain the signatures of both lessor and lessee to signify their agreement to the lease terms.
A lease will specify when the payments are due and what penalties the lessee will incur if the lease payments are not remitted on time. Laws about non-payment vary from state to state, but after a period of no lease payments, there will be a legal process for the lessor to recover the property and evict the tenant.
A lease will include a starting and ending date. It will clearly describe the property to be rented and any amenities or appliances. A security deposit may be required by the lessor. This deposit guarantees the lessor that the lessee will return the property in good condition and the deposit may be forfeited if this doesn’t happen. In some situations, the lessor may repair or restore the property to good condition, deduct the costs from the security deposit, and return the balance to the lessee. Leases often allow for “normal wear and tear” when describing the condition in which the property must be returned. Most leases include restrictions against subletting without the written approval of the lessor.
In a residential lease, there will also be provisions for what is included in the lease payment. Frequently, utilities such as garbage service, water, and sewage are included because the property owner is billed for the entire building or complex and not per unit. Electricity, telephone, and cable or satellite services are typically set up and paid by each lessee individually. A residential lease will often include a clause limiting the number of persons who may occupy the unit. Pets are most always restricted, and, if permitted, will probably require an additional security deposit to benefit the lessor in the event of damage caused by the pet. The lease may permit the use of a parking place or garage for the lessee’s vehicle.
If the lease is for a single family home or other unit with a yard or garden, there may be a clause to specify the responsibility for yard maintenance. If the property is part of an owner’s association and subject to its rules, those rules will be incorporated in the lease by reference.
Access to the residential unit permitted to the lessor will be clearly stated in the lease. In general, the lessee is considered to be entitled to “quiet enjoyment” of the property as long as the terms of the lease are met. In some cases, the degree of access is covered by state law. If there are repairs necessary, the lease may call for repair requests to be made in writing and prohibit the lessee from attempting repairs. Some leases call for an inspection or inventory prior to the lessee taking possession. Photos or video of the property protect both parties from later misstatements about what did or did not exist at the beginning of the lease.
If you are contemplating leasing a home or apartment, read the lease agreement carefully before you sign it and make sure you understand clearly all the clauses it contains. If there is anything confusing, get it clarified before you sign your name. Leasing can be a pleasant, straightforward process or a nightmare. The difference comes when one or both parties don’t live up to the lease terms.