Important Considerations in Drafting a LeaseReal Estate Influence
June 12, 2013 — 762 views
Drafting and signing lease agreements is the final stage of giving a residential or commercial property for rent. This agreement mentions the details of the rights and liabilities that the landlord as well as the tenant has during the lease period. That is why it is important to know the intricacies of drafting a lease agreement and reviewing a drafted agreement before offering it to the client.
Drafting a Lease for Rental Property
While drafting a rental lease, it is important to keep the essential points in mind in order to make sure that you do not miss any vital points. It can be a good idea to refer to other existing rental agreements. There are also many internet sites and office supply stores that have filled in the blank based lease agreement forms.
Some of the important payment terms that must be included in the lease agreement are the due date of rental rates, security deposit, mode of payment, late fee charges, grace period for paying the rent, penalty for non-payment, and the lease contract duration. Every aspect of the payments must be made clear. Make sure that you make it clear in the lease agreement as to who is liable to pay for the monthly utility bills.
Maintenance and repairs, pet allowance policies, tax payments, inspections, and subleasing are other aspects that must be clearly mentioned in the rental agreement.
Some Common Features of a Lease Agreement
Although the rental agreement norms differ in every country and state, there are some laws that are common for all lease agreements. Let us consider some of the common terms.
- Title – The title proves to the tenant, that the landlord is the lawful and valid owner of the property and is authorized to lease the premises. It is important for real estate agents to have this authorization to finalize the deal for the owner of the property.
- Tenure of Lease – The lease agreement will also commonly state the period of lease so that the tenant does not overstay the contract period and might be entitled to pay penalty in case he/she decides to leave early.
- Monthly Rent – The contract will clearly state the amount of rent to be paid by the tenant and the final date of payment, along with details of whether the payment has to be made through cash, check, or any other method.
- Deposit – The deposit amount that has to be issued by the tenant and the terms under which the money is refundable at the end of the lease period is mentioned.
Triple Net Lease Agreements
When lease agreements state that the tenant must pay the additional expenses like common area maintenance, building insurance, or property tax along with the normal rent, it is known as triple net rent agreement. This type of agreement is also known as NNN (net-net-net lease). The cost of repairs and utility expenses might also have to be paid by the tenant. The landlords are liable only for the repairs to the structure and the roof of the property and at times might have to cover parking expenses.
Commercial properties generally tend to be under the triple net lease agreement. Lease agreements will have to be drafted depending on the type of property you are leasing out.