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Basic Components of Real Estate Property Lease

Why do you mean by Lease?

Lease is a contractual agreement through which a person convey his real estate property to the other person for a limited period of time, subject to various conditions.  Property will be transformed in exchange for something of value, but still he retains the ownership.

For giving a property on lease, it should be a legal property.  A lease agreement is considered when the property owner (lesser) offer his estate to another person (lessee).  The lesser must authorize the lessee to possess and use the property owned by the lesser for a certain period of time without gaining the ownership.  A lease agreement also includes a statement on consideration; it means that the lessee must pay something in value for using the real estate property of the lesser. 

In general, no written agreements are filed to lease a property.  But it is very essential to avoid certain disputes and it should be signed by both the parties.  Hence, Pacifica Companies provide you with certain components for preparing an effective lease agreement.

Major components that must be included in a property lease agreement:

Name of tenant

This means the full name of the tenant including the surname who is going to reside in your premises.  The person whose name is entered in the agreement is called as tenant and he is solely accountable for all the terms in the lease agreement.  Be sure to include his complete name in the agreement before allowing him to use your real property.

Lease Term

Lease term is the duration of the agreement or the period of the agreement.  This term states the starting and ending date of the agreement.  By using this you can lock the tenant at least for 1 year.  Also, you will have a great option to let him out by giving a 1 month prior notice.


Rent Payment

Include the amount of rent of a real estate and the due date.  This term also states the mode of payment whether by cash or check or through any other mode.  You can also add an additional clause about the late rent or rent shortage.

Fees, Fines, Charges

This term mentions the charges that the tenants are responsible for due to late rent, rent shortage, bounced check, court fines etc.  This statement also includes the utilities that the tenant can use if the charges for utilities are not mentioned in the rental charge. 

Security Deposit

The owner of a real estate property has a right to charge an advance payment of minimum 2 months rent.  This is nothing but a security for damages or unpaid bills.  You have to mention how much the deposit will be? When it will be returned? Which charges are deducted from the deposit at the time of refund? It is very important to mention about the interest on the deposit. 

Number of Occupants

Tenant should state the total number of persons going to use the real property.  Here, you can use a special clause to mention the limit [Total number of occupants]. 

Hazardous Materials

The owner should mention that the tenant should not keep or have hazardous materials on or around the property.  Materials may be dangerous, inflammable or explosives that cause un reasonable fire around your property.

Responsibilities

This statement includes each and every responsibility of both the owner and tenant. It should be mentioned who is going to share the responsible for certain repairs, maintenance or damages. 

Usage

This clause determines certain factors as:

  • The property is used exclusively by the tenant as per the agreement. 
  • No permission is granted to illegal businesses. 
  • Using the property for commercial purpose along with the residence is not     allowed.
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