If you own a small building in the United States, you may have found the process of creating a lease a bit confusing. You may have considered hiring an attorney, but balked when you saw the prices that they charge. Fortunately, there are online companies that offer a tool to build a lease.
Before you start taking tenants, it may be helpful to know a thing or two about how leases and tenancy agreements work. One of the most important things to know is the role and importance of the parties signing a lease.
There are two different kinds of contracts a landlord and tenant may sign. One is a tenancy agreement, and the other is called a lease. A tenancy agreement generally goes for a period of 30 days and is renewed at the end of that time period. The property owner can change the terms of the agreement from month to month so long as they notify the tenant. There are two basic parties to any lease agreement, the lessor and the lessee.
The lessor is the person or business that owns the property. If you have set up your business as a sole proprietorship or DBA, you will sign the lease as an individual. If you have set yourself up as an LLC, partnership, or corporation, you will sign as an agent or representative of the corporation.
The lessor agrees to lend property, whether it is a residence or business, out to another party for a certain rental price which is to be paid at set intervals.
In some cases, a property may be rented out by the month. In most cases, a residential property will be rented out for a year. A typical business lease in the United States will last from 3 to 5 years.
The Lessee or Tenant
The lessee is the individual or entity who will use or occupy the property for the amount of time specified on the lease. When a property is rented by a corporation, LLC, or partnership for business purposes, the lessee will be considered the business, and the person who signs it will be doing so as an agent of that business. The person who occupies the property will be the tenant. If the business is operating as a sole proprietorship, the owner will simply sign with their own name.
Who is considered a Lessee or Tenant
According to the website ezLandlordForms, Each state has its own specific laws pertaining to rental agreements. In most cases, a residential lease must be signed by every adult who occupies the property. Any children or pets who occupy the apartment must be listed on the lease.
In some cases, a third party will act as a co-signer on a lease. The co-signer will not live or do business in a property, but they will share equal financial responsibility with the lessees. This does not mean they will pay rent. It means that in the event that the lessee defaults on the rent, the lessor can require the co-signer to pay.
What a lease or tenancy agreement Should Include
Any lease should include the specific details of the terms of the rental agreement. It should state-specific conditions for the extension or early termination of the lessee’s occupancy. It should also state whether or not the lessee is allowed to have pets, aquariums, or water beds in the apartment.
Renting real estate can be very profitable. Having an up to date well-written lease can make everything go smoothly for both the landlord and the tenant.