Why do I need a Lease Agreement?

Regardless if you are about to move into your first apartment or if you are leasing space for your expanding business, chances are that you will be signing a lease agreement. Before you do, however, it is wise to learn a little bit about that piece of paper that you are signing.

A lease agreement is a legal contract between two parties. For the most part this includes the lessee (this would normally be you or whomever is going to be the tenant) and the lessor (the person to whom you pay the rent). The document would also state the term of the lease; that is the amount of time which you are committing yourself to rent the particular piece of property. Most residential lease agreements are written to cover a term of one year. Commercial lease agreements can be written to cover terms of multiple years.

Listed in the lease should be the full names of the lessee (you) and the lessor (landlord). The exact address of the property that is being rented should also appear. The monthly rent that is to be paid must be clearly stipulated in the lease, as well as the dates in which this rent must be paid. Likewise, the starting date of the agreement should be made clear. As most landlords will usually ask for a security deposit, there should also be a clause stipulating that fact. Also, the terms for returning the deposit and reasons for its its forfeiture should also be included.

As the lease agreement is designed to be enforceable by both parties, ancillary clauses can also be added to protect both the tenant and the landlord. Restrictions on the use of the property or limitations on how, or if, it may be modified by the tenant can be included. An itemized list of appliances or equipment that are being included as part of the property can also appear. Similarly, an itemized list of any current damage that is already present at the start of the lease can also be added to protect the tenant from liability later on. Also, who is responsible for specific types of maintenance may appear as clauses within the lease.

In situations where the owner does not bar the tenant from making modifications or improvements to the property, one might find a clause related to leasehold improvements. This is the legal term used to describe just such modifications. These may include adding new carpeting, new windows, remodeling or other alterations which in some way improve the property or make it more useful for the use of the tenant. If the lease does not bar such modifications, it will likely include language stipulating that such changes become property of the owner once the lease expires.

There is no need to fear signing a lease agreement. Just remember, as with any legal document, it is extremely important to read and understand it before placing your signature. If something is not clear, or if there is something that you feel should be included, bring it up to the other party before signing. In the end, it will protect not only your landlord, but also yourself.