The lease agreement guarantees the lessee to enjoy the property for a specific period of time and guarantees the lesser to take the specified payment regularly or on the specified period. Both the parties (who has the capacity) to the contract are bound by the lease agreement and the consequences of any of the parties failing to meet the obligation of the contract.
What is a lease?
A lease is a legal contract between two parties in which one party uses the building or land of another party for a fixed period of time by paying rent.
The person who owns the building or land is known as lessor and the person who takes the building or land on rent for a fixed period of time is called the lessee.
What is the lease agreement?
The lease agreement is a written contract between the lessor and lessee. This agreement states the terms and conditions of the lease. It states the time of regular payment, amount of payment and specified period unto when the lessee will pay the rent. The lease agreement is also known as a lease deed.
Specifications of the lease agreement
There are some specifications of lease agreement which are:
A Legal document
Once a person signs the lease agreement, it binds both lesser and lessee in the legal contract to follow the terms and conditions given in the agreement. This document can be used in the litigation as documentary evidence in case of any breach of contract.
If there is more than one lessee in the contract, the contract will bind all the numbers of lessees. It means all the lessees in the contract will be responsible under the terms and conditions of the lease.
An oral or written agreement
While making a lease agreement, it can be enforceable as an oral or written contract. But it should be noted that not all the states allowed the oral agreement because it becomes tougher to prove a lease without any written document.
So always try to make the lease agreement in writing.
Content of lease agreement
This agreement outlines the detailed obligation and responsibilities of the lessor and lessee.
- It provides the full details that have been agreed upon by the lessor and lessee.
- The amount of rent will be paid
- The date the rent will be paid
- Responsibilities of lessor and lessee if something happened to the property
Both the parties can alter the terms and conditions of the lease agreement before signing the same. But when the parties sign the document, the parties are not allowed to alter or change the terms and conditions of the agreement.
Types of lease
There are different types of leaves that are given in the law. Some of the types of leases put the burden on the lessee while some put the entire load on the lessor.
Absolute net lease
In the absolute net lease, the lessee is responsible for the property or asset. He will be responsible for entire expenses such as insurance, taxes and maintenance of the property. This agreement retires the owner of the property from taking care of any financial obligation related to the leased property. The absolute net lease is also known as a bondable lease.
Normally absolute net lease is used in the cases of large businesses.
Triple net lease
It is used in commercial real estate, not in residential. It does not work for the apartment or buildings.
In this lease the lessee pays
- Taxes of property
- insurance of property
- Property management fee
Modified gross lease
The modified gross lease transfers the entire burden of property to the lessor. The modified gross lease agreement contains the terms in which the owner pays all the insurance for the property e tax is of the property e and common area maintenance also. In this agreement lease, the lesser only takes the cost of interior maintenance and utility.
This agreement also specifies that the roof and the other structure maintenance of the building will be the responsibility of the owner of that property. The tenant will not be liable for any e roof maintenance.
Such types of leases contain high rates as compared to other leases because the owner of the property takes care of all the expenses related to the property.
The modified release is good for the tenant or lessee because he has no obligation to pay any taxes or any maintenance cost of the property. He can enjoy the property at the same rates to date which is written in the document.
Hindi full-service lease most of the expenses are taken by the owner of the property. There are fewer expenses that it has two to be made by the tenant such as data and telephone cost, otherwise, all the cost of the property will be paid by the owner. The cost paid by the owner includes common area maintenance, Texas, interior, insurance, utility and janitorial cost of the building.
Also as per the facilities provided by the landowner, the rate of this service is slightly high as compared to others.
All these are the main types of leases under law. The person can choose according to their comfort. If a person wants to take the building on the lease, usually he will choose a full-service lease.
Benefits of lease
The least provide many benefits for the lessee and lessor. It provides great peace of mind to the person due to its different benefits. So let’s discuss the advantages of leasing.
Once the deal of days is between lesser and lessee the lessee can enjoy his right to stay or do anything which is written in the lease agreement. The landlord of the property cannot disturb him till the expiry of the duration given in the contract if he is continuously paying the specified amount of money as consideration.
No increase in rent
The landowner of the property cannot increase the rent before the expiry of the lease. Once the agreement deed is signed between lesser and lessee the deed locks the monthly rent.
Rent controlled renewal
There are many rent-controlled areas in which the landlord can renew the lease at the same rate which are prescribed in that area.
Disadvantages of the contract of lease
It is less flexible
The lease agreement is not flexible as compared to the rental agreement. Suppose if you are paying 2000 rent for a building and suddenly the price decreases in your area; you will find yourself higher than others.
It becomes hard to move suddenly
Once you make the deal of lease with the person; you bind yourself to stay in that building for a certain period of time. Suppose you, get a job in another area and your deed is still continuing, in that case, your lease can turn into a hurdle.
Some of the landlords allow subletting in the lease which can help you to solve this problem.
Penalty on breaking a lease
There are major penalties for the breaking of the lease. If the tenant policy was to leave the place before the expiry period, he has to lose his deposit or sometimes he has to pay the rent throughout the date of expiry of the agreement.
A contract of lease is a promise between the lessor and lessee to pay the rent on time by taking possession of the property for a certain period of time.
The person can choose any type of lease according to his need. In my opinion, the lease is better than the rent agreement because it provides some safety to the lessee that he can enjoy his right to that property till the date of expiry.