clarity of the leases is key for Real Estate Investors (and everyone on the planet) The standard definition of a land lease is pretty cut and dried: A lease is a contract. The contract gives the lessee (tenant) the right to possession and use of an asset (home, place of business, etc.) for a specific period of time. In exchange for the possession and use, the lessor (owner) receives payments during this period of time.
Ah, but the devil is in the details of these leases! Often, if you do not pay attention to language, an agreement can become something other than cut and cried!
An advantage of renting both parties clearly written. If you are a landlord, you receive a fair return for the property you have rented. If you rent, you get the use of the property for a fair rent.
On the other hand, a poorly written lease a recipe for a large number of personal financial problems and headaches. For example, if you are a landlord, you may find yourself with a property that produces little income and / or assessment. If you rent, you could end up paying a rent that is excessive in light of market conditions.
So from the point of view one of the parties, it is better to understand the lease before it is ever signed. Here are some rules to help:
Rule No. 1: Always get a written lease! I repeat it in writing! Never, never, never rely on an oral lease! These leases may be applied, but they are much more difficult to prove because nothing is written and no one has a physical basis for judging the validity of the agreement. good business sense requires that leases and contracts must be written in detail.
Rule No. 2: The language of the lease should be as clear as possible. If someone offers you a lease with terms that are vague or confusing, your ears should draw the possible financial risk. Insist that the language be rewritten so you are quite clear about what rights and responsibilities of each party were.
Rule # 3: The lease should clearly define the rights and responsibilities of landlord and tenant. Definitely avoid generic "boilerplate" lease. In addition, a generic form can be compatible with your state and local laws and provide reasons for breaking the agreement. A lease should always be custom-tailored to a specific property and your needs.
Rule No. 4: The language of lease can be easily interpreted and applied by a third party (courts, etc..) If you need to go to court to take care of violations of rent you are asking the court not to have the difficulty understanding the terms of the contract. Otherwise, things can go in your favor.
Rule 5: The lease should include consequences for violating the terms (by default, etc..) There should be clear penalties for violations of the lease (eg, late payments, returned checks, etc. .) If such sanctions are not clear, then you can have a devil of a time in collecting what is done (if you are the lessor).
Rule No. 6: The lease sets out the manner prescribed dispute resolution. To address the potential problems of rent, you want be sure of a settlement mechanism (law firm lawyer, etc.) included in the lease language. In this way, both parties understand clearly how they can resolve any dispute.
Rule 7: Make sure you get the full lease. When someone offers you a summary of a lease or simply the first one or two pages, insist on receiving full rent. Without the full rent, you can register for the trip instead of a rough ride quality.
Rule No. 8: read every word of the rental! You can find terms that are unacceptable, and you may want to change some of the language or add additives. Of course, the terms are often subject to negotiation between the landlord and the tenant.
Rule No. 9: Always have your legal advisor.
Posted on June 13, 2010.
