What Does Lease Agreement Mean?
Lease relations are widely practiced in contemporary society. We are talking about those moments when the owner lends his property to another person for temporary use. In order to avoid misunderstandings related to the term of payments or permitted actions with the object, it is necessary to conclude a lease agreement. Its advantage is that the document specifies all the nuances for both parties to the transaction. If the tenant or landlord has a claim, it is not difficult to prove that they are right.
Types of Objects for Lease Agreement
A lease agreement is made for the transfer of movable and immovable property. It must be reviewed and signed by both parties to the transaction. The agreement can be concluded for the following:
- warehouses and office premises;
- industrial and other enterprises;
- residential premises (houses, apartments).
It is recommended to think carefully about each clause of the agreement to avoid unpleasant situations in the event of force majeure. This applies to both parties, that is the lessor and the lessee.
Lease Agreement Template: Main Points in the Document
Have a look at the lease agreement template so you don’t make any mistakes when drafting the document. In fact, there are many variations provided. Specific terms and conditions depend on the object that is rented out. The fact is that each agreement adds certain points that are unique to movable or immovable property. If we consider the general points, however, they are as follows:
- the subject matter of the agreement;
- the parties to the deal;
- the term of the agreement;
- settlement features;
- rights and obligations of the parties;
- liability of the parties;
- early termination of the agreement.
Each category must be entered as accurately as possible. Otherwise, there may be lengthy litigation if there is a disagreement on a particular issue.
Subject Matter of the Agreement
Here it is necessary to specify in detail what property is transferred to the tenant. Otherwise, the document will be meaningless. Let us look at the car lease agreement sample. For a vehicle, you need to specify its type, color, license plate number, and vehicle identification number. If the property is being leased, its address, area, and general condition are required. If equipment is being transferred for use, it is necessary to review and indicate its number.
Parties to the Deal
This refers to the lessor (the owner of the property) and the lessee (the person who will use the property and pay for it). It is necessary to specify their full names, and passport data. If it is an organization, enter its name and state registration certificate.
The peculiarity is that the lessor must confirm the ownership of the property. For example, specify the series and number of the certificate of registration of a car. For premises, the document number and the date of the purchase and sale transaction are required. This is discussed in more detail in the room lease agreement example.
Term of Agreement
As a rule, the parties choose the parameter on a case-by-case basis. If the term is not specified, it does not mean that it is open-ended. In such cases, the lease agreement is valid until the end of the current year. It can also be terminated if one of the parties wishes to do so.
The amount of payment is negotiated by the parties. It is recommended that the price be stated precisely. If there is no information about the amount of payment, the cost will be calculated according to market averages in the event of a dispute.
The section should clearly state when and how payment should be made. For example, by the 20th of each month in cash, goods, or services.
Rights and Obligations of Parties
The main obligation of the lessor is to transfer the property to the lessee within the specified period in the proper form and condition. For example, it is not possible to hand over a warehouse without doors or a roof, or a car without a windshield. The lessor is obliged to fix the defects that have not been agreed upon. It may include repairs or payments for the work done by the lessee, as well as replacing the object.
The person who has accepted the property is responsible for its preservation. The lessee also carries out minor routine repairs. When using residential/office properties, the lessee is usually responsible for paying for utilities.
Liability of the Parties
Each party to the deal must act in good faith. Otherwise, there are fines, penalties, and interest, which must be indicated in the document. Additional methods of intervention can also be added. For example, the right of the landlord to close the warehouse with the lessee’s goods in case of untimely payment can be added. More details can be viewed in the commercial lease agreement template.
Early Termination of Agreement
The cases when the agreement can be terminated early are described here. For example, if the landlord has provided a facility or equipment that is not suitable for use. Also, late payment by the lessee more than twice in a row, damage to the property or failure to repair may be considered.
Even if the contract is terminated, the parties are not exempt from liability. For example, the tenant will still have to make overdue payments or repair the damaged property. Everything is spelled out in more detail in the lease agreement templates.
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PandaDoc: Best Software to Draft Lease Agreements Fast
If you want to minimize the time it takes to draft agreements, use PandaDoc. It is adapted for computers and smartphones, so you can react to changing situations as quickly as possible. Thanks to the built-in lease agreement templates, you can use a preset form by simply inserting your data. Certification is performed by means of an electronic signature, after which you can send the prepared document to the other party via e-mail. Everything is as simple and convenient as possible.