Lease and rent agreement is an important aspect to be considered before signing an agreement. However, signing a lease and rent agreement or commercial rent agreement is never an easy task. There are lots of things which must be considered before giving it a final shape. It’s not only an agreement but it’s also legal security to avoid any misunderstanding between the owner and the tenant. Clarity of the thoughts is always required, be it any discussion. The key point is, these discussions must be documented. Below indicated points could be a small list to make things crystal clear;
- Parties to the lease
The lease agreement should have the names of the landlords and tenants who are bound by the agreement.
The Agreement should have precise and accurate details of the property mentioned in the lease agreement. It should be such a way that in the address apartment number, flat number, name of the society, the nearest prominent landmark should be prominently displayed.
- Terms of commencement
There should be a clearly stated clause which should indicate terms of the commencement to the end of the end agreement done.
- Terms of rent
All kind of amounts be it Rent, security deposit, maintenance, tax, Electricity or water bill, any other amount should be mentioned in the agreement. There must be a dedicated clause mentioning the day of the month rent would be due, where the rent would be sent, and how it would be accepted (by check, by automatic draft, etc.). The terms for late rent should also be in this portion of the agreement.
It should also contain the things which would not be covered under maintenance by the tenant.
- Rent Appreciation
There should be a clause indicating that on year on year basis that particular percentage hike on the existing rent would be acceptable. The same would be fixed in consideration of market inflation.
- Termination and Notice period
With the start and end of the lease, there should be a clause which should explain the notice period from either side of the parties. This should also mention that once premises would be vacated, within that particular time security deposit would be returned by the landlord.
- Security deposit details
The amount of the security deposit which could be in the form of rent advance, lease amount, how it is to be paid, how it would be returned, and the terms of its future release should be specified in the lease agreement. It should also mention that amount deposited as security would be returned with any kind of interest rate or not. If the amount would be returned with interest than the percentage should be decided and mentioned in the agreement.
- Occupants of the property
The lease agreement should list the names of every person who will regularly occupy the property and what happens if a person stays for more than a certain length of time.
- Repairs and damages
Preferably photographs of the various places (Internal or External premises) should be taken and should be kept with the file of the agreement. The condition of the property should be noted as well as the tenant’s and landlord’s responsibilities for repairs and problems with the property. The lease agreement should also describe whether the landlord or tenant is responsible for damages to the property.
- Alterations to the property
The lease agreement should describe what, if any, alterations the tenant may make to the property.
- Right of entry
The lease should include a clause that allows the landlord to enter and inspect the property with reasonable notice. The terms should define reasonable notice and explain the rights of the tenant. However, ass rights to allow entry of any third personnel not mentioned in the agreement should be reserved by the tenant.
- Right to renew the lease
The property might require a longer duration tenancy than usual hence there should be a clause which should mention that the agreement could be renewed at the end and the same could be done on mutual agreement with the tenant and the owner of the property. Ideally, a new lease agreement will be signed each time the tenant renews.
- Right to sublet the space
If the tenant has the right to sublet the property to another person, the lease agreement should spell out those terms.
- Parking restrictions/rules
If the property has parking or offers parking in a designated spot, those terms should be listed in the lease agreement.
- Possessions
If certain possessions, like water beds or grills, are not allowed on the property, those terms should be listed – along with the consequences of those items cause damage to the property.
- Property rules
If the property is a multi-unit, the landlord may specify rules that govern behaviour on the property such as avoiding loud noises after 10 p.m. or not doing vehicle repairs in the parking lot etc.
It’s preferable to indicate the nature of the business and related services which would be offered in a rented place. However, there should be a clause that these services are subjected to get added or removed as and when required.
- The legal dispute related to property
It should be mentioned that the property is not under any kind of legal dispute or under any kind of pending legal case which might affect the possession of the property on later cases.
- Illegal activity inside the premises
It’s preferable to indicate that no illegal activity which is not acceptable under various sections of legal jurisdiction would be done in the rented premises.
- Place of jurisdiction to be mentioned
There is no intention nor any kind of prediction that any kind of legal dispute would take place but in case such happens, place of the jurisdiction should be mentioned.
