If a property lease arrangement is not drafted carefully, it won’t really constitute a legally binding contract. There are lots of components that have to be included in a well-drafted property lease arrangement to ensure its viability. Luckily for first-time landlords, the practice is not too intricate or packed with legal jargon. If you strategy lease drafting with the right information you’re able to create a transparent, powerful, binding rental to your property property.
Provide a legal description of this property in the very first paragraph of this rental arrangement. Even though a street address or device number often suffices for structural leases, a property lease arrangement demands a more exhaustive legal description. You have to mention the property’s exact boundaries as given by coordinates on a property survey map or on the property’s deed.
Use specific, constant nomenclature when referring to parties involved in the rental. In other words, you wish to consistently and specifically refer to the”renter” and”landlord,” or use a business name or the landholder’s title in place of the generic”landlord.” Avoid using vague pronouns such as”us,””them,””that he” or”you.” These words are not specific enough and will frequently weaken a rental arrangement.
Establish the lease’s length clearly and concisely. If you do not specify how long the tenant will lease the property, then the rental arrangement is invalid.
Add any essential clauses regarding profit-sharing if you expect the tenant to give you a proportion of their property’s profits. If the property is being leased for agricultural purposes, you might wish to consider incorporating profit-sharing clauses. According to the University of California’s Small Farm Program, rents that include profit-sharing can be helpful in the event the land is fertile and the landlord and tenant both take proactive measures toward ensuring that a high crop yield. But, remember that profit-sharing agreements are usually coupled with a very low or nonexistent monthly rent, thus if the harvest fails, you won’t get rent from the tenant. Make sure any profit-sharing provisions are clearly worded, incorporating exact profit percentages and itemizing the tenant’s responsibilities for cultivating and harvesting the property.
Detail each party’s financial responsibilities for any possible construction or landscaping on the house. If your property lease arrangement enables the landlord or tenant to construct commercial or residential structures on the house, you must explain who’ll pay for these developments. In accordance with”California Real Estate Property Management,” you cannot force a tenant to pay for developments unless the lease specifically indicates that the tenant is liable for specific itemized property additions.
Any included or excluded utilities. If certain water, electrical or gas utilities are not itemized in the rental, whoever uses the utilities will be legally responsible for these invoices. Typically the tenant uses the utilities, but it can be difficult to show tenant usage in the event the house is shared by multiple occupants. This is why itemized utility prices are important in the land lease arrangement.
Schedule a consultation session with an attorney once you’ve drafted the rental arrangement. Here is the only way to know for sure that the rental is complete and legally binding. Even though it can be costly and time consuming to have a lawyer draft a rental from scratch, a simple consultation using your pre-drafted lease document will usually take around 15 minutes.