Lease agreements are formal, legal agreements between two or more parties in which the owner of an asset, the lessor, allows one or more lessees to use such assets as if the lessees owned them. These documents are often drafted by landlords for their tenants and automotive companies for people who borrow their vehicles, for example.
Although they're widely popular in today's world of doing business, most people aren't caught up on lease-related literature.
How leases work. People and businesses alike often don't have enough money to buy physical goods, equipment, and buildings that they want to use. Rather than saving up money to purchase them outright, they typically seek out other owners of such assets and attempt to rent who are willing to rent them. These assets' owners typically want their borrowers to handle their assets in certain ways. Further, they want to make sure that they're legally protected in the event that lease terms aren't adhered to. Leases almost always contain terms and conditions that borrowers must ascribe to. Further, leases serve as valid legal documents. Lessors are generally responsible for drafting leases and providing them to lessees for review. Lessors and lessees usually modify lease terms before agreeing to them. Sometimes, lessees bring their own leases to the table, though lessors have more influence in determining whether they'll honor lessees' lease proposals or not.
Lease vs renting. Although leasing and renting, as English words, essentially mean the same thing, the definition of the two words are different in the world of business and in getting an apartment. Rental agreements are legal documents that lay out the rules for the short-term use of buildings, equipment, or other assets. In most cases, rental agreements last 30 days or one calendar month. They are renewed on a monthly basis by the owners of the assets being leased. Leases, to the contrary, are virtually identical to rental agreements except they last for much longer - typically months or years at a time. For apartments, it's typically year to year. With rental agreements, asset owners are free to increase rents at the end of any month unless there are rent controls. Owners are not legally able to bump rents up in the middle of leases' terms. Lastly, rental agreements are typically renewed on an ongoing basis. In order to end rental agreements, one or both involved parties must actively opt-out of them. Leases, on the other hand, must be manually renewed upon their end dates.
Common lease requirements. In order to be legally viable in the United States - if not most countries around the globe - leases must contain the full, legal names of all lessors and lessees. Leases also must explicitly quantify rents. They usually also quantify late fees and describe how they are assessed. When it comes to rental properties, whether they're commercial or residential, leases indicate whether lessors or lessees are responsible for maintaining such facilities, repairing things that break, or both. Many leases require lessees to agree not to engage in illegal, negligent, or reckless behavior in, around, with, or while using the assets being lent.
Lease misconceptions. Some landlords who are new to renting homes fail to consider the potential of lessees wanting to stay for longer than leases prescribe. For example, many lessees want to live in rental properties for an additional year following the closure of the initial one-year lease they signed. Lessors sometimes believe that if they get lessees to agree to any provision, clause, or proposal, then they're enforceable. However, federal, state, and local laws supersede the private dealings of lessors and lessees. As such, lessors need to make sure that their lease requirements are within the scope of relevant governments' allowed range of activities. For example, many states actually don't allow for pets to be banned from an apartment being leased.
Do you need a lawyer? Since leases are legal documents, they must adhere to certain legal standards in order to be valid in courts of law. However, most landlords and other lessors can find free copies of legally-valid leases all over the Internet. Lessors almost always need to seek legal help when drafting complex, lengthy leases from scratch, especially when the assets being leased are of very high market values. Many attorneys provide free consultations to lessors and lessees to address their concerns regarding whether they need to retain professional legal help or not.