A reader who is planning to rent out his property to a friend wants to know what the basic provisions are which need to be included in a lease because he feels he does not need a complex contract.
As the property is being rented by a friend, he feels there is little chance of a dispute arising.
This ties in with other queries on whether certain clauses in particular lease agreements are necessary, desirable or reasonable.
See the reader’s question here.
There are certain issues that need to be considered when entering into a lease agreement.
It is important to remember that there is a difference between the essential clauses that constitute a proper agreement and those that make the agreement more sensible in the event of a possible dispute.
Firstly, the parties and property subject to the lease need to be described adequately.
This may seem simple, but you should consider the instance of a storage room or garage on a property that was not specifically described or excluded, which the owner continues to use.
The tenant needs to know what his rights are in this situation.
Another example is where a company is the lessee.
Does this mean only employees of the company are allowed to reside in the leased premises, assuming it is a residential lease?
Once it is determined who is renting the property, the rental amount should be specified or be easily ascertainable.
You also have to consider if the rental will escalate annually or on some other basis and by how much.
In addition, the term of the rental must be specified to make clear if it is indefinite or for a fixed period of time.
If it is for a fixed period of time, it must be outlined how renewal of the agreement will work.
You have to specify the responsibilities of each party in respect of the renewal.
The tenant may, for example, be required to give notice of renewal at a certain time, usually a month or two prior to the termination of the agreed fixed period.
The consequences of the failure to do so should be considered and recorded.
Even if the above elements are addressed in the contract, the agreement is not necessarily conclusive.
For a simple list of the basic provisions that must be addressed in a lease the provisions of section five, sub-section six, of the Rental Housing Act must be addressed.
One aspect that is dealt with in some detail in the act is that of the deposit.
This is often of particular interest to tenants who query what deductions may be made from the deposit and when they are entitled to receive their deposit back from the landlord – in full or subject to deduction.
There are many other aspects that should be considered and agreed upon to avoid conflict.
One common example relates to where an agent is involved in the transaction and, if there is one, what fee or commission is payable.
The liability for the cost relating to repairs, both necessary and non-essential, is another consideration which can cause disagreement if not appropriately agreed upon in the contract.
While the reader may wish to keep things simple, addressing some of the more complicated aspects at the inception of the lease may save the friendship later on should a dispute arise.
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