Important considerations in a Lease and Rental Agreement

  • Everybody once in their life time will come across a lease and rental agreement either to negotiate or sign it for personal or business use. There are certain comprehensive conditions that are involved in negotiating and understanding legal agreements dealing with leasing, renting or leave arrangements for residential and commercial properties.

    What is a Lease and Rental Agreement?

    A rental agreement provides for tenancy of a short duration that is automatically renewed at the end of the period unless the tenant or landlord ends it by giving written notice. For these month-to-month rentals, the landlord can change the terms of the agreement with proper written notice. 

    A lease agreement, on the other hand, gives an occupant the right to occupy a rental unit for a set period of time - most often for six months or a year but sometimes longer -- as long as the tenant pays the rent and complies with other lease provisions. The landlord cannot raise the rent or change other terms of the tenancy during the lease, unless the tenant agrees.

    When a lease expires it does not usually automatically renew itself. A tenant who stays on with the landlord's consent after a lease ends becomes a month-to-month tenant, subject to the rental terms that were in the lease.

    Important points to ensure an effective lease agreement

    • The rent amount should be decided beforehand only and the amount that the occupant will pay for the leased or rented property must be clearly established. It should also contain about the quantum of increase in rent due to changing environment.
    • The payment date must be decided in advance for any delay in the payment can be fined.
    • The duration of the lease and it must be clearly stated in the agreement to prevent future conflicts between the tenant and the owner.
    • The agreement should mention about the maintenance costs of the leased or rented property to and who will be the bearer of the same in order to prevent any confusion in the future.
    • The agreement must also contain important information of the parties i.e. the lessee and the lessor like name, address, etc.
    • It should be clearly stated as who is to bear the water bills, electricity bills and other such expenses.
    • Clearly specify as to how and in what circumstances the agreement can be terminated. Whether it would be fault based and no-fault termination or both. Fault based termination rights are triggered when one party breaches any terms and conditions of the agreement. No fault termination is when the parties can terminate the agreement without citing any reason.
    • The agreement should contain a wear and tear clause stating that the occupant will return the property in the condition in which he received it, subject to normal wear and tear, as long as the same was not caused by any direct act or negligence.
    • It should also mention about the security deposit and what would be its amount plus when will it be refunded to the tenant on repossession of the property by the landlord. The agreement should clearly state whether this deposit is interest free.


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    These guides are not legal advice, nor a substitute for a lawyer

    These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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