LEASE: BINDING CONTRACT OR BLIND AGREEMENT
Leases can be tricky especially for a first time tenant who is new to the game…
Tolani is a fashion designer who was born and bred in the United Kingdom where she has lived all her life. She got a great offer worth millions of naira that will allow her take her business to the next level and she is excited! The offer requires her to relocate back to Lagos, Nigeria and she does not mind. She had silently been considering moving back to her father’s land anyway. The only issue is that she does not have anywhere to stay.
Her parents’ home in Nigeria is all the way in Akure, Ondo state so that is not an option. She certainly does not have the kind of money required to buy a home in Lagos yet so the next best option is to rent an apartment. Tolani has never lived on her own so she has never had to deal with a landlord before and up until now; she never really understood what a lease entails. Tolani is lost, confused and needs help understanding all this landlord and tenant parole because she does not want to make mistakes.
A lease is a legally binding written contract that states the terms and conditions governing two parties as regards renting property. A “lessee” is the tenant or person intending to rent a property and a “lessor is a property owner or landlord. A lease contract guarantees the lessee of having access to the property and also guarantees the lessor of a particular amount of monetary payment on a basis agreed to by both parties. The landlord (lessor) requires the tenant (lessee) to sign the lease contract, implying agreement to the terms and conditions of occupying the property.
Lease contracts that are made for commercial properties often times, are agreed on in alignment with a particular lessee and can last from one to ten years. The bigger the tenant (lessee), the longer and more complex the lease contract is. It is important that the landlord (lessor) and the tenant (lessee) both reserve individual copies of the lease contract. This can come in handy should any sort of problems ever occur. Another important thing to note is that not all clauses of a lease contract are automatically imposable. For instance, because a clause on the lease contract states that a landlord is allowed to enter the premises to perform maintenance checks does not mean that the landlord is allowed to enter into the premises without giving due notice to the tenant.
All lease contracts are not made the same way because they are created by different people to suit different lease arrangements. Regardless of this, all lease contracts have certain generic characteristics/components. It is important that all these characteristics/components are stated in details to both parties and there is clear understanding of everything in order to avoid future misunderstanding that could become a conflict. Some of such characteristics/components are:
- Name of the lessee (tenant) and lessor (landlord).
- The beginning date and timeline of the contract.
- Identification of the property being leased by address, model, serial number etc.
- Determinants for renewal or non-renewal of the contract.
- Specific amount of money for rent of the property and rent due date.
- Stipulated amount for security deposit and terms of refund should the need arise.
- Specific conditions like insurance, restriction to usage, maintenance responsibilities and more.
- Consequences for breach of the contract and termination clause. This states what happens should the contract end early or be cancelled. It also states the rights of the parties to put an end to the lease and their duties.
Types of Lease Contract
- Periodic Tenancy: This is a type of tenancy that is documented. It is when a person rents a property for a certain period of time. It can either be weekly or monthly. The rental rate is clearly stated but there is no specific finishing date in the lease.
- Estate for Years: This type of tenancy also involves a written lease that has a particular start and finish date. This type of lease has a rental rate but does not have a notice to vacate because the finish date is when the tenant is expected to vacate the property.
- Estate at Will: This type of tenancy is considered to be unique because the details are not documented and the specific amount for rent is not stated. Therefore, the tenant can choose to leave the property whenever it suits them.
- Estate at Sufferance: This type of tenancy is when a tenant defaults in vacating the property when the lease expires leaving the tenant with no other choice than to abide by the terms and conditions of the original lease. The tenant still has to leave the property upon the request of the landlord.
- Percentage Lease: This type of commercial lease is when the landlord takes a specific amount as rent as well as a certain percentage of the business/tenant’s sales every month.
- Net Lease: This type of commercial lease involves the tenant paying rent as well as a percentage of taxes, maintenance, insurance etc of the property alongside the landlord.
- Double Net Lease: This type of commercial lease involves the tenant being solely responsible for the insurance of the property while they still pay rent. The landlord still handles everything concerning the maintenance of the property.
- Triple Net Lease: This type of commercial lease involves the tenant paying for rent, taxes, insurance, and maintenance of the property rent for his/her business operation.
Breaking a Lease
The penalty for breaking a lease contract can be subtle or damaging and it is dependent on the basis upon which the contract was broken. A tenant (lessee) that breaks a lease contract without first working out the terms with the landlord (lessor) can be at the peril of a civil lawsuit. It is possible that a tenant might have problems renting a new property because they had previously broken a lease contract without following the due process. If the need to break the lease contract arises, a tenant needs to negotiate with their landlords and seek correct legal counsel in order to avoid any problems.
There are instances where a landlord willingly allows a tenant break their lease contract because they are able to source for a new tenant to take the space immediate they vacate the property or they are willing to let go of the security deposit. There are lease contracts that have premature termination provisions that allow tenants end the contract on the basis of certain conditions or when landlords fail to perform their own responsibilities stated in the contract such as maintenance of the property.
The truth remains that no lease process is the same. Some might be easier than others while some might be more difficult than others. But they all require one primary thing: KEEP YOUR EYES OPEN FOR DETAILS!
Have you been in any unpleasant landlord/tenant situation? Share your experience with us in the comments section.