So you have found your lease property and now perplexed with the condominiums for rent but have submitted a letter of intent to the landlord. Now the time comes when you have to sign the property lease issued by the landlord but before putting pen to paper and admitting all the clauses mentioned in the agreement, first understand the essentials of property lease, it types, what should be the important clause inserted in the agreement and how property is leased.
So, let’s start with the Land ownership which is divided into two categories- freehold and leasehold.
Wherein a freehold category involves the full ownership of the property until the end as in the landlord will hold the property in perpetuity. There will be no expiry or termination date.
On the other hand, the leasehold category also known as property lease or tenancy lease will have a fixed period of ownership involved in it. Hence we will be discussing more of property lease in this chapter as many disputes arise in this section only.
What is property lease?
Property lease is an essential ingredient for a landlord and a tenant to set them for the worst situation. Property lease is basically a written contract between landlord and tenant consenting on various terms and conditions related to the property for a specific time.
It has a legal effect of transferring the ownership of the property from the landlord to the tenant for a specific term period and also at an unwavering rent, which makes the tenant an exclusive owner of the property leased for that time only.
The rights and duties of the landlord and tenant are found generally in the property lease agreement. Any breach of these rights and duties may lead to termination of the whole lease period on the will of the landlord. But there are few remedies attached to it through which the landlord and tenant can have a sigh of relief.
There are many leasehold types like 999 years of lease or 99 years of lease. But 99 years lease is the most common one among tenants.
Generally, only one year lease is granted to the tenants, with or without the renewal options. It becomes tough to find a place on lease for months. There is no law regarding intimating through a notice to the landlord about the termination of tenancy before the contracts end by the tenant. But some contracts state that the parties can end the contract prematurely by giving two to three months’ notice prior or for renewing the contract.
Any party can prematurely end the contract but they have to pay the full month’s rent as compensation.
Why is it needed?
Legal enforcement is the major issue of not getting into a lease agreement. If there will be an oral lease then it will become difficult to enforce it in the eyes of law at the time of dispute.
And if it will be written and drafted in a proper manner then the draft will be of a great help for the court to determine their rights and obligations between the parties.
Once the lease agreement is signed, both the parties get bounded with care and both get to handle the lease with care and attention.
Who can claim if it breached?
There are only two parties involved in the property lease agreement, the one is a landlord and another one is the tenant.
As the property lease is a contract between the tenant and landlord, so if in case any dispute arises then only these two can claim their right in the court of law.
No legal heir gets the rights of their deceased relations as soon as the tenant expires the lease agreement made in favour of him will end at that moment only.
What goes into the clause?
A property lease is a contractual relationship between the landlord and the tenant stipulating the duties and rights of the party. It also safeguards the interest of the parties against the repercussions in regards to the lease agreement.
There are numerous clauses which are added to the property lease agreement as follows-
- About the property and the term to be specified-
The lease agreement should be clear about the property mentioned with the period for how much time the lease is to be issued.
2. Rent payment and other facilities-
The lease agreement should be clear with the payment part and about the rent for the attached amenities too. There should be an averment of security deposit which is given as security to the landlord by the tenant of the property. If in case any damage occurs then the security deposited will be forfeited for the repairs work or if the tenancy agreement is not complied with.
3.Use of the leased property-
4.Immigration status of the parties.
5.Maintenance of the property-
The clause will also contain one point for maintenance of the premises. As a man of ordinary prudence, the landlord will expect the tenant to take care of the property leased as his own. The charges incurred will be also specified.
6. Covenants related to tenants and the landlord-
For tenants the covenant will include- payment of rent, looking after the property, not to sublet it, using it as per norms.
For landlord- providing fit place for lease, quiet enjoyment of the leased property.
7. Termination of lease-
A termination clause should be added to it. Like for how many years the property will be leased and after it what is the renewal procedure.
8. Breach of the lease agreement-
The point will be added in the clauses related to breach of the agreement in which you will get the termination points and defences too.
Where it applies?
It applies for commercial, business or residential purposes. It is applied where there are specifically two parties i.e. landlord and the tenant. Where the tenant requires a space to start his own business or wants to resides, then in that situation he might ask for a leased apartment.
Disadvantage of not entering into a lease agreement-
If in case you don’t enter into a property lease agreement and it’s all verbal agreement between you both , then in the situation you might not have any legal right to claim your part from the other person.
It’s all always said that any contract to make it enforceable in the eyes of law, you need to write it down on a piece of paper with the authentication so that it can be shown in the court of law.
The major disadvantage in not entering into a legal contract will be no option to renew the lease on paper.
Forms of solving property lease disputes-
· If in case the tenant doesn’t pay the rent after due date too, then the landlord can file a writ of distress in court, wherein the sheriff gets appointed and directed to seize and sell the foods inside the property and retain the unpaid rent from it. And if the rent is paid after it then the landlords have the duty to repossess the property.
· Mediation –Mediation is one of the best ways to settle a dispute between the landowner and the tenant as it lasts for few hours or in one or two sessions it gets over. Whenever a dispute arises, the claim can be attempted in a community mediation centre as per the orders of the court.
It provides mediation services on matters including-
1. Unapproved behaviour of the Parties
2. Disagreement between the parties regarding clauses mentioned
3. Matters involving oral agreements of less than $50000
4. Unacceptable words
Rewards of mediation-
There are many advantages of getting into a mediation like-
1. Fast relief given to parties within one or two sessions.
2. Inexpensive proceeding only the complainant has to bear $5 fees of the mediator.
3. A confidential meeting between the parties wherein the matter doesn’t get disclosed out of the court.
4. It is informal, expressive and beneficial for both the parties as it encourages the parties to sum upon a solution.
5. It is a flexible proceeding and a win-win situation between them.
6. Post-conflict relations are also preserved.
· A claim at small claims tribunal-
If the mediation fails, then the parties can file their claim in small claims tribunal, where the jurisdiction of cost will be below $10000 and it is going to be cost effective.
After the claim is filed the tribunal will fix it before the Registrar to settle the matter in mediation. The mediator will try to resolve the matter as per the settlement terms given by the parties within 10 or 14 days of lodging the complaint. If it doesn’t get fixed then the tribunal will fix a hearing after 7 to 10 days before the Referee. The Referee will also adjudicate for the settlement between the parties.
Therefore it is desirable to get a property lease enforced as soon as possible before entering into an agreement with the landowner.