The contractual agreement signed by a landlord and tenant is called a lease. Its main purpose is to inform both parties about their obligations and responsibilities in order to protect them. It usually includes the monthly or annual rental fee, the specific length of the rental period, and the method of collecting payments.
It is important that landlords and tenants do not break any terms of the lease. If any of them do, the contract is no longer binding. When this happens, the non-offending party can take legal action and demand compensation for breach of contract.
Some people tend to confuse a lease with a rental agreement and use them interchangeably. However, they are quite different. A lease lasts for a specific length of time – usually measured in months or years – and it has to be manually renewed by both parties. On the other hand, a rental agreement lasts for about 30 days and will renew automatically, unless the landlord or tenant cancels the contract in writing.
Whether it is a residential or commercial rental property, there must be a signed contractual agreement for all parties involved. All tenants who are older than 18 years of age and the landlords or their agent should sign the lease agreement. Depending on the amount of information covered, a contract can be one or several pages long. What matters most is that the lease is as in depth as possible to provide better protection for both parties.
Take note also that each state or country has specific real estate laws, so make sure your contractual agreement for leasing covers these regulations. It would be wise to consult with a real estate attorney to make sure your contract is legally accurate.