Understanding the Annual Lease Contract

2008-07-11 17:00:28

( Insurance )



Definition of Annual Lease Contracts

The annual lease contract is a formal written agreement between a landlord or lessor, and a tenant or lessee. The contract stipulates the terms that the two parties have agreed to regarding the use of a real estate property owned by the lessor, which applies to one entire year from the date of signing.

The total lease or rental amount due to the landlord is similar to the yearly sales income of a store, except that the monthly lease payment amounts are uniform.

Components of the Annual Lease Contract

The basic annual lease contract must contain the terms of agreement of the lease. It must state the names of the lessor and the lessee, the exact date of the start and end of the lease period, and the payments required from the lessee.

Furthermore, the annual lease contract also specifies the monthly deadline for the lease payments, as well the amount of the security deposit. The security deposit does not cover any of the monthly rental payments. Instead it is held by the landlord as funds to cover any repairs or damage needed on the property in the event that the lessee vacates the place at the end of the lease. The lessor refunds any unused portion of the security deposit.

Other Stipulations of the Annual Lease Agreement

Typically, the annual lease contract also specifies other conditions and policies that the lessee must observe during his use of the leased property.

The lessee must not sublease the property to a third party, nor use it in any way that was not stated in the contract. For instance, if the contract of lease is for residential property, he should not use it for business purposes.

The lessee cannot make major improvements beyond ordinary wear and tear, such as adding a fence or room, unless he gets the lessor's permission.

The lessee normally shoulders the expenses for electricity, gas and water. The lease contract also indicates where the lessee can park his vehicle and whether he can keep a pet in the premises.

There are also other conditions in case of accidental damage or need to replace
fixtures. The lessor also specifies the amount limits of repair or maintenance costs that the lessee is responsible for.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.