Lengthy lease agreements filled with legal jargon can be daunting, especially for the hundreds of new tenants joining the letting market each day.
“It’s vital that tenants and landlords understand the key elements on which a lease is based,” says Lauren Maltby of Shepstone & Wylie Attorneys.
The first principle is that the parties entering into the lease must be agreed on. It is imperative to establish whether the party is an individual, a close corporation, a company or a trust and then to ensure that such entity is correctly described. This is essential if legal proceedings are instituted against either party, she says.
Second, the premises in respect of the lease must be agreed on. The description of the lease should not be defined too loosely so as to create confusion between the parties and the resulting administrative difficulties.
Third, the rental payable must be agreed, as well as any additional charges, for example service charges or proportionate rates or levies. Last, the period of time of the lease, which must be limited, must be agreed on together with any renewal options.
“Once the agreement is in place, duties and obligations arise for both parties and it is imperative that the terms and conditions are accurately recorded,” says Maltby. “A lease may be either residential or commercial and this is defined by, but not limited to, the prescribed use of the premises and the rental definition.
“A lease may be written or verbal, but it is clearly advisable to enter into a written lease agreement to avoid dispute at a later stage.”
If either party is in breach of the lease or unable to fulfill their obligations, the terms and conditions of the written lease agreement determine the appropriate course of action for the aggrieved party. For example, if the landlord fails in his obligation to maintain the premises, the tenant can cancel based on breach and similarly, should the tenant fail to pay rental, the landlord can cancel the agreement.
Maltby says if, however, either party is unable to fulfill their obligations say due to financial difficulties, the parties can agree to amend the terms of the lease accordingly. Once again, such an amendment should be recorded in writing.
Leases are therefore specific to the particular circumstances at hand, such as the nature of the parties, premises and rental payable. It is therefore advisable to consult and attorney to ensure that the appropriate lease agreement is drafted to meet your needs, she says.
