How to Know if a Lease is Legally Binding

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Avoid Verbal Lease Agreements

A lease agreement provides important legal protections for both landlords and tenants. While verbal lease agreements can be legally binding, they’re not recommended because of the lack of documentation. In the event of an eventual dispute, a verbal lease agreement may not be enforceable because of the inability to prove that a verbal agreement actually exists and the lack of proof as to what both parties agreed to.

So, steer clear of any verbal lease agreements and craft a written lease that complies with all applicable local, state, and federal laws. An attorney or property management company such as Palmetto State Properties can certainly help you create a written lease agreement that is legally binding. Read on to learn how to know if a lease is legally binding. Or check out our owner services.

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Crafting a Legally Binding Written Lease

At a minimum, a written lease needs to include:

  • – The names of all parties involved
  • – Location of the rental property
  • – The lease effective and expiration dates (the start and end dates of legal tenancy)
  • – The amount of the monthly rent and the rent due date
  • – What, if any, utilities are included in the rent
  • – The amount of any security deposit and the conditions for holding and returning it
  • – Any additional fees that apply (e.g., parking fee, pet fee, etc.)
  • – Rental terms (including tenant responsibilities and any prohibited activities that can result in premature termination of the lease)
  • – The signatures of all parties to the lease

There should be no doubt in anyone’s mind as to the consequences of violating the lease agreement. For example, tenants should know that the security deposit can be used to repair damage caused by the tenant that is beyond normal wear and tear. The lease should also make clear that missing rent payments may be grounds for eviction.

The Lease Signing Process

A lease for a rental property only becomes a legally binding contract after it has been signed by all parties to the agreement. These days, leases may be signed in person, or sent to the tenant electronically for signing. It’s up to the landlord to decide whether to require a signature in the tenant’s own handwriting or to accept a digital signature. If the lease is not signed in person, it’s the tenant’s responsibility to contact the landlord for any needed clarification before signing.

When a lease will not be signed in person but is sent to the tenant for signing, the landlord should not sign it first. The tenant should always be the first to sign. This rule of thumb protects landlords against a tenant who doesn’t respond and doesn’t return the contract. If the signed lease is not returned in a timely manner, the landlord has the option of withdrawing the rental offer and choosing another prospective tenant. But by far the most compelling reason for the tenant to sign first is that a tenant could make changes to a lease that already has been signed by the landlord and those changes could be construed as legally binding without the landlord even having a chance to reject them or enter into negotiations.

How to Know if a Lease is Legally Binding

The lease must include all the details required by law in that state. Once the lease has been signed properly by all parties, the contract is legally binding on both the landlord and the tenant.

Why is an Enforceable Lease Crucial?

Having an enforceable lease becomes crucial when there is a breach of contract. A valid, legally binding lease allows the landlord to hold the tenant accountable for violating any of the terms of the lease. It gives the landlord the right, for example, to send a late rent notice after the tenant misses a rent payment, laying the groundwork for evicting the tenant. Depending on the specific terms of the lease, the landlord may be able to charge a late fee for a payment made after the due date, or use the security deposit to repair dames attributable to the tenant.

An enforceable lease also protects the tenant if a landlord violates any of the lease terms, such as not paying interest on the tenant’s security deposit, or mingling the tenant’s security deposit with other funds instead of holding it in an escrow account if that’s what the law requires.

Whether the landlord claims the tenant is in violation of the lease terms or the tenant maintains that the landlord is at fault, having a legally binding lease provides a basis for the matter to be adjudicated in a court of law if it comes down to that. Without a legally binding lease, any court proceeding could be a toss-up.

Get in touch today to find out how we can help.

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