A Brief Introduction About Condo Lease Agreement
A condo lease agreement is a legally binding document drawn between a tenant and the landlord of the condominium. If you know anything about how to rent a condo, you probably know that you should have a condo leasing agreement to govern your leasehold. It sets down the terms of the leasehold including critical terms that define the monthly rent, security deposit, duration of the lease, rights, and duties of the partners, maintenance, and also gives an overview of all the terms that have been agreed upon.
This agreement gives both parties to the contract confidence that the other party will fulfill his or her obligations towards the other party. These agreements are also called condo lease, condo lease form, condominium lease agreement, condo leasing agreement, and condo document.
Who Takes the Condo Lease Agreement – People Involved
You would need to enter into a condo lease agreement if:
- You own a condominium and are looking to lease it out to a tenant.
- You are a tenant looking to lease out a condominium.
The contracting parties here are the tenant and the landlord.
Purpose of Condo Lease Agreement – Why Do You Need It
The purpose of a condo lease agreement is to:
- Lay down the terms and conditions of the transaction and to ensure both parties acknowledge them.
- Establish the relationship between the contracting parties as tenant and landlord.
- Detail the terms of the monthly payment, security deposit, maintenance, rights and duties, and rental term.
- Protect the interests of both contracting parties, making legal recourse an option in the event of a dispute.
Contents of Condo Lease Agreement – Inclusions
An effectively drafted condo lease agreement must be detailed and include the following terms:
- Effective Date: This mentions the date on which the agreement becomes effective. It is a standard yet critical clause that must be included.
- Parties to Contract: This clause identifies the parties to the contract, that is, the landlord and tenant. It must mention their names and addresses.
- Premises: This term contains the address of the condominium that is to be leased.
- Term: This term gives information about the duration of the lease.
- Renewal: This clause allows the tenant to renew his lease with the landlord by paying a certain amount. It also includes information about when the tenant needs to serve a notice of renewal to the landlord if he wants to renew his lease.
- Monthly Payments: This clause defines the date, mode, and amount that is to be paid monthly for the lease. Also, make provisions for an increase in monthly payments each year to accommodate property taxes, condominium homeowner’s association fees, recreational fees, and insurance.
- Condominium HOA: This clause states that the landlord is to bear all mandatory fees paid to the condominium homeowner’s association. The landlord should also reserve his right to vote at meetings of the condominium homeowner’s association.
- Security Deposit: This clause defines how much needs to be paid as the security deposit.
- Possession: This term will determine when the tenant can occupy the premises. Usually, the tenant can occupy the condo on the first day of the term of the lease.
- Personal Property: This clause allows tenants to use and own personal property within the premises of the condominium at his own risk. The tenants’ covenant to the landlord to keep the furnishings, appliances, or any other property of the landlord in good shape must be honored.
- Maintenance: This clause details what parts of the condo need to be maintained by the landlord, including the roof, sidewalks, air conditioning and ventilation, heating, wiring, and plumbing. The tenant must also maintain the premises in good condition and must not destroy the property.
- Furnishings: This clause lists the furnishings the landlord is to provide to the tenant.
- Damages: Any damage to the listed items will attract a charge to the tenant.
- Rules: This clause provides that the tenant must always abide by the rules of the condominium homeowner’s association, local, state, and federal laws.
- Remodeling: This clause determines whether the tenant can make structural changes to the premises without the consent of the landlord.
- Utilities: This term determines who pays the bills of utilities and services of the premises.
- Taxes: This term makes the landlord responsible for any real estate taxes, and the tenant for all personal taxes that he incurs from the use of the condominium.
- Insurance: Both the landlord and the tenant, are required to have insurance policies of their own.
- Termination: Termination clause specifies the circumstances under which the agreement may be terminated.
- Governing Jurisdiction: This clause specifies the jurisdiction that will govern any disputes that may arise out of the agreement.
- State-specific Laws: Include any clauses and terms that may be required for compliance with state-specific laws and legislation.
How to Draft the Condo Lease Agreement
The procedure to draft a condo lease agreement:
- Mention the date of the agreement, on which the contract will come into effect.
- Identify the parties with their names and addresses.
- Establish the relationship between the parties.
- Mention the address of the premises.
- Include the terms of renewal, monthly payments, security deposit, possession, rights and duties, and payment of utilities and taxes.
- Include clauses to ensure that the tenant follows the rules of the homeowner’s association and local, federal, and state laws in connection with his use of the property.
- Make sure a clause that allows the tenant’s quiet and peaceful enjoyment of the space.
- Also, make sure that a clause prevents the tenant from bringing or keeping any dangerous materials on the premises of the condominium.
- You also need to include a clause that allows the landlord reasonable access to the property.
- Include a clause for the representations and covenants to the landlord and tenant respectively.
- Include provisions for amendment, severability, and termination.
- Include a template of an inspection checklist as an appendix so the tenant can confirm that everything has been inspected and is satisfactory.
- If your condo was built before 1978, you might have to include a disclosure of information on lead-based paint hazards to comply with local laws.
- The agreement should mention the name of the jurisdiction that will govern the document and any disputes that arise from it.
- Have the parties to the contract sign it to signify acceptance of terms.
Make sure that the agreement complies with local, state, and federal laws. Also, make the terms are simple, explicit, and void of ambiguity.
[Also Read: Residential Lease Agreement]
The terms of the contract should be negotiated such that it is mutually beneficial and agreeable to both parties, to avoid dissatisfaction that could lead to disputes. The interests of both parties must be kept in mind while framing the document, and neither should be disadvantaged or nourished at the expense of the other.
Benefits & Drawbacks of the Condo Lease Agreement
The benefits of having a condo lease agreement:
- Provides an overview of the terms and conditions involved, avoiding ambiguity and miscommunication.
- Safeguards interests of both parties.
- Ensures that the tenant fulfills his obligations to the landlord by taking care of the premises and maintaining it in good shape, as per the agreement
- Ensures that the landlord fulfills his obligations to the tenant, including the upkeep of the condominium.
- Makes legal recourse an option, should a dispute arise.
- Gives the transaction legal validity.
The drawbacks of having a condo lease agreement:
- The legal costs of drafting the agreement must be borne by one or both of the parties.
- Negotiations can take time.
What Happens in Case of Violation
In case, the terms of the agreement are breached by any of the parties, the aggrieved party can resort to the legal resolution of the dispute, either by arbitration or conventional dispute resolution methods(1). Depending on how the contract suggests disputes should be handled, the parties might be required to amicably settle the dispute internally or by alternate dispute resolution methods before going to court.
Condo leasing agreements are used when a tenant is looking to lease a condominium. They contain many important terms, including the rights and obligations of both the tenant and the landlord(2). Some of the most critical terms in the document include the monthly payment, insurance, term, possession, damages, and rules clauses. If you’re a tenant looking to get a condo for lease or rent, you should make sure that your landlord arranges to have a condo lease agreement is used. This will help you get an overview of all the terms of the contract in a single comprehensive document. It also gives it legal validity, which is important if a dispute arises.