What is a Massachusetts Lease Agreement?
A lease agreement is a contract between a lessor who rents out his property or an asset to the lessee for a periodic payments called lease payments. This contract outlines the rights and responsibilities of the lessor and the lessee throughout the lease period. It is a binding document that delegates obligations and utilities such as deposits, payment tenure and period, maintenance responsibilities and fair use of the property. Lease agreements made in Massachusetts cover an extensive scope of activities as per its state law
It is required when two parties agree to use an asset in some variety. If a person needs accommodation to live in, or wants to hire a residential house, then this contract is drafted. Sometimes, tenancy rights dictate that a landlord must enter into an agreement with a tenant before permitting such tenancy. Since these lease agreements are bound by the rules of the state of Massachusetts, they are called Massachusetts Lease Agreements. Lease agreements are binding on both the parties and hence can be used in case of any disputes between them.
Contents of a lease agreement:
Any lease agreement must be comprehensive enough to prevent abuse of loopholes in case of a dispute. some items included in any such agreement are
- Name and address of the landlord along with a telephone number
- Name and permanent address of the tenant along with his telephone number
- A description of the lease property to identify it without contest in a court of law
- Details of the rent payable, duration of the lease, penalties and fines, due dates, grace period, method of payment and intent of use
- A description of the amenities provided in the property and an agreement on their current state
- Rules and regulations subject to fair use of the property, that a tenant has to abide by.
- Policies for guests and pets
- Details of maintenance charges and payment for utilities
- Arbitration clauses and jurisdiction for conflict resolution.
- Obligation on the parties to bear the legal expenses
- Termination of lease and its procedure
- Rules for premature termination
Types of lease agreements:
In Massachusetts, just as in any other state, leases can chiefly be divided into
- Capital Lease or Financial Lease
- Operating Lease or Service Lease
Capital lease is when the right to maintain and the right to claim the depreciation of the property are all transferred to the lessee. While the ultimate ownership of the asset rests with the lessor, the rights to claim tax deduction on depreciation are transferred to the lessee. These types of lease usually last the lifetime of an asset. An operating lease on the other hand, is where the lease is taken out for a short period of time. The right to claim depreciation is maintained with the lessor while the tax shield for payments is with the lessee.
Advantages of a lease agreement:
- Lease rental income is distributed over the life of the asset and therefore accounts for inflation. It also provides a steady flow of income to the lessor
- Lease counters any fall in the value of an asset in times of recession
- Lease agreement are binding documents that describe the scope of duties between the landlord and the tenant. this agreement helps in conflict resolution
- The benefits due to each party, as outlined by the agreement, can be identified with a lease agreement
- Lease agreements, though binding, do not supersede the laws of the land. So for Massachusetts lease agreements, there is no chance that a landlord can put in unfair terms
Disadvantages of a lease agreement:
- The property is locked for the duration of the lease. The landlord can’t take advantage of any appreciations in the value of his asset because of his contractual obligations
- The ROI in drafting a lease agreement for a very short period is low.
- Lease agreements do not guarantee performance. In the event the terms of the lease are violated, the lessor can only bring a suit against the lessee
Recourse for violation of lease agreement:
The recourse for breach of contractual terms are usually outlined in the agreement itself. If the tenant breaches the terms in the agreement, the landlord has the power of remedies for breach of contract. This can involve restitution of the terms of contract, termination without further notice, eviction, or bringing a suit against the tenant. If a landlord breaches any terms, the tenant can seek remedies under the tenancy rights. What remedies will be used is at the discretion of the landlord and the tenant, and the nature of their relationship.
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Lease has a lot of advantages, out-trumping its disadvantages. These are particularly useful if you are living on a budget. If you live in Massachusetts and you need a contract that ensures the landlord does not swindle you, you need our Massachusetts Lease Agreement template. Download now and get a lease on the house you love.