You must know about lease renewal if you are a tenant or a landlord. This involves both the tenants and the landlords in a binding agreement related to leased property. Thanks to the lease renewal of a leased property, the tenant can extend their stay on the leased property.
This agreement involves the consent and the clarity of both parties involved in the lease agreement. Both parties have a deal in the renewed agreement, and they summarize the terms and conditions accordingly.
Read this blog post to learn more about lease renewal and how it works for the lessee and the lessor.
What’s Included In A Lease Renewal?
So, what does a lease agreement include? If you want to find out, keep reading this section down below –
Defining Property Description
The lease renewal agreement must define the rental property with the required details. It must include the permanent address of the property and different unique features that differentiate it from other commercial or residential properties.
Outlining The Renewal Terms
So, when a lease agreement is renewed, the lessee has more time to stay in the property. The lease renewal must include the increment of the lessee’s tenure on the property. It should outline the start and end date of the renewed lease. Also, the lease renewal should mention whether the renewal is based on month to month basis or on a fixed term.
Outlining Payment/Rent Terms
A rental agreement usually includes different things, and the rent amount is one of the most important information there. The renewed lease agreement must specify the rent amount the lessee has to pay during the increased rental period. It must include any possible changes in rent (whether the rent has increased or decreased. The renewal agreement must also include the frequency of rent payments.
Mentioning Repairs & Maintenance
A lease agreement already has all the necessary information related to the maintenance and repairs of the property. However, the lease renewal should also mention the party that needs to take care of the rental apartment. It must include whether the renter or the landlord needs to carry the burden of repairs, maintenance, etc.
Adding Termination & Renewal Terms
The lease agreement should have key termination & notice provisions. The renewed lease agreement must also include the timeframe for giving notice related to lease renewal in the future. If either party wants to do so, there must also be a timeframe for terminating the renewal.
Addressing Amendments & Addendums
When a lease agreement is renewed, some of the conditions might be amended or changed with agreement from both parties. So, if there is any change in the lease agreement, both parties need to mention that in the renewed lease agreement. The lease renewal must include the modification of the rental terms and conditions. This should remove any further misunderstanding related to the lease in the future.
Lease Agreement Benefits
There are many online lease templates available for free for property owners. They can use these templates to fill out the information necessary. However, verifying the document with the local attorney before sending the agreement document to the tenant is important. As a tenant or a landlord, it is important to understand the different benefits of having a lease agreement –
Benefit 1
A leave agreement renewal easily sums up all the different terms and conditions of the lease. It includes the different rules related to the lease and the obligations both parties need to understand.
It must be noted that a lease agreement cannot be done verbally. Many agreements are there that can be done verbally. However, a lease agreement demands a noted-down document that needs to be sent to the renter. The benefit of having a written agreement is having a legal weight.
Benefit 2
If there is no documented renewal of a lease agreement, the tenants will not have clear guidance as to how long they can stay on the property. This agreement acts as a guiding document that concerns and guides both the lessee and the lessor. It allows both the lessor and the lessee to agree upon the terms and conditions and move ahead accordingly.
Benefit 3
It is common for tenants and landlords to build a relationship over time. As a result, a lessor might want to retain their best tenants while the tenant might enjoy the comfort of staying on a familiar property. With lease renewal, the lessors can make their terms and conditions flexible and extend the stay of their tenants. However, the renewal also outlines the timely rent collection and the fulfillment of both party’s duty to the property.
Benefit 4
Lease renewals allow tenants to avoid the chances of prolonged vacancies in their properties. It is not too easy to find a good tenant who respects the terms and conditions of the rental apartment. Also, a prolonged vacancy on a property leaves a bad impression on a prospective tenant. Another benefit is that the landlords can create a lease renewal in a day and get it finalized (with the tenant’s agreement).
How To Draft Your Lease Renewal?
You can easily draft a legally valid lease renewal by following the steps mentioned here.
- First, you have to evaluate the existing lease agreement. The initial step for that is to carefully identify the important provisions of the current provision. You must also take different lease-related terms into account. Here are some examples – lease duration, rental amount, maintenance responsibilities
- Then, you need to start communication with your tenant. You must start the conversation before the lease expires. When you build an open line of communication, it becomes easier to follow through the lease renewal process.
- Before you negotiate and modify the terms and conditions, it is important to assess the current market trends related to rental properties.
- Once you have taken care of the current market trends, you must negotiate the terms and conditions of the agreement.
- Now, the next step is to prepare the renewal agreement.
- Include all the necessary clauses related to the lease agreement.
- Now, get the draft verified by a local attorney and send it to your tenant.
- Once both parties agree on the terms and conditions, the landlord must retain a copy of the notice.
Final Words
Lease renewals can be good for both renters and landlords. Renters can increase their stay on the property while the landlords can skip the chances for prolonged vacancy. Hopefully, this article was helpful for you to understand how a renewal of rent agreements works. However, if you have any queries, let us know through the comment section below. Thank you for reading.
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