Disputes between landlords and tenants can be costly and annoying for both parties. Often, they could have been avoided if both parties had been clearer about things from the start.
Here are some key issues to clarify in the lease contract.
1. What is included and what is not
As we mentioned in an earlier post, leases are not all priced in the same way. Some include much more than others. Both parties need to know who is responsible for which costs.
2. When and by how much the price can change
Landlords may need to put the price up to cover the rising costs they face. Alternatively, they may just want to raise the rent because they think they can get more. Buyers, on the other hand, need to be sure the price won’t rise beyond what they can afford. As such, it’s important to set out when the price can increase and set a limit on how much it can increase by.
3. How either party can terminate the contract
A business might not go as well as planned. Unexpected events may cause the owners to decide they need to downsize, move to a new location or shut down altogether. A lease that gives them no option to escape early could make this impossible. Likewise, there may be occasions when the landlord wants to terminate the contract, such as if interest rates rise and they can no longer afford the mortgage, or if a developer comes in with an offer they cannot refuse. The lease contract should stipulate conditions for the early termination of the contract.
The lease contract is there to protect both parties, and as such, both should have their legal representatives check it over.