Common Terminology in Leasing Agreements
A lease agreement is a legally binding contract that creates obligations for both landlord and tenant. To understand the obligations created by a lease agreement, it is necessary to understand some essential terminology.
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Lease Agreement
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A lease agreement is a contract in which a property owner provides the right to use and control the property in exchange for rent. In most states, the contract must be written to be valid for more than one year.
Term
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The term is the period for which the parties agree to obligate themselves to a lease agreement. Most residential leases are for one year. Commercial and agricultural leases can have terms lasting several years.
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Acceleration Clause
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An acceleration clause requires immediate payment of the rent for the rest of the lease term if the tenant fails to fulfill specified obligations. These are usually used for a failure to pay rent.
Sublease
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A sublease is entered between a tenant and a third party and conveys the same leased property. The original tenant remains liable for rent if the sublessee fails to pay.
Assign
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To assign means to transfer a party's rights in a lease agreement to another party. This is similar to a sublease, but the original party is no longer obligated under the lease.
Deposit
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A deposit is money given to a landlord by a tenant as security for the tenant's performance under the lease. Typically, the landlord may use the deposit to repair damage caused by the tenant or if the tenant fails to pay rent.
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References
- Photo Credit signing a contract image by William Berry from Fotolia.com
