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A lease is a
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
ual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an
asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can ...
.
Property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
, buildings and vehicles are common assets that are leased. Industrial or business equipment are also leased. Basically a lease agreement is a contract between two
parties A party is a gathering of people who have been invited by a host for the purposes of socializing, conversation, recreation, or as part of a festival or other commemoration or celebration of a special occasion. A party will often feature f ...
: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. The lessee also agrees to abide by various conditions regarding their use of the property or equipment. For example, a person leasing a car may agree to the condition that the car will only be used for personal use. The term rental agreement can refer to two kinds of leases: * A lease in which the asset is
tangible property In law, tangible property is literally anything that can be touched, and includes both real property and personal property (or moveable property), and stands in distinction to intangible property. In English law and some Commonwealth legal sy ...
. Here, the user '' rents'' the asset (e.g. land or goods) ''let out'' or ''rented out'' by the owner (the verb ''to lease'' is less precise because it can refer to either of these actions). Examples of a lease for
intangible property Intangible property, also known as incorporeal property, is something that a person or corporation can have ownership of and can transfer ownership to another person or corporation, but has no physical substance, for example brand identity or k ...
include use of a computer program (similar to a license, but with different provisions), or use of a
radio frequency Radio frequency (RF) is the oscillation rate of an alternating electric current or voltage or of a magnetic, electric or electromagnetic field or mechanical system in the frequency range from around to around . This is roughly between the uppe ...
(such as a contract with a cell-phone provider). * A periodic lease agreement (most often a month-to-month lease) internationally and in some regions of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
.


General terms

A lease is a legal
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
, and thus enforceable by all parties under the
contract law A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...
of the applicable jurisdiction. In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
, since it also represents a conveyance of possessory rights to real estate, it is a hybrid sort of contract that involves qualities of a
deed In common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring ...
. Some kinds of leases may have specific clauses required by statute depending upon the property being leased, the jurisdiction in which the agreement was signed, and the residence of the parties. Common elements of a lease agreement include: * Names of the parties of the agreement. * The starting date and duration of the agreement. * Identifies the specific object (by street address, VIN, or make/model, serial number) being leased. * Provides conditions for renewal or non-renewal. * Has a specific consideration (a lump sum, or periodic payments) for granting the use of this object. * Has provisions for a security deposit and terms for its return. * May have a specific list of conditions which are therein described as Default Conditions and specific Remedies. * May have other specific conditions placed upon the parties such as: ** Need to provide insurance for loss. ** Restrictive use. ** Which party is responsible for maintenance. * Termination clause (describing what will happen if the contract is ended early or cancelled by either of the parties, stating the rights of parties to terminate the lease, and their obligations) All kinds of personal property (e.g. cars and furniture) or real property (e.g. raw land, apartments, single family homes, and business property, which includes wholesale and retail) may be leased. As a result of the lease, the owner (lessor) grants the use of the stated property to the lessee.


Leases of land

The narrower term 'tenancy' describes a lease in which the
tangible property In law, tangible property is literally anything that can be touched, and includes both real property and personal property (or moveable property), and stands in distinction to intangible property. In English law and some Commonwealth legal sy ...
is land (including at any vertical section such as airspace,
storey A storey (British English) or story ( American English) is any level part of a building with a floor that could be used by people (for living, work, storage, recreation, etc.). Plurals for the word are ''storeys'' (UK) and ''stories'' (US). ...
of building or mine). A premium is an amount paid by the tenant for the lease to be granted or to secure the former tenant's lease, often in order to secure a low rent, in long leases termed a ''ground rent''. For parts of buildings it is most common for users to pay also by collateral contract, or by the same contract, a service charge which is normally an express list of services in a lease to minimize disputes over service charges. A gross lease or tenancy stipulates a rent that is for the global amount due including all service charges. A cancelable lease ( UK: determinable/breakable lease) is a lease that may be terminated (formally ''determined'') solely by the lessee or solely by the lessor without penalty. A mutually determinable lease can be determined by either. A non-cancelable lease is a lease that cannot be so terminated. Commonly, "lease" may imply a non-cancelable lease, whereas "rental agreement" may connote a cancelable lease. Influenced by
land registration Land registration is any of various systems by which matters concerning ownership, possession, or other rights in land are formally recorded (usually with a government agency or department) to provide evidence of title, facilitate transactions, ...
, commonly tenancies initially granted for more than a year are referred to more simply as leases. The lease will either provide specific provisions regarding the responsibilities and rights of the lessee and lessor, or there will be automatic provisions as a result of local law. In general, by paying the negotiated fee to the lessor, the lessee (also called a tenant) has possession and use (the rental) of the leased property to the exclusion of the lessor and all others except with the invitation of the tenant. The most common form of real property lease is a residential rental agreement between landlord and tenant. As the relationship between the tenant and the landlord is called a tenancy, this term generally is also used for informal and shorter leases. The right to possession by the tenant is sometimes called a leasehold interest. A lease can be for a fixed period of time (called the term of the lease). A lease may be terminated sooner than its end date by: * Break/cancellation (this depends upon the terms of the lease) * A negotiated deed of
surrender Surrender may refer to: * Surrender (law), the early relinquishment of a tenancy * Surrender (military), the relinquishment of territory, combatants, facilities, or armaments to another power Film and television * ''Surrender'' (1927 film), an ...
or yielding-up. * Forfeiture * By operation of statute (rare) A lease should be contrasted with a
license A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
, which may entitle a person (called a licensee) to use property, but which is subject to termination at the will of the owner of the property (called the licensor). An example of a licensor/licensee relationship is a parking lot owner and a person who parks a vehicle in the parking lot. A license may be seen in the form of a ticket to a baseball game or a verbal permission to sleep a few days on a sofa. The difference is that if there is a term (end time), a degree of privacy suggestive of exclusive possession of a clearly defined part, practised ongoing, recurrent payments, a lack of right to terminate save for misconduct or nonpayment, these factors tend toward a lease; by contrast, a one-time entrance onto someone else's property is probably a license. The seminal difference between a lease and a license is that a lease generally provides for regular periodic payments during its term and a specific ending date. If a contract has no ending date then it may be in the form of a ''perpetual license'' and still not be a lease. Under normal circumstances, owners of property are at liberty to do what they want with their property (for a lawful purpose), including dealing with it or handing over possession of the property to a tenant for a limited period of time. If an owner has granted possession to another (i.e., the tenant) then any interference with the quiet enjoyment of the property by the tenant in lawful possession is itself unlawful. Similar principles apply to
real property In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or aff ...
as well as to
personal property property is property that is movable. In common law systems, personal property may also be called chattels or personalty. In civil law systems, personal property is often called movable property or movables—any property that can be moved fr ...
, though the terminology differs. The right to sub-lease may or may not be permitted to a tenant. Where it is permitted, the lease granted directly by the owner is called a "headlease", or sometimes a "master lease". Headlease tenants and their tenants who may in turn also sublet are termed ''mesne landlords'' from the old French for middle. The headlease tenant has no right to grant a sublease which extends beyond the end of the headlease. To circumvent
privity of estate Privity of estate is a mutual or successive legal relationship to the same right in real property, such as the relationship between a landlord and tenant. Thus, privity of estate refers to the legal relationship that two parties bear when their es ...
which is the general principle flowing from
privity of contract The doctrine of privity of contract is a common law principle which provides that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract. The premise is that only parties to contracts should be ab ...
, laws exist in several jurisdictions to bind subtenants to some of the restrictive covenants (terms) of the headlease, for instance in England and Wales those which have been held by courts to touch and concern the land. A transfer of a remaining interest in a lease, assignment, is a type of (''alienation'') is often possible and an implied rights to assign exist by compulsory law or as a default position in some jurisdictions. Sharing or parting with possession can be a breach of certain leases resulting in action for forfeiture. Enfranchisement is the obtaining of the landlord's title and is most commonly negotiated with the landlord where a tenant pays only a ''ground rent''. Merger is where the landlord and tenant happen to be the same and can terminate a lease where there are no subtenants in certain jurisdictions. In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
a lessee may negotiate a
right of first refusal Right of first refusal (ROFR or RFR) is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transactio ...
clause into their land or property lease giving them the right to make a purchase offer on the property before the leasor can negotiate with third-party buyers. This gives tenants the ability to commit to a piece of property before any other potential buyers have the opportunity.


History of leases of land

Over the centuries, leases have served many purposes and the nature of legal regulation has varied according to those purposes and the social and economic conditions of the times. Leases, for example, were mainly used for
agricultural Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people ...
purposes until the late 18th century and early 19th century when the growth of cities in industrialized countries made leases an important form of landholding in
urban area An urban area, built-up area or urban agglomeration is a human settlement with a high population density and infrastructure of built environment. Urban areas are created through urbanization and are categorized by urban morphology as cities, ...
s. The modern law of landlord and tenant in common law jurisdictions retains the influence of the common law and, particularly, the ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. A ...
'' philosophy that dominated the law of
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
and
property law Property law is the area of law that governs the various forms of ownership in real property (land) and personal property. Property refers to legally protected claims to resources, such as land and personal property, including intellectual prop ...
in the 19th century. With the growth of
consumerism Consumerism is a social and economic order that encourages the acquisition of goods and services in ever-increasing amounts. With the Industrial Revolution, but particularly in the 20th century, mass production led to overproduction—the sup ...
,
consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent busines ...
legislation recognized that common law principles, which assume equal bargaining power between the contracting parties, create hardships when that assumption is inaccurate. Consequently, reformers have emphasized the need to assess residential tenancy laws in terms of protection they provide to tenants. Legislation to protect tenants is now common. Consequently, Common law has treated Lease as not similar or equivalent to a common commercial contract, especially in regard to the question of whether a Lease Agreement can be terminated by
notice Notice is the legal concept describing a requirement that a party be aware of legal process affecting their rights, obligations or duties. There are several types of notice: public notice (or legal notice), actual notice, constructive notice Se ...
, in the same way and manner as a usual commercial contract.


Types of tenancies


Fixed-term tenancy or tenancy for years

A fixed-term tenancy or tenancy for years lasts for some fixed period of time. It has a definite beginning date and a definite ending date. Despite the name "tenancy for years", such a tenancy can last for any period of time—even a tenancy for one week may be called a tenancy for years. At
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omniprese ...
the duration did not need to be certain, but could be conditioned upon the happening of some event, (e.g., "until the crops are ready for harvest" or "until the war is over"). In many jurisdictions that possibility has been partially or totally abolished. A fixed term tenancy comes to an end automatically when the fixed term runs out or, in the case of a tenancy that ends on the happening of an event, when the event occurs. If a holdover tenant remains on the property after the termination of the lease, s/he may become a tenant at sufferance because the lessor/landlord has suffered (or allowed) the tenant to remain as a tenant instead of evicting him or her. Such a tenancy is generally "at will," meaning the tenant or the landlord may terminate it at any time, upon the providing of proper statutory notice.


Periodic tenancy

A periodic tenancy, also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent. An oral lease for a tenancy of years that violates the
Statute of Frauds The Statute of Frauds (29 Car 2 c 3) (1677) was an Act of the Parliament of England. It required that certain types of contracts, wills, and grants, and assignment or surrender of leases or interest in real property must be in writing and sign ...
(by committing to a lease of more than one year—depending on the jurisdiction—without being in writing) may actually create a periodic tenancy, depending on the laws of the jurisdiction where the leased premises are located. In many jurisdictions the "default" tenancy, where the parties have not explicitly specified a different arrangement, and where none is presumed under local or business custom, is a month-to-month tenancy. Either the landlord or the tenant may terminate a periodic tenancy when the period or term is nearing completion, by giving notice to the other party as required by statute or case law in the jurisdiction. Neither landlord nor tenant may terminate a periodic tenancy before the period has ended, without incurring an obligation to pay for the months remaining on the lease. Either party must give notice if it intends to terminate a tenancy from year to year, and the amount of notice is either specified by the lease or by state statute. Notice is usually, but not always, at least one month, especially for the year-to-year periodic tenancy. Durations of less than a year must typically receive notice equal to the period of the tenancy—for example, the landlord must give a month's notice to terminate a tenancy from month to month. However, many jurisdictions have increased these required notice periods, and some have reduced the capacity of a landlord to use them drastically. For jurisdictions that have local rent control laws, a landlord's ability to terminate a residential tenancy is substantially reduced. For example, in California, the cities of Los Angeles, Santa Monica, West Hollywood, San Francisco, and Oakland have "rent stabilization ordinances" that limit a landlord's ability to terminate a periodic tenancy, among other restrictions. The notice must also state the effective date of termination, which, in some jurisdictions, ''must'' be on the ''last day'' of the payment period. In other words, if a month-to-month tenancy began on the 15th of the month, in a jurisdiction with a ''last day'' requirement the termination could not be effective on the 20th of the following month, even though this would give the tenant more than the required one month's notice.


Tenancy at will

A ''tenancy at will'' is a tenancy which either the landlord or the tenant may terminate at any time by giving reasonable
notice Notice is the legal concept describing a requirement that a party be aware of legal process affecting their rights, obligations or duties. There are several types of notice: public notice (or legal notice), actual notice, constructive notice Se ...
. Unlike a periodic tenancy, it isn't associated with a time period. It may last for many years, but it could be ended at any time by either the lessor or the lessee for any reason, or for no reason at all. Proper notice, as always with landlord/tenant law, must be given, as set forth in the state's statutes. If there is no formal lease, the tenancy at will is the one that usually exists. In rare cases it may occur where the tenancy is not for
consideration Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. The court in ''Currie v Misa'' declared ...
. Under the modern
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omniprese ...
, a tenancy at will without compensation is very rare, partly because it comes about only if the parties expressly agree that the tenancy is for no rent, commonly where a family member is allowed to live in a home (a nominal consideration may be required) without any formal arrangements. In most residential tenancies for a fixed term, for consideration, the tenant may not be removed except for cause, even if there is no written lease. (However, an oral lease for more than 12 months is not enforceable if the statute of frauds in the jurisdiction includes leases of more than 12 months.) Many residential leases convert to "at will" tenancy subject to 30 days' notice. Alternatively, a tenancy at will (without a specific time limit) may exist for a temporary period where a tenant wishes to take possession of a property and the landlord agrees, but there is insufficient time in which to negotiate and complete a new lease. In this case, the tenancy at will is terminated as soon as a new lease is negotiated and signed. The parties may also agree on the basis that if the parties fail to enter into a new lease within a reasonable time period, then the tenant must vacate the premises. If a lease exists at the sole discretion of the landlord, the law of the jurisdiction may imply that the tenant is granted, by
operation of law The phrase "by operation of law" is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles. For example, if a person dies wi ...
, a reciprocal right to terminate the lease at will. However, a lease that explicitly exists at the will of the tenant (e.g. "for as long as the tenant desires to live on this land") generally does not imply that the landlord may terminate the lease; rather, such language may be interpreted as granting the tenant a
life estate In common law and statutory law, a life estate (or life tenancy) is the ownership of immovable property for the duration of a person's life. In legal terms, it is an estate in real property that ends at death when ownership of the property may ...
or even a
fee simple In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. A "fee" is a vested, inheritable, present possessory interest in land. A "fee simple" is real property held without limit of time (i.e., per ...
. A tenancy at will is broken, again by
operation of law The phrase "by operation of law" is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles. For example, if a person dies wi ...
, if the: * Tenant commits
waste Waste (or wastes) are unwanted or unusable materials. Waste is any substance discarded after primary use, or is worthless, defective and of no use. A by-product, by contrast is a joint product of relatively minor economic value. A waste prod ...
against the property; * Tenant attempts to assign the tenancy; * Tenant uses the property to operate a criminal enterprise; * Landlord transfers his/her interest in the property; * Landlord leases the property to another person; * Tenant or landlord dies. The specifics of these rules differ from jurisdiction to jurisdiction. Subject to any notice required by law, a tenancy at will also comes to an end when either the landlord or the tenant acts inconsistently with a tenancy. For example, the changing of locks by the landlord is an indication of the end of the tenancy, as is the vacation of the premises by the tenant. However, in some jurisdictions, such as California, a landlord is prohibited from using a "self help" remedy, such as changing the locks, to terminate a tenancy, particularly a residential tenancy. Doing so may constitute a "constructive eviction" and expose the landlord to civil and criminal liability.


Tenancy at sufferance

A ''tenancy at sufferance'' (sometimes called a ''holdover tenancy'') exists when a tenant remains in possession of a property after the expiration of a lease, and until the landlord acts to eject the tenant from the property. Although the tenant is technically a
trespasser In the law of tort, property, and criminal law a trespasser is a person who commits the act of trespassing on a property, that is, without the permission of the owner. Being present on land as a trespasser thereto creates liability in the ...
at this point, and possession of this type is not a true estate in land, authorities recognize the condition in order to hold the tenant liable for rent. The landlord may
evict Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mortg ...
such a tenant at any time, and without notice. The landlord may also impose a new lease on the holdover tenant. For a residential tenancy, this new tenancy is month to month. For a commercial tenancy of more than a year, the new tenancy is year to year; otherwise it is the same period as the period before the original lease expired. In either case, the landlord can raise the rent, so long as the landlord has told the tenant of the higher rent before the expiration of the original lease.


Formalities

Formal requirements for a lease are determined by the law and custom of the jurisdiction in which real property is located. In the case of personal property, it is determined by the law and custom of the jurisdiction in which the rental agreement is made. A tenancy for a duration greater than one year must be in writing in order to satisfy the
Statute of Frauds The Statute of Frauds (29 Car 2 c 3) (1677) was an Act of the Parliament of England. It required that certain types of contracts, wills, and grants, and assignment or surrender of leases or interest in real property must be in writing and sign ...
.


Term

The term of the lease may be fixed, periodic or of indefinite duration. If it is for a specified period of time, the term ends automatically when the period expires, and no notice needs to be given, in the absence of legal requirements. The term's duration may be conditional, in which case it lasts until a specified event occurs, such as the death of a specified individual. A periodic tenancy is one which is renewed automatically, usually on a monthly or weekly basis. A tenancy at will lasts only as long as the parties wish it to, and may be terminated by either party without penalty. It is common for a lease to be extended on a "holding over" basis, which normally converts the tenancy to a periodic tenancy on a month by month basis. It is also possible for a tenant, either expressly or impliedly, to give up the tenancy to the landlord. This process is known as a "surrender" of the lease. There have been recent restrictions and limitations in
New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
regarding lease terms. One limitation in particular stated that units can not be leased for a period of less than two weeks and any unit leased for less than 90 days may not allow guests or pets in the unit.


Transparency and fine print

As stated by the Australian Consumer Law (ACL), 2013, a lack of transparency regarding a term in a standard-form consumer contract may cause a significant imbalance in the parties' rights and obligations. This article contains quotations from this source, which is available under the Creative Commons Attribution 3.0 Australia license. A term is considered transparent if it is: * expressed in reasonably plain language * legible * presented clearly * readily available to any party affected by the term Terms that may not be considered transparent include terms that are hidden in
fine print Fine print, small print, or mouseprint is less noticeable print smaller than the more obvious larger print it accompanies that advertises or otherwise describes or partially describes a commercial product or service. The larger print that is us ...
or schedules or phrased in complex or technical language.


Rent

Rent is a requirement of leases in some common law jurisdictions, but not in civil law jurisdictions. In England and Wales it was held in the case of '' Ashburn Anstalt v Arnold'' that rent was not a requirement for there to be a lease, however the court will more often construe a licence where no rent is paid as it is seen as evidence for no intention to create legal relations. There is no requirement for the rent to be a commercial amount; a peppercorn or rent of some nominal amount is sufficient for this requirement.


Exclusive possession

A sharing arrangement with much of a landlord's property or, for no specific room of a building for instance, may defeat a finding of a lease, however this common requirement of a lease is interpreted differently in many jurisdictions.


Provisions specific to car rental

In addition to the above, a car rental agreement may include various restrictions on the way a renter can use a car, and the condition in which it must be returned. For example, some rentals cannot be driven off-road, or out of the country, or towing a trailer, without specific permission. In New Zealand you may have to specifically endorse a promise that the car will not be driven onto Ninety-Mile Beach (because of the hazardous tides). There will certainly be a requirement to show a
driver's license A driver's license is a legal authorization, or the official document confirming such an authorization, for a specific individual to operate one or more types of motorized vehicles—such as motorcycles, cars, trucks, or buses—on a public r ...
, and only those drivers appearing on the contract may be authorized to drive. It may include an option to purchase
auto insurance Vehicle insurance (also known as car insurance, motor insurance, or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury r ...
(UK: motor insurance), if the renter does not already have a policy to cover rentals—another important consideration for multiple drivers. Some agencies may even require a bond payable if the car is not returned in order, often held in the form of a credit-card authorization—voided if the car is returned per agreement. A renter should be advised that he or she will be responsible for any tolls, parking or traffic violations incurred upon the vehicle during the rental period. There should also be advice on handling thefts, accidents, break-downs, and towing. Further terms may include added fees for late returns, drop-off at a different location, or failure to top up the petrol immediately before the return. Finally, there may be provisions for making a non-refundable deposit with a booking, terms for payment of the initial period (with discounts, vouchers, etc.), extended periods, and any damages or other fees that accrue prior to the return.


Leasing property

A rental agreement is often called a lease, especially when
real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...
is rented. Real estate rentals are initiated by a rental application which is used to build the terms of the lease. In addition to the basics of a rental (who, what, when, how much), a real estate rental may go into much more detail on these and other issues. The real estate may be rented for
housing Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether i ...
,
parking Parking is the act of stopping and disengaging a vehicle and leaving it unoccupied. Parking on one or both sides of a road is often permitted, though sometimes with restrictions. Some buildings have parking facilities for use of the buildings' ...
vehicles, storage, business, agricultural, institutional, or government use, or other reasons. * Who: The parties involved in the contract, the lessor (sometimes called the owner or landlord) and the lessee (sometimes called the renter or tenant) are identified in the contract. A housing lease may specify whether the renter is living alone, with family, children, roommate, visitors. A rental may delineate the rights and obligations of each of these. For example, a "sub-let" to a stranger might not be permitted without permission of the landlord. This also applies to whether or not
pet A pet, or companion animal, is an animal kept primarily for a person's company or entertainment rather than as a working animal, livestock, or a laboratory animal. Popular pets are often considered to have attractive appearances, intelligence, ...
s may be kept by the renter. On the other hand, the renter may also have specific rights against intrusions by the landlord (or other tenants), except under emergency circumstances. A renter is in possession of the property, and a landlord would be trespassing upon the renter's rights if entry is made without proper notice and authority (e.g., 24 hours' notice, daytime, knock first, except for emergency repairs, in case of fire, flood, etc.). * What: Rented real estate may include all or part of almost any
real property In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or aff ...
, such as an apartment, house, building, business offices or suite, land, farm, or merely an inside or outside space to park a vehicle, or store things. The premises rented may include not only specific rooms, but also access to other common areas such as off-street parking, basement or attic storage, laundry facility, pool, roof-deck, balconies, etc. The agreement may specify how and when these places may be used, and by whom. There may be detailed description of the current condition of the premises, for comparison with the condition at the time the premises are surrendered. * When: the term of the rental may be for a night (e.g., a hotel room), weeks, months, or years. There may be statutory provisions requiring registration of any rental that could extend for more than a specified number of years (e.g., seven) in order to be enforceable against a new landlord. :A typical rental is either annual or month-to-month, and the amount of rent may be different for long-term renters (because of lower turnover costs). Leaving a long-term lease before its expiration could result in penalties, or even the cost of the entire agreed period (if the landlord is unable to find a suitable replacement tenant, after diligent pursuit). If a tenant stays beyond the end of a lease for a term of years (one or more), then the parties may agree that the lease will be automatically renewed, or it may simply convert to a tenancy at will (month-to-month) at the pro-rated monthly cost of the previous annual lease. If a tenant at will is given notice to quit the premises, and refuses to do so, the landlord then begins eviction proceedings. In many places it is completely illegal to change locks on doors, or remove personal belongings, let alone forcibly eject a person, without a court order of eviction. There may be strict rules of procedure, and stiff penalties (triple damages, plus attorneys' fees) for violations. * How much: Rent may be payable monthly, annually, or in advance, or as otherwise agreed. A typical arrangement for tenancy at will is "first and last month's rent" plus a
security deposit A security deposit is a sum of money held in trust either as an initial part-payment in a purchasing process (often used to prevent the seller's selling an item to someone else during an agreed period of time while the buyer verifies the suitabili ...
. The "last month's rent" is rent that has yet to be earned by the landlord.


Deposit

The security deposit is often handled as an
escrow An escrow is a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacti ...
deposit, owned by the tenant, but held by the landlord until the premises are surrendered in good condition (ordinary wear and tear excepted). In some states, the landlord must provide the tenant with the name and account number of the bank where the security deposit is held, and pay annual interest to the tenant. Other regulations may require the landlord to submit a list of pre-existing damage to the property, or forfeit the security deposit immediately (because there is no way to determine whether a prior tenant was responsible). In UK the government has introduced deposit protection scheme leading to several property inventory services which can optionally be used to carry out an inventory.


Insurance

In order to rent (alternatively called lease) in many apartment buildings, a renter (lessee) is often required to provide proof of renters
insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
before signing the rental agreement. There is a special type of the
homeowners insurance Home insurance, also commonly called homeowner's insurance (often abbreviated in the US real estate industry as HOI), is a type of property insurance that covers a private residence. It is an insurance policy that combines various personal insura ...
in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
specifically for renters— HO-4. This is commonly referred to as renter's
insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
or renter's coverage. Similar to
condominium A condominium (or condo for short) is an ownership structure whereby a building is divided into several units that are each separately owned, surrounded by common areas that are jointly owned. The term can be applied to the building or complex ...
coverage, referred to as a HO-6 policy, a renter's insurance policy covers those aspects of the
apartment An apartment (American English), or flat (British English, Indian English, South African English), is a self-contained housing unit (a type of residential real estate) that occupies part of a building, generally on a single story. There are m ...
and its contents not specifically covered in the
blanket policy Blanket policy is a policy which behaves similarly to a variety of things. Based on Webster's Dictionary it "covers a group or class of things or properties instead of one or more things mentioned individually, as where a mortgage secures various d ...
written for the complex. This
policy Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organ ...
can also cover liabilities arising from accidents and intentional injuries for guests as well as passers-by up to 150' of the domicile. Renter's policies provide "named peril" coverage, meaning the policy states specifically what you are insured against. Common coverage areas are: * Accidental discharge of water *
Fire Fire is the rapid oxidation of a material (the fuel) in the exothermic chemical process of combustion, releasing heat, light, and various reaction Product (chemistry), products. At a certain point in the combustion reaction, called the ignition ...
or
lightning Lightning is a naturally occurring electrostatic discharge during which two electrically charged regions, both in the atmosphere or with one on the ground, temporarily neutralize themselves, causing the instantaneous release of an average ...
*
Smoke Smoke is a suspension of airborne particulates and gases emitted when a material undergoes combustion or pyrolysis, together with the quantity of air that is entrained or otherwise mixed into the mass. It is commonly an unwanted by-produ ...
*
Theft Theft is the act of taking another person's property or services without that person's permission or consent with the intent to deprive the rightful owner of it. The word ''theft'' is also used as a synonym or informal shorthand term for some ...
*
Vandalism Vandalism is the action involving deliberate destruction of or damage to public or private property. The term includes property damage, such as graffiti and defacement directed towards any property without permission of the owner. The term ...
or malicious mischief * Windstorm Additional events including riot, aircraft, explosion, hail, falling objects,
volcanic eruption Several types of volcanic eruptions—during which lava, tephra (ash, lapilli, volcanic bombs and volcanic blocks), and assorted gases are expelled from a volcanic vent or fissure—have been distinguished by volcanologists. These are oft ...
, snow, sleet, and weight of ice may also be covered.


Sublease

In real estate law, sublease (or, less formally, sublet) is the name given to an arrangement in which the lessee (e.g. tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant. This means they are not only leasing the property, but also subleasing it simultaneously. For example, if a company leases an office space directly from a landlord, the lessor, and subsequently outgrows the office, then the company can sublease the smaller office space to another company, the subtenant, and enter into a new lease for a larger office space, thereby hedging their real estate exposure. The sublessor remains liable to the original lessor in accordance with the initial lease, including all remaining rent payments, including operating expenses and all other original lease terms. In a down-market, the original lessee may require a lower rent payment from the sublessee than what he or she may have originally paid, leaving the remaining rent owed to the lessor to be paid by the original lessee. However, if market prices have increased since the original lease was signed, the sublessor might be able to secure a higher rent price than what is owed the original lessor. However, many commercial leases stipulate that any overages in rent be shared with the landlord, the lessor. In residential real estate, it is sometimes illegal to charge the subtenant more than the original amount in the sublessee's contract (for instance, in a
rent control Rent regulation is a system of laws, administered by a court or a public authority, which aims to ensure the affordability of housing and tenancies on the rental market for dwellings. Generally, a system of rent regulation involves: *Price cont ...
situation where the rental amount is controlled by law). Subletting of
social housing Public housing is a form of housing tenure in which the property is usually owned by a government authority, either central or local. Although the common goal of public housing is to provide affordable housing, the details, terminology, d ...
is generally illegal, whatever the rent charged to the subtenant; in the UK it is officially described as a category of housing fraud. In New York the subletting of Mitchell-Lama cooperatives is illegal. Mitchell-Lama residents must maintain a primary residence to remain in their cooperative. A sublease can also apply to vehicles as an alternate type of car rental. In a vehicle sublease, a lessee or vehicle owner can assign a lease to a third party and by way of contractual agreement for specific dates. Although this arrangement is not popular, it is a growing trend in the travel industry as a less expensive alternative for travelers and locals.


Equipment leasing

Leasing is also used as a form of financing to acquire equipment for use and purchase. Many organizations and companies use lease financing for the acquisition and use of many types of equipment, including manufacturing and mining machinery, vessels and containers, construction and off-road equipment, medical technology and equipment, agricultural equipment, aircraft, rail cars and rolling stock, trucks and transportation equipment, business, retail and office equipment, IT equipment and software. Lease financing for equipment is generally provided by banks, captives and independent finance companies.


See also

* Ecoleasing *
Finance lease A finance lease (also known as a capital lease or a sales lease) is a type of lease in which a finance company is typically the legal owner of the asset for the duration of the lease, while the lessee not only has operating control over the asset, b ...
*
Leasehold estate A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a ...
*
Leasehold valuation tribunal A leasehold valuation tribunal (LVT) was a statutory tribunal in England which determined various types of landlord and tenant dispute involving residential property in the private sector. An LVT consisted of a panel of three; one with a backgr ...
* Leveraged lease *
Operating lease The expression "operating lease" is somewhat confusing as it has a different meaning based on the context that is under consideration. From a product characteristic stand point, this type of a lease, as distinguished from a finance lease, is one w ...
*
Recital (law) In law, a recital (from la, recitare, "to read out") consists of an account or repetition of the details of some act, proceeding or fact. Particularly, in law, that part of a legal document—such as a lease, which contains a statement of certain ...
*
Renting Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for ...
* Vehicle leasing


References


External links


Lease Journal Entries
{{Authority control Contract law Property law Business terms Business law Legal documents Landlord–tenant law