A lease contract is a formal document that is prepared for leasing or purchasing of certain asset or property. The leasing can be done for both intangible and tangible property. The purchase is done generally of real estate where not only can the lessee rent but also reserve the option to refuse purchase of the property. The contract must be drawn to state the terms and conditions as well as purpose. For purchases, the tenant or buyer can choose the desired property which the owner can lease for a certain period of time. With the cessation of the period the tenant can choose whether he wishes to buy the property or not. The prices and rent are decided beforehand. If a deposit is made it is nonrefundable. The lease contract is very important for legal purposes and hence must be created with the strictest adherence to certain guidelines:
- The name of the owner and the lessee/ potential buyer must be clearly stated for avoiding legal confusions in the future.
- The intent for the contract drawn must be specified: whether it is for purchase or just rent.
- The clause for ‘right for first refusal’ should be inserted. The lessee reserves the right to not purchase the property after renting it.
- The terms and conditions for renting and/or purchasing should be clearly mentioned.
- In case of any damage done to the property while on rent, the required actions needed to be taken must also be mentioned.
- The time period for the lease contract must be stated.
- The mode of payment and the deposit to be made against the property should be specified. There will be no return of the deposit once made.
The lease contract can be a bilateral or a unilateral contract depending on the intent.