Lease is More - How to Create a Lease without Killing a Tree

By: Anthony L. Barthel, Esq.

A lease is a legal mechanism by which two or more parties agree upon the terms of use of property. Leases range from simple weekend lease for use of a cabin to ground leases running for a century. Increasingly, homeowners are finding that leasing their property, rather than selling, is the only alternative when desiring to move given the current market conditions. As such, homeowners are on the lookout for the right “form” with which to lease their home. Landlords who provide simple leases set clear expectations that help avoid future problems.

Lease Essentials

Every lease must cover the bare essentials – identification of the parties, identification of the property, the term of the lease and the price to be paid. If accomplished efficiently, these essentials can be disposed of in less than a page.

Parties

Often, parties to a lease are not adequately identified. The tenant may include one person but not another who will be using the premises. As a rule of thumb, each person of majority age should be a party to the lease – this will leave the landlord with the maximum number of people to be held accountable for use of the space and for payment. Further, the landlord may wish to organize a limited liability company to hold the property to reduce claims made against any of the landlord’s personal property. This organization should be done before the lease is signed and the lease should carefully recite the legal name of such an organization to take advantage of the limited liability protection it provides.

Premises

Identification of the leased premises can be problematic. For example, if the property contains multiple units or storage buildings not intended on being rented, simply providing the street address for the entire property does not suffice. In order to be clear, a written explanation of the leased premises may be appropriate and the landlord should consider attaching a drawing of the leased premises, showing the area to be rented.

Term

When the lease begins and ends is not as simple as one may think. Many times a landlord is willing to extend options for additional periods or leave the termination date loosely defined. Care should be taken to identify start dates and times, as well as a date certain when the lease ends. Any options for additional periods should take into account how any additional period of time will terminate and how the landlord and tenant are required to communicate with one another regarding lease extensions.

Payment

How much is to be paid, when payment is required and where payment is to be made can be lost on the unwary. Clearly defined monthly rent, including any formula for rent increases and timing, should be thought out ahead of time. Landlords should be careful to include any fees for upkeep of the property, utilities, or ancillary services such as lost key replacement. Tenants are masters at the art of arguing for a “grace period” or the “check is in the mail”. Dates certain and locations where rent payments are to be delivered take the wind out of these arguments and establish a consistent pattern of dealing that tenants are more likely to follow if enforced fairly.

Gotch’ya” Provisions

Drafting for unknown future events can fill volumes of pages. Even so, a few simple provisions can cover a multitude of common issues faced by residential landlords.

Lead Paint Disclosure

If the premises to be rented were constructed prior to 1978, the home may contain lead based paint. Landlords of these properties should provide a pamphlet created by the Environmental Protection Agency and should have the Tenant acknowledge receipt of the pamphlet and the risks involved with letting the home.

Security Deposits

How many landlords have entered the premises following a tenancy only to find it trashed? A pre-move in inspection addendum should be included with the lease as well as the procedure to follow after having moved out. Even though handling of security deposit funds is governed by Minnesota statutes, adequately documenting the condition of the property prior to the move in is absolutely necessary to defend the retention of security deposits for repairs.

Statutory Disclosures

Minnesota law requires certain disclosures in all residential leases. For example, Minnesota law requires a notice regarding certain seizures of illegal materials and termination of the lease. Landlords who have been using the same lease form for many years should be sure to check for updates in the law.

Free Sample Lease and Guide to Landlord and Tenants Rights and Responsibilities

The Minnesota State Bar Association has created a simple residential lease for use by the public. Additionally, the Minnesota Attorney General’s Office maintains a very useful guide for landlords and tenants. If you want a free electronic copy of the Lease and Guide in .pdf format, please e-mail me at abarthel@skjold-barthel.com.