In our legislation, the real estate lease agreement is a contractual figure that is used very frequently.
However, it's common for there to be many doubts surrounding the topic, as these are contracts that tend to be very personalized. Depending on the needs of the parties, the types of terms or clauses that the contract should contain will vary.
Below are some of the most important elements and concepts found in most contracts that can serve as a guide:
Table of Contents
- 1 Concept
- 2 Legal Basis
- 3
- 4 The landlord.
- 5 The tenant.
- 6 The good or thing that is the object of the contract.
- 7 The rent.
- 8 Term.
- 9 Property destination.
- 10 Property Status.
- 11
- 12 Bail bond.
- 13 The deposit.
- 14 Inspections.
- 15 Municipal licenses and permits.
- 16 Improvements.
- 17
- 18 Repairs.
- 19
- 20 Subletting.
- 21 Conclusion.
Concept
A lease is a contract by which one person, called the lessor or landlord, undertakes to temporarily deliver to another, called the lessee, a property so that they may possess it in the name of the lessor and use it for the agreed purpose for a determined rent.
Legal Basis
The lease agreement is regulated in the Civil Code Decree 106 of the Congress of the Republic. Specifically in article 1880, which states the following: “A lease is a contract by which one party is obligated to grant the use or enjoyment of a thing for a certain period to another party, who is obligated to pay a determined price for that use or enjoyment.
The landlord.
This is the person who is obligated to deliver a thing to another for temporary use, in exchange for payment of rent. They must be a capable person and have free disposition over the property they wish to lease.
The tenant.
It is the person to whom the landlord grants the temporary use of a property in exchange for rent.
The good or thing that is the object of the contract.
Any type of real estate property may be leased, such as apartments, houses, land, farms, commercial spaces, and others.
The rent.
It refers to the payment agreed upon in the contract and can be in national currency or foreign currency.
Term.
It is established by mutual agreement between the parties and may be extended by a simple exchange of letters. It is important to note that if the agreed-upon term exceeds 3 years, the contract must be executed as a notarized deed.
Property destination.
The intended use of the property subject to the contract must be expressly stated. Examples: commercial, residential, storage.
Property Status.
The lease agreement must specify the current condition of the property, the operational status of the utilities, and details regarding the paint on the walls, the functioning of the locks, the floors, and the security bars, etc.
Bail bond.
It is a figure that can be incorporated into the contract used by the owner or landlord to ensure the tenant's compliance with each of the contractually established clauses.
The deposit.
It is the cash payment that the tenant makes to the landlord to protect the landlord in the event that the tenant fails to comply with any of the terms of the lease. In most cases, the security deposit is equal to one month’s rent and is used to cover overdue rent or repairs for damage the tenant may have caused to the property before the lease ends.
Inspections.
If the landlord and tenant agree, the landlord's right to inspect the property upon prior notice may be established.
Municipal licenses and permits.
Before renting a property, it is important to know what land use designation is on file with the municipality. In other words, if a property is intended for commercial use but is registered as “residential,” you must apply to the municipality to have the designation changed to avoid potential violations and fines. It is recommended that the lease agreement specify which party is responsible for handling this process.
Improvements.
The landlord can authorize the tenant to make improvements with their own funds. It is common to agree that the improvements made will remain in favor of the property without any compensation from the landlord. Alternatively, it can be established that the tenant must return the property without said improvements.
Repairs.
It is normal for any property to show signs of wear and tear from normal use. When it comes to repairs of this kind, the landlord is usually responsible for them. These include: plumbing, water leaks, appliance maintenance, floor repairs, and similar issues.
Subletting.
It is a voluntary, ancillary agreement under which the tenant may assign all or part of their rights and obligations as a tenant to a third party. The right to sublet the property must be stipulated in the lease agreement to avoid disputes between the parties.
By allowing subletting, the lessor tacitly authorizes the lessee to benefit from the civil fruits of the property, that is, the rents that the sublessee will pay. These rents are distinct from those that the lessee owes to the lessor.
Conclusion.
Every contract is different, and therefore the clauses and terms it contains will also vary.
It is important that every contract considers all types of situations that may arise according to each specific case.
This article covered the most common topics. However, it is recommended to seek legal advice to ensure that both parties, landlord and tenant, are protected and thus avoid future contingencies.
