What is required for a valid lease?

THE MINIMUM REQUIREMENTS OF A LEASE/RENTAL AGREEMENT.
There are for­mal require­ments for the con­tent of a lease doc­u­ment other than the fol­low­ing. Think of the acronym L.A.N.D. All legally enforce­able lease or rental agree­ments must contain:

1. Length of the lease; Monthly, daily, yearly, etc.

2. Amount of the rent;

3. Names of the parties;

4. Descrip­tion of the property;

These equal the acronym LAND. It is an inter­est­ing fact that leases or rental agree­ments for LESS than ONE year do not have to be in writ­ing. But enforc­ing an unwrit­ten rental is very, very dif­fi­cult in a court of law. It becomes a sit­u­a­tion where it one party deniess what the other says. The judge has to try to make sense out of the sit­u­a­tion and one party is prob­a­bly going to be very unhappy with the result­ing judg­ment. In Cal­i­for­nia, the law says all rental/lease agree­ments for MORE THAN ONE YEAR must be in writ­ing and signed by the lessor; but if the lessee does not sign and moves in and pays rent, he or she is bound by the terms of the lease.

1. Dura­tion; How long is the lease. In the text there are time peri­ods listed for var­i­ous types of leases such as land, min­eral leases, and leases relat­ing to minors.

2. Amount; The amount of rent, money paid for the use of the prop­erty must be given and when it is to be paid. Tech­ni­cally, rent is due at the end of a period, but it is allow­able to have an agree­ment where the rent is pre­paid on the first of every month. The first of the month (pre­paid) is the most com­mon form of rental payment.

If a prop­erty is sold while a ten­ant is in occu­pancy, the rental amount paid will be divided between the seller, while he or she owns it, and the buyer receives the bal­ance for the period of time left when the buyer owns the prop­erty. Exam­ple: prop­erty sells and closes escrow on 10th of month. Ten days rent will be cred­ited to seller and 20 days rent will be trans­ferred to buyer. This is called pro­ra­tion of rents. All items that are pro­rated in a sale are based upon a legal month which is thirty (30) days.

3. Secu­rity Deposits; Secu­rity deposits, clean­ing deposits, etc. are deposits of monies given by a lessee to a landlord/lessor for any poten­tial dam­ages that may occur while ten­ant is in occu­pancy. If a prop­erty is dam­aged, the lessor may use these funds to repair dam­age when the ten­ant vacates a prop­erty. The land­lord has 21 days from tak­ing back occu­pancy after a ten­ant moves or vacates the prop­erty. Secu­rity deposits may be used for past due rent; or if the ten­ant leaves per­sonal prop­erty behind and the lessor has to store the prop­erty; and to repair all dam­ages and then send any remain­ing deposit to the ten­ant at any for­ward­ing address. If a prop­erty sells, all deposits are trans­ferred to the new owner to be used for appro­pri­ate expenses at a future date. The new owner has the same 21 day require­ment as the pre­vi­ous owner.

4. Assign­ment and Sub­leas­ing Pro­vi­sions. A sub­lease is a trans­fer of the entire lease­hold estate to another per­son called a sub­lessee. The ten­ant may, if there is no pro­vi­sion to the con­trary, assign or sub­lease the prop­erty to another. If a sub­lease is done, the orig­i­nal ten­ant leases/rents the prop­erty to another. It is usu­ally referred to as a “sand­wich lease.” The orig­i­nal ten­ant is still respon­si­ble for the orig­i­nal lease and the new ten­ant is leasing/renting the prop­erty from the orig­i­nal ten­ant. The sec­ondary ten­ant is respon­si­ble to the orig­i­nal ten­ant and the orig­i­nal ten­ant is respon­si­ble to the land­lord. An exam­ple would be: Home builder John leases a large par­cel of land from the owner. He, the builder, becomes the tenant/lessee. John then builds a group of homes on the prop­erty. He sells the homes to buy­ers. The buy­ers own the home and lease the prop­erty from John. They become sub­lessees to John for the prop­erty and own their homes. At the end of the lease the prop­erty reverts to the orig­i­nal owner of the land and the own­ers of the homes have a prob­lem. They own their build­ings, but have no rights to the land. At this point there must be some­thing done. Does John renew the lease with the landowner? Do the home­own­ers lease the land from the landowner? Does the landowner sell the prop­erty to the home­own­ers? Do the home­own­ers aban­don their homes? Do the home­own­ers remove their homes? Some­thing has to be done as the home­own­ers are sub­lessees and have no rights to the land upon expi­ra­tion of the orig­i­nal lease between John and the landowner. When a devel­oper builds apart­ments on leased land and then leases out the units indi­vid­u­ally he or she has a sand­wich Lease. It does not have to be homes; it can be any type of prop­erty. Com­mer­cial stores use leased land quite often. Many of the major gro­cery stores own their build­ings and have a long-term lease for the land. They also lease their build­ings to other stores and con­tinue with the land lease for the prop­erty. The ten­ant of the store pays rent for the build­ing and the orig­i­nal store owner pays rent to the landowner for the land. These are both exam­ples of sub­lease sit­u­a­tion. Ten­ants can do the same thing. A ten­ant rents an apart­ment and then rents it to another party. The orig­i­nal ten­ant pays rent to the build­ing owner and the sub­lessee pays rent to the orig­i­nal tenant.

If a ten­ant wants to be relieved of all respon­si­bil­ity for the lease, he or she must ASSIGN the lease to another with the landlord’s per­mis­sion. The new ten­ant and land­lord will cre­ate a Nova­tion agree­ment where the new ten­ant assumes all respon­si­bil­ity for the lease and the orig­i­nal ten­ant is totally released from any oblig­a­tions. This is referred to as an ASSIGNMENT of the lease. If the lease is not assigned, the orig­i­nal ten­ancy remains in effect and a sub­lease sit­u­a­tion exists.