Whether you are a tenant or a landlord, drafting a lease agreement is an important part of the renting process. To be successful and to avoid future headaches, you need to understand the Term Provision of a lease agreement and how to draft a lease agreement that is fair to both sides.
Understanding The Term Provision of a Lease Agreement
First, you need to decide whether the lease will be at will, month-to-month, or for a set period of time, like a year.
An “at will” lease means that either the landlord or the tenant can cancel the lease, at any time, without breaching the contract.
To create an at will tenancy, you should put language in a written lease agreement that explicitly states that the lease is “at will” and that “either party may terminate the tenancy at any time.”
Term of Years
A “term of years” tenancy means that the lease will last for a fixed period of time, like 7 months or a year, and then terminate automatically. Under a term of years lease, neither party has to give the other party notice that they don’t plan to renew the lease.
To create a term of years tenancy in a written lease agreement, you should include a statement in the contract that provides that “the tenancy is for a term ending on [a certain date]” and that parties wishing to renew the lease should give proper notice ahead of time.
A “periodic tenancy” is the most common type of lease. A periodic tenancy lease continues from year to year or for successive fractions of a year (such as weekly or monthly) until it is terminated by proper notice by either party. The key to a periodic tenancy lease, is that the termination date is always uncertain, which means it renews automatically.
To create a periodic tenancy in a written lease agreement, the contract should expressly state the successive periods of the lease. For example, if both parties would like to only commit to one month at a time, then the lease would say something like “Landlord leases to Tenant from month to month.”