If it’s not in writing, it doesn’t exist!
During your time as a landlord, you’ve probably entered in to an oral lease agreement at some point. If you’re a new landlord, you’ve probably been tempted and have now searched the Internet asking, “Is an oral lease agreement a good idea?” While commercial real estate oral leases are enforceable in Texas , it’s always best to have a written agreement. Let’s discuss why.
When you enter into a verbal agreement with your tenant, there are definitely possibilities of uncertainty and financial loss.
This would appear to be the most simple and important aspect of a lease. It should be – and will be, if you have a signature on the agreement. Without a contract, the date and amount of the monthly rent will be up in the air. You have to rely on your tenant’s word. Wouldn’t it be simpler and safer to have that information in writing so that there is no confusion?
In the unfortunate event that the tenant does not pay rent, a lease will define your course of action. This section holds the tenant accountable and increases the likelihood that you get paid!
Finding A Tenant
You spent time and money marketing your space as well as finding and qualifying your tenant. That money isn’t recouped if there is no written lease. It’s gone. Using a broker to find a tenant costs money. If you don’t have a written agreement that determines the broker’s cost, you only have their word to base your payment on. You need proof of what was agreed on. That’s why, in addition to a broker, you also need a commercial real estate attorney.
You could be stuck paying the cost of all the utilities. The electric, water and gas bills will land on your shoulders if your tenant isn’t held responsible with a lease agreement. This also goes for repairs, cleaning and furnishing. A commercial real estate lease should cover all of these facets. That means that who pays for what expenses under what conditions should be clearly established.
What if your oral lease agreement goes awry and you need to involve lawyers? You pay for that. You will be paying attorneys to help with a number of possible problems:
By working with a commercial real estate attorney, you can be sure that your lease goes into appropriate detail. It will cover issues that may come up between you and your tenant(s). This could even include who handles repairs and damages or something as simple as when the rent is due.
Possibly the worst potential loss: your mind!
Dealing with a tenant with no written lease to enforce can cause a landlord to lose his/her mind. Think about what your tenant may be doing on your property. They could be participating in illegal activities, causing neighboring tenants to complain, or not being held accountable on the insurance policy .
If you don’t have strict, enforceable rules in place, you may end up being held responsible. This can cause you monetary and mental stress.
Get ahead of your problems and losses before they happen. Make sure you’re protected and that your tenant understands what is expected of him. Let’s talk. Fill out the contact form or give me a call to create a commercial real estate lease.
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