What Does Lease Agreement Mean?

In today’s world, it is becoming more and more common to use a type of contract such as a lease. This is due to the fact that not everyone has the opportunity to buy their own property. Renting a dwelling or office space helps to solve the current problem of accommodating your employees or a particular place of residence.

The agreement between the lessor and the renter is called a lease. It sets out the terms of the agreement so that each party is aware of their responsibilities and rights in relation to the lease. It is important to understand that the tenancy agreement is intended to protect the two parties. The most important thing is to maintain communication throughout the process from the signing of the lease to its expiry date. Only by doing so can you avoid many unpleasant situations and, in most cases, resolve them before legal complications arise.

The Concept of a Lease Agreement

A lease agreement is a legal document that sets out the terms and conditions of a commercial or residential property lease between the owner of the property, also known as the landlord, and the tenant. 

Drawing up a thorough and effective lease agreement is very important as it protects all parties involved in the rental agreement throughout the term of the lease. Often landlords start with a standard lease agreement, but it is possible to use a lease agreement tamplate. It is worth pointing out that the wording and terms may be negotiated by all parties before signing, after which the lease agreement becomes a legally binding document.

The agreement is made in duplicate for each party, so they must keep their own copy of the document until it is terminated or expires. This is particularly useful in the event of a dispute.

A lease does not give the tenant any rights of ownership. However, the landlord does have the option of allowing the renter to adapt the property to his or her needs. Throughout the lease term, the tenant is responsible for keeping the property safe. Lease agreements can be used to rent out cars, using a car lease agreement sample, household appliances, construction equipment and other things.

The Main Elements of a Lease Agreement

The lease agreement sets out and details the obligations and responsibilities of the landlord and the tenant. All the information about which the parties have agreed is written down in the document, especially the duration of the lease, the amount of the monthly rent and the responsibility for the upkeep of the property. It is important for parties to know that the lease may be modified before it is signed. If there are clauses in the document that are unclear or one of the parties does not agree, they can be discussed and changed before the agreement is signed.

The terms of a lease agreement can vary greatly, depending on the type of lease and the specific needs of the tenant and landlord. However, a classic lease agreement consists of certain clauses:

  •   The names of the parties or their representatives;
  •   Details of the property;
  •   Amount of rent, payment terms, grace period and penalties for late payment;
  •   Method of payment;
  •   How to terminate the contract prior to the expiry date of the contract;
  •   Amount and information about the security deposit account;
  •   The utilities provided by the landlord and, if there are any lower charges for these utilities, how these charges will be calculated;
  •   Facilities that are allowed to be used by the tenant;
  •   Contact information;
  •   Rights and obligations;
  •   Resolution of disputes;
  •   Existence of restrictions;
  •   Maintenance and repairs.

Leases usually have two possible end dates – a fixed term or an automatic renewal. Fixed-term end dates define a specific period of time during which the lease is valid. At the end of the lease term, both parties must agree to renew and either include an addendum to the lease extending it or sign a new lease. The automatic renewal continues indefinitely, unless the landlord or tenant gives notice to terminate the lease.

Commercial Lease Agreements

There are several different types of commercial lease. Commercial leases are often for a long period of one to ten years. The period usually depends on how big the company is, and the larger the tenant the longer the agreement will be.

Some commercial leases require the tenant to pay rent plus operating costs to the landlord, while others require tenants to pay rent plus property tax and insurance. There are four types of lease:

  • Single-Net Leases. The renter is responsible for paying the property tax.
  • Double-Net Leases. Responsibility for payment of property taxes and insurance.
  • Triple-Net Leases. Payment of property taxes, insurance and running costs.
  • Common Lease. The tenant pays the rent and the landlord is responsible for the remaining costs.


You can have a lawyer draw up the agreement and have it drafted in accordance with the law. You can write the document yourself, but knowledge of the applicable law is important, or you can use the commercial lease agreement template.

Leases are legally binding agreements, so the wording in the lease agreement should be clear and comprehensive.  Landlords have several options when entering into a lease agreement:

  • Use an experienced solicitor. 
  • Create your own, using a standard template and customizing it to suit tenants’ needs. It is easy to use lease agreements templates that can be found on the internet or use the software package PandaDoc, whose library contains many different document templates, including room lease agreement example.
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