Tip of the Month - May, 2022


Source: Property Management & Managing Risk
By: Robert C. Kyle & Floyd M. Baird, RPA/SMA

Because a lease is a contract, the general requirements for a valid lease are similar to those for a legally enforceable contract.  Both/(all) parties to the lease must have the legal capacity to enter into a contract, and must reach a meeting of the minds.  The objectives of the lease must be legal in nature.  The document must be dated and must provide the valid consideration.

The basic elements of a lease include:
1-Legal names of both/(all) parties
2-Description of the property
3-Term of the lease
4-Consideration or amount of rent
5-Time and method of payment
6-Use of the premises
7-Rights and obligations of both/(all) parties

Written, oral and implied leases are all covered by the statute of frauds of the state in which the property is located. This statue requires any lease not fully performable within one year of its execution to be in writing to be legally enforceable.  Although an oral lease agreement for less than one year is usually enforceable, it is wise for the property manager to protect the owner’s interests by executing all leases in writing.


This web page was updated 4/29/2022.