If you’re a prospective tenant or landlord entering into a leasing transaction then it’s likely that you will be asked to sign a number of different documents. It’s important to understand the differences between each document and how they interact in order to determine which is appropriate for your situation.
- Offer To Lease
The first document you’ll commonly be asked to sign is an Offer To Lease. This document is normally prepared by a property agent and sets out a few pages of key terms that will form the foundation of the Lease. These terms usually include the property address and size, rent and annual increases, proportion of outgoings, security bond, whether there will be personal guarantees and any sort of incentive or special conditions. Once the Offer To Lease is signed by the parties, the tenant will usually pay a deposit and the landlord will instruct its solicitors to proceed with preparing the formal Lease.
Whether the Offer To Lease is binding will depend on its terms. The document may expressly say that it is not binding, in which case either party can pull out of the negotiations and the deposit will be refunded. In some cases the document may be binding and entitle the landlord to keep the deposit if the tenant has a change of mind, and perhaps further recourse against the tenant.
The Lease is the formal document containing all of the agreed terms and conditions for the transaction. It will become binding once it is signed by both parties. Once the Lease commences, a copy is normally lodged with the Land Titles Office to be registered on the property’s Title. The length of the Lease will determine whether registration is required. In a straightforward leasing transaction, the Lease will usually be the final document to be signed.
- Agreement For Lease
In some situations, the parties will be ...