Benefits of a business plan

Understand what a Lease Agreement is and in which situations you should use it. How to do it, which essential clauses must be included in your contract. Simple PDF and word templates for printing.

Types of Lease Agreement:

  • Rural Lease
  • Commercial Lease
  • Vehicle Lease

It is a fact that skymarketing has already hired or will hire one day, since it is through the contract that the main economic relations are established in the legal and social world.

You must agree that there is nothing that makes you more sleepy than signing a contract that is shallow, incomplete, full of vices and omissions, right?

That’s why making a lease in the right way has its importance and relevance.

There is important information that needs to be expressly provided for in your contract in order for this business to be safe for you.

There are several types of contracts, such as Rural Lease, Commercial, Commercial Lease, Pasto Lease, and so on…. 

But before knowing them, you must understand what a Lease Agreement is!

1. What is Lease Agreement?

It is when one party assigns to another the use and possession of a movable or immovable property, upon payment, for a specified period.

This contract always involves two parties: the lessee: the one who will enjoy the property; and the lessor, lessor or landlord: the one who owns the property. 

Thus, the lease contract or agreement is the instrument that formalizes the lessee’s right to use, in whole or in part, the property that belongs to the lessor.

But you might be thinking “Wouldn’t that be a rental?” Well, I actually tell you no! They are just similar institutes, but they have differences.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

Lease x Lease Agreement 

The lease must obligatorily have immovable property as its object. Rent, on the other hand, is the price paid for the lease of a property that can be movable or immovable.

In addition, another difference is that in the lease, the lessee has the option to definitively purchase the property at the end of the contract. and in the rent, this option will only be possible if the parties decide to put this in their contract, which they usually do not do.

There are numerous types of contracts, so let’s talk a little about a few.

2. Care in the Rural Lease Agreement 

It is possible to say that the rural lease, or land, is a contract made with a person who owns a certain amount of land and gives it to another person to plant and invest in it for payment.

In this modality, the lessee pays a certain amount to the lessor every month, and this certain and determined amount must be in cash, a fixed amount, and not in percentage or in cattle. 

Although it is possible to replace the fixed amount payment by another type of “currency”, such as the results of activities being carried out on the property, this replacement must be provided for in the contract.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

Rural Partnership

In partnership, there is the sharing of profits, fruits, and expenses. 

Here, the form of payment can be through a percentage or division of the harvest, without any problem.

Thus, if the rural partner has a greater production in a given month, the amount to be paid to his partner will be proportional, even when there is a loss.

Whose Environmental Responsibility in Land Leasing?

A pertinent subject is the responsibility of contractors in land leases.

Well, first of all, it is important to make it clear that the responsibility for environmental preservation areas can be civil, criminal and administrative.

In the criminal area, for example, only those who committed damage to the environment will respond for the conduct, that is, on the land that was leased. And this responsibility can be of both the lessor and the lessee.

However, in the administrative area, taj residencia will have the application of environmental fines in case of non-compliance with the law or damage to the environment.

Consequently, the two parties will share responsibility for paying all fines, in addition to recovering for environmental damage.

It similarly occurs in the civil area, as the responsibility is objective and joint, that is, it does not depend on fault.

Thus, the landlord and the tenant can also answer for the material and/or moral indemnities that they cause.
Finally, the lessor (owner) will only be exempt from liability, when a situation beyond their control occurs.

3. How is Pasto Lease

It is also feasible to lease a farm’s pasture, for example. It’s a worthwhile business for those who want to start a business in the countryside and don’t have a farm yet.

This is because, when renting only the pasture, the entire infrastructure of the farm is under the responsibility of the lessor, that is, the owner of that land. He will not only have to deliver a well-prepared pasture, but also ready to be used.

Some of these attributions are to provide a corral for the cattle that will eat the pasture, build a water system that works well, and maintain the fences so the cattle do not jump, etc.

Meanwhile, those who rent the pasture will only need to worry about putting the cattle there to produce.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

4. How does Commercial Point Lease work?

Commercial lease is a type of contract for non-housing purposes. In this type of business, the owner grants to the tenant the right to exploit the property, for commercial purposes, upon payment.

It can occur with stores, establishments, commercial properties, etc. However, express authorization from the landlord is required for the tenant to carry out adaptation works on the property.

What’s more, this commercial lease can be with equipment or without equipment. The parties will decide this, and the decision must be expressed in the contract so that there is no problem later.

This is a relevant question, because it directly influences the amount of monthly installments and the amount that will be paid for the property at the end of the contract, if there is an interest in selling and buying.

As for any damages and losses caused by works, installation and operating expenses of the trade, all of them will be the responsibility of the lessee.

And finally, the contractors are free to agree on how long they intend to enter into this agreement.

But in case of no contractual provision, the duration of 5 years will be considered for legal purposes. Click here to download and print a Commercial Lease draft

5. Who can hire leasing or leasing?

Leasing is a “commercial lease” contract, where the landlord transfers the right to use and own a certain asset to the lessee. This is who assumes the risks and benefits related to the asset, with the option to buy at the end of the contract.

The parties that are part of this type of legal transaction are the bank or leasing company and an individual or legal entity. It can also be operational or financial.

The operational works as if it were a rental: you rent an asset and pay the monthly installments for its use, for a period shorter than its useful life.

This is the case with a refrigerator, for example. You will use it for a period of 02 years and its useful life is 05 years. 
In financial terms, you pay monthly installments, but in the end you will have the option to buy for a negligible amount.

In this case, it is possible to use the asset for almost its entire lifetime. This is the case with an aircraft for airlines, for example.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

6. How is the Vehicle Lease Agreement?

A leased vehicle means that a certain person has ownership and use of a car and its accessories.

The person who leases bears all the burdens, including fines, gasoline, maintenance and/or repairs, and everything that is essential for the car to function.

It is essential that the contract contains the value of the “rent”, the form of payment, the duration, whether the vehicle will be used within the national territory or not, what is the purpose of the lease, etc.

7. Step by Step: How to Make a Simple Lease Agreement?

It is important that some steps are taken to ensure that there will be no vices or irregularities. They are:
Contractor data

First, it is of fundamental importance that the contractors’ personal data are correctly written.

For example: first and last name, nationality, CPF or CNPJ, RG, physical and electronic addresses, profession, marital status.

The more detailed the qualification of the contractors, the more complete and secure your contract will be, as it is based on this information that you will know who to charge and where to charge, in case there is any subsequent default.

object description 

The object will depend on what will be leased, since there are several types of lease.

It can be a car, a piece of land, an entire farm or just part of it, the headquarters of a company, a gas station, a hotel, etc.

The important thing is that, whatever the object, it must be duly detailed in the contract, including the extent to which the tenant’s right of possession and enjoyment extends.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

Payment methods

The form of payment must be in currency, cash, fixed amount.

If another form of payment is stipulated in the contract, we will not be facing a lease, but probably a partnership contract.

In this sense, it is important to know that it is possible to have a contractual provision for payment by percentage, productivity or pre-fixed production.

However, this will only be possible in case of replacement. Otherwise, the lease will be disqualified.

Failure to comply with this criterion may be detrimental to the parties, as it may cause the payment clause to become null and void.

lease term

The law does not require compliance with a specific deadline for the expiration of lease contracts, it is up to the authorities of Paradise City Nowshera to discuss the conditions that favor them.

However, for rural lease contracts, the law stipulates at least three requirements that must be met:

In case of temporary farming, the term of this contract must be at least three years;

If the crop is perennial, such as the cultivation of coffee or sugar cane, which take longer to cut/harvest, the term of this contract must be at least five years;

If it is a case of reforestation such as eucalyptus, for example, the minimum period should be 07 years.

These requirements were instituted by the legislator to ensure that the person who leases the land has time to recover the investment undertaken.

8. Is there a Lease Agreement with a purchase option?

Yes, even this purchase option at the end is already given in the contract. The lessee pays only for the use of the property and after the contract is ended, he will have the option to buy it afterwards, with the due discount of what has already been paid for the use.

For this reason, it is essential to know how much your business is worth, if you are an owner interested in selling your business .

Knowing how much your business is worth on the market is quite simple, if you apply a basic rule used by many experts, which is the “15×1” rule.

This means that you will multiply your point’s net profit value by 15, deducting all expenses with personnel, merchandise, transport, maintenance, etc.

For example: If your restaurant’s monthly profit is $10,000, to find out when your business is worth in the market, you will multiply 10,000 x 15.

Thus, the base value of your business will cost at least R$150,000.00. 

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.

Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

9. What documents are required for hiring?

The basic documents required are the same for all contracts in general, regardless of their nature.

Examples are:

  • ID
  • CPF
  • Proof of address

There are also specific documents, which are those pertinent to each type of contract.

If you are going to lease land, for example, it is important to attach to the contract the property registration with all the descriptions referring to the size, width, latitude, longitude.

It is also interesting to include in the documentation a technical expert opinion to record the quality of the land, the type, pre-existing improvements, etc.

All of this serves to ensure legal certainty for hiring.

10. How to proceed after signing the contract?

After the signature of the contractors and witnesses, it is important to ensure that the signatures taken from the document are really true.

That’s why all parties must go to the nearest registry office and notarize their signatures.

Afterwards, each contracting party will have a copy of the agreement, which must also be authenticated at the notary’s office.

These procedures do not usually take long and, as bureaucratic as they may seem, it is what will guarantee validity and legal force to your hiring, in addition to preventing future wear and tear.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

11. How to renew the contract?

There is a clause in the lease that states whether it will be automatically renewed or not.

If this clause is not foreseen, the general rule will be applied, which is the automatic renewal of the contract.

However, another way to extend the contract in advance is to make an amendment. Opportunity in which it will be possible to readjust the deadline according to the needs of the parties.

In this sense, if the contract is automatically renewable, it will be necessary to inform the other party in advance about the disinterest of this renewal, which can be done by means of a notification. 

12. Can I terminate the lease before the deadline?

Yes, it is possible. However, the breach of lease agreement before the deadline, will be made under the terms of the law:

Before cancellation, it is mandatory to fulfill at least 1/3 of the stipulated obligation;

Anyone wishing to withdraw from the contract must notify the other party, 120 days in advance, by registered letter with acknowledgment of receipt.

There may also be a cancellation due to non-payment of rents. However, the property owner can only start the eviction process and collect the fines for breach of contract, after a delay of 03 months.

The decree that governs this type of contract lists the chances of terminating the land lease. The most common causes are:

  • Term and renewal expiration;
  • Acquisition of land leased by the lessee;
  • Termination or termination of contract;
  • Termination or extinction of the lessor’s right, which occurs when he loses his rights to the leased property;
  • Force majeure that makes it impossible to execute the contract;
  • Unappealable court decision;
  • Total or partial expropriation of the property;
  • Lessee’s death

What happens if the tenant dies?

The tenant’s death is provided for in Decree No. 56.566/66 as one of the hypotheses for terminating the lease agreement.

However, it is entirely possible that the contract will not be extinguished if this fatality happens.

This happens because the heirs and legatees will be able to fulfill the contractual relationship until the end, each one always responding within the limit of their share of the inheritance.

Every contract must follow basic rules and requirements that sometimes on the internet are outdated, as the models offered are generic and do not represent what is specific in the contractual relationship, which is unique.
Therefore, the contract is indicated to be made by a notary or lawyer, who knows exactly what are the mandatory clauses it must have.

Lease Agreement

13. How to register lease agreement in the finance portal?

Basically, you will need to perform the following steps to register:

Choose: “Tax Services” > “Citizens” > “Deliver” > “Rent”. Insert TIN and personal access password. 

Select the option “Report start of contract”. Fill in the contract details. Click on “Save Draft” and confirm the data entered. Check the accuracy of the data and submit the contract. 

Keep the stamp tax payment slip (10% of the total rent, payable by the end of the month following the start of the lease).

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