What Is a Lease Agreement?
Lease agreements are standard agreements between two parties for the exchange of the use of a property. If you rent a commercial property or an apartment in a residential type space, you have probably signed a lease agreement. The lease agreement is a contract for the use of the property and any rent or fees that are due based on your use of the space.
Lease agreements are vital to the process of renting a property because they are receipts for your rental that you can use when filing your income taxes. Depending on the state in which you reside, the state may require a copy of your lease agreement when you file as well. Common types of lease agreements that you need with a notary seal and signature are leases for commercial use properties and residential apartments or houses.
There are several components that should be included in your lease agreement. This includes a legal description of the property , terms for the use of the property, and the costs of use. Success as a landlord depends on having a carefully drafted lease agreement.
The legal description of the property gives the general location of the property, the address of the property, and any other pertinent information to help identify exactly which property is being referenced in the lease agreement. The terms for use of the property include how long you have leased the property, how much your monthly payment will be, and any other stipulations that pertain to the use of the property. The costs of use include the initial rental fees, any additional fees added on for services to the property, and the total due at signing.
Contracts: What Does Notarization Mean?
A notary (or notary public) is someone authorized by a state to provide notarial acts, which include the verification of the identity of an individual signing a legal document. These notarial acts include administering oaths and affirmations, taking acknowledgment of a signature, witnessing and authenticating a signature, and verifying or proving signatures or matters. A notary’s main job is to prevent fraud by verifying the bona fides of the person signing the document, so that people don’t inadvertently sign things they shouldn’t. A notary can also provide other services relating to those regular notarial acts.
The reasons for having certain documents notarized include:
Not all documents need to be notarized. In fact, most regular contracts do not need to be notarized in order to be valid.
Some states require that documents like mortgages and other property-related contracts be notarized, while others do not. This means that a lease agreement may or may not need to be notarized.
A Legal Requirement: Do Lease Agreements Have to Be Notarized?
Not all lease agreements are required to be notarized. Whether a lease agreement must be notarized depends on the applicable laws of the locality (country, state, province) where the property located. In general, there is no universal requirement that lease agreements be notarized. While such a requirement is common for property sales contracts that transfer legal title, it is not common for transactions involving the lease or rental of real property. In the United States, there is no federal law requiring lease agreements to be notarized. The specific requirements are governed by state laws. In most states, a lease does not have to be notarized. However, some states do require that certain lease transactions be notarized. For example, if the term of a lease is greater than one year, the lease has to be in writing and signed by the parties. While it typically does not have to be notarized, some states do require notarization when the lease term is more than one year. There is some question whether notarization is even required within the one-year threshold. We recommend having all real estate leases acknowledged before a notary public. Outside of the United States, we recommend that all real estate leases be notarized. Particularly in civil law countries, the requirement for notarization of real property transactions is common. By obligation and custom, such transactions are formalized by a notary public and the legal effect of notarized contracts is different from that of contracts that are not notarized.
Advantages of Notarizing a Lease Agreement
Though not legally required, getting a lease agreement notarized can have its advantages. Notarization adds an extra protective measure, which may be beneficial for landlords and particularly so for tenants. Here’s how:
A notary public is employed by the state to serve the public by witnessing live signatures of individuals. They act as an impartial witness to the signature of a legal document. Their role is to verify that the person signing a document is the same individual described in the document and nothing about the document is misleading or fraudulent. The information they provide is recorded in a notary’s journal.
Additional information regarding a lease agreement and the benefits of notarizing can be found in the Rev Law ‘s article ‘Does a Lease Agreement Need to Be Notarized? A Comprehensive Guide’.
Disadvantages
The process of notarization is not without its potential drawbacks and considerations. For starters, notarizing a lease agreement is likely to incur additional costs. The cost of a notary may be from $10 to $100, depending on the notary’s fees and policies. If you are hiring a mobile notary, it is also worth considering that the time they take to appear at a given location may lead to additional charges. These fees can add up, especially if both the landlord and tenant need the document notarized.
Another consideration is time constraints. A notary is typically only prepared for actions that require notarization in person. However, as mentioned earlier , remote online notarizations (RONs) have increased in popularity and service availability within the last couple of years. Those who wish to waive the notarization requirement in their lease will not enjoy these conveniences. Furthermore, while it is true that notary offices are open at more varied times due to RON, most still operate on standard business days, which can extend the process of finalizing your lease agreement.
Logistical issues may be incurred as well. The primary purpose of notarization is to prevent fraud; thus, the arrangement and completion of the process require a degree of formality. This means that the signing of the document must happen with diligence and upon proper consent. If you would like to have the lessor or lessee at a closing, but they cannot attend due to illness, distance, or other reasons, an appointment with a notary may be necessary.
To Notarize or Not
The decision to notarize a lease agreement should generally be driven by the nature of the rental relationship. For example, if the landlord and tenant will interact on a formal basis, with multiple meetings, payment record-keeping, and written correspondence, a notarized lease could serve as a useful formality to establish the parties’ intent that the agreement is a binding contract. If the parties will have an informal working relationship, with verbal discussions about the payment of rent, the use of the premises, the need to repair certain appliances, etc., a notarized lease may not be necessary.
The need for formal documentation may also be relevant to the decision to notarize a lease. If both parties intend to reside at the same address but different units for a significant amount of time, it may make sense to have a notarized lease to document the premises’ condition or to ensure that the arrangements with regard to the rental are formalized as part of a binding contract. On the other hand, if a tenant intends to move out of a unit shortly after past the deadlines related to rent for the renewal period, a notarized lease is probably unnecessary.
Advice from special counsel may also play a role in determining whether a lease agreement should be notarized. With regard to lease agreements, special counsel historically has been called in to help with drafting, negotiation or dispute resolution. Where a specific consultation has occurred, one option may be to follow the advice from special counsel and have the lease agreement notarized, which can mitigate any potential risks that may have been discussed when the advice was provided. Alternatively, if special counsel was not asked to draft the lease agreement, it may make sense to consult with special counsel about whether the agreement should be notarized before proceeding further.
Summary: Lease Agreements and Notarization
As you have seen in the above, not all lease agreements have to be notarized. However, if they are notarized, there are some advantages to it. The notarization process entails affirming a document is authentic. This process is usually done when the lease agreement is greater than three years of length but could accommodate shorter lease terms depending on your circumstances and the jurisdiction involving the agreement . Notarization can help protect the rights of all parties, but this does not mean that a notarized document will be definitively adhered to in every court.
The next time you decide to sign a lease agreement, you may want to think about whether you need to have that lease agreement notarized. Hopefully the information provided above will give you the information you need before you enter into an agreement.