A contract is an agreement for a legal purpose entered into voluntarily by two or more parties that creates obligations between them. To be enforceable, a contract must meet certain legal criteria (i.e. it must have an “offer,” “acceptance,” and “consideration”; each of these terms has a specific legal definition). In almost all cases, you should consult a lawyer to ensure that you have a legally binding lease.
The lease contract should contain, at a minimum, five essential components:
- who the parties are;
- a description of the premises being leased;
- how long the arrangement will last (i.e. the term);
- what the tenant will pay (i.e. the consideration); and
- the parties’ signatures.
In some states, to be enforceable, a lease that has a term longer than one year must be in writing. Verbal agreements and oral contracts can be legally binding as long as they are “reasonable, equitable, conscionable and made in good faith.” Problems with oral agreements may arise if the parties remember the details of the agreement differently. If disputes wind up in court, the argument becomes one person’s word against the other’s.