Most landlords know that they need a lease agreement between them and the tenants that rent their properties. What a lot of a landlords do not know is all the topics that should be covered in that lease. Read this brief article to better understand this subject.
No matter which way you decide to come up with your rental lease, you'll need some tools to help you get the best lease possible. Personally, I am fan of checklists, so it only makes good sense to use one to help you understand what you should have in the lease you eventually decide to use The checklist below is probably very close to the same one a lawyer would use for reference if he or she were drafting a lease for a client. This checklist will be extremely consistent, wherever you live.
We will go through the checklist and I will give a brief explanation of each item as I list it. Keep in mind that not every item may not be necessary, but should be considered. A good lawyer can help you decide.
Parties--the people involved in the lease. Each person or entity is a party to a lease. You could have two parties or many parties to a lease.
Names--all parties or entities on the lease need to be named.
Address--of the parties if different than the leased address.
Other identification--as needed.
Subject of the lease
Address or legal description of the property; address of the property being rented.
Lessee's purpose--whether residential, commercial, farm use, etc.
Restrictions on use of property--limits on use and occupancy.
Duration of agreement or option for lease--length of contract including starting and ending dates.
Provisions to be included in subsequent lease
Parties--usually refers to names of minors/pets.
Subject term--fixed day when rent is due and when considered late.
Rental payments--amount of payment and security deposit.
Access to property--right to enter property for emergency, repairs, or timely condition review.
Designation of party responsible for repairs--who's responsible for what repairs and action taken if repairs not completed in a timely manner.
Identification of appurtenance--what goes with or is related to the rented premises (appliances, equipment, etc.)
Liability for utilities--who pays sewer, water, garbage, and so forth.
Liability for taxes and assessments--in some leases, the tenants are responsible for these items.
Renewal option provisions--conditions and time frame for lease renewal of premises.
Purchase option provisions--conditions and time frame for purchase of premises.
Transferability of lease agreement--whether you can sublease or not.
Date of execution--when the lease was signed by parties.
Signatures--signatures of parties.
This completes the checklist that you may use to structure your rental lease. It is very likely and actually quite common that you might include other provisions in your lease other than those listed.
For instance, many people write their rules and regulations into the lease itself. These regulations cover such things as noise, lockouts, pets, and parking. Other landlords simply hand out the rules as an afterthought, but might write out amendments to their standard lease as they feel it's needed.
Whatever you decide to include in your lease, make sure it can do its' job where necessary; in a court of law.
If you would like further information on leases, please visit the articles page on my website at:http://www.findthatqualitytenant.com
I am not a lawyer, therefore, if you have any legal concerns with anything in this article, please contact the appropriate legal counsel.
About the Author
Don Conrad is the author of the soon-to-be released book," How to Find That Quality Tenant". His book and website are dedicated to educating and improving the landlord tenant selection process. His website at http://www.findthatqualitytenant.com, contains informational articles, links and moore.
Thursday, April 19, 2007
Your Business Is Incorporated - But Are Your Personal Assets Safe?
Many small business owners understand the benefit of incorporating, but they don't realize how easy it is to lose their "corporate status" if they get sued or end up in bankruptcy. This is dangerous because then the court can come after their PERSONAL assets (like their house, car, savings, etc)!
Today, I will review a little bit of why incorporating is so important for small business owners, and then tell you five simple steps you can follow to protect your personal assets, even if your business gets sued or goes through bankruptcy.
It makes sense to incorporate for a couple of reasons. First, because it protects you from personal liability, and second, because it offers you some great tax advantages. For today, we're going to just focus on the personal liability part.
When you incorporate, your business becomes like another person. This other person has it's own bank account, it can own things like property, and it can take risks. Even if that "other person" (your business) goes completely bankrupt or gets sued, YOU are safe (assuming you do everything correctly).
This is important because many new businesses fail, but you as the entrepreneur don't want to fail. You want to pick yourself back up and start your NEXT business which will be even more successful. Failure is a necessary way to learn, so we want it to be as painless as possible.
When everything works like it should, then yes, you PERSONALLY are protected. But there are certain situations where your corporate status doesn't help you out, and every business owner should be aware of them!
You see, setting up a company gives you so much protection from liability, that unethical people in the past have tried to take advantage of it. They have created "shell corporations", or businesses just for the purpose of liability protection, to help them get away with various crimes.
Of course, the law had to be modified to weed out these people and make sure they were appropriately prosecuted. But in the process, the requirements for honest small business owners became TOUGHER. Some extra steps are now required to make sure your corporate status stays intact.
By the way, whenever a court decides to waive the corporate protection and actually prosecute the owners behind the company PERSONALLY, they call it "piercing the corporate veil". (Lawyers always like to come up with fancy names for things.)
Following are the top five ways to protect you personal assets then starting a business. Make sure you do these correctly, and you can be sure that even if your business experiences a colossal failure, or gets sued out of existence, at least your personal assets are safe and you can start over.
1. Never Engage in Fraud or any Criminal Act
This sounds simple, but many small businesses owners unknowingly break the law. Never sell a product you know is defective or doesn't work, misrepresent something in your advertising, forge any signatures, or pull a bait and switch (offer a great deal to get people in the door only to tell them it is out of stock so you can sell a substitute.) Run your business HONESTLY and with INTEGRITY every day, and it will pay off in the long run.
2. Never Misrepresent Your Corporate Officers or Members
Don't ever lie about who is involved in your company. When it comes time to ask for investors, or get people to support you, you may be templed to exaggerate about who is actually working with you. If they haven't actually SIGNED your operating agreement, then they aren't your partner.
3. Make Sure Your Follow All Corporate Formalities
If you are going to claim you are a company, then you'd better act like a company. That means you have to file all important documents and keep them on file (your operating agreement, articles of incorporation, and DBA for example). You also have to keep detailed financial records. In Breaking Free, I provide samples of these documents and show you exactly how to create them yourself. This will literally save you thousands of dollars in legal expense because you won't have to pay a lawyer to create them for you. (Read more below)
4. Keep Your Business and Personal Assets Separate
The business has to have it's own bank account. The money in that bank account is not YOUR money. It belongs to the business. In fact, if you decide one day come along and take some money out to buy yourself a Hawaiian vacation, that is called embezzlement (a crime)! Many first time business owners (especially if they are the sole owner) don't understand this concept. The money in the company is not theirs. The company is like a separate person, and all assets must be treated as such.
5. Never Treat the Business' Assets as if They Were Your Own
Don't deposit your personal checks into the corporate account. Don't use company money to finance your personal life and hobbies. Don't lend the company car to your buddy for a weekend excursion. Don't set up a cot in the back of the office and start living there! Again, the business and yourself are two separate people. Treat them accordingly.
With these five basic steps, you will be well on your way to protecting your personal assets in the event your business goes under.
Many successful business people, from Donald Trump to John D. Rockefeller, went through periods of ups and downs in their life. Not every company they bet on was a success. But they managed to survive and lived to fight another day because they where smart enough to INCORPORATE correctly. They followed the above five steps to make sure they wouldn't lose their corporate status in the event of a lawsuit. They made sure that their PERSONAL assets were safe, even if the COMPANY went bankrupt.
About the Author
Brian Armstrong is the author of Breaking Free, and is an authority on How to Start a Business. Learn how to incorporate the easy way and protect your assets in our FREE Online Course. Click Now!
Today, I will review a little bit of why incorporating is so important for small business owners, and then tell you five simple steps you can follow to protect your personal assets, even if your business gets sued or goes through bankruptcy.
It makes sense to incorporate for a couple of reasons. First, because it protects you from personal liability, and second, because it offers you some great tax advantages. For today, we're going to just focus on the personal liability part.
When you incorporate, your business becomes like another person. This other person has it's own bank account, it can own things like property, and it can take risks. Even if that "other person" (your business) goes completely bankrupt or gets sued, YOU are safe (assuming you do everything correctly).
This is important because many new businesses fail, but you as the entrepreneur don't want to fail. You want to pick yourself back up and start your NEXT business which will be even more successful. Failure is a necessary way to learn, so we want it to be as painless as possible.
When everything works like it should, then yes, you PERSONALLY are protected. But there are certain situations where your corporate status doesn't help you out, and every business owner should be aware of them!
You see, setting up a company gives you so much protection from liability, that unethical people in the past have tried to take advantage of it. They have created "shell corporations", or businesses just for the purpose of liability protection, to help them get away with various crimes.
Of course, the law had to be modified to weed out these people and make sure they were appropriately prosecuted. But in the process, the requirements for honest small business owners became TOUGHER. Some extra steps are now required to make sure your corporate status stays intact.
By the way, whenever a court decides to waive the corporate protection and actually prosecute the owners behind the company PERSONALLY, they call it "piercing the corporate veil". (Lawyers always like to come up with fancy names for things.)
Following are the top five ways to protect you personal assets then starting a business. Make sure you do these correctly, and you can be sure that even if your business experiences a colossal failure, or gets sued out of existence, at least your personal assets are safe and you can start over.
1. Never Engage in Fraud or any Criminal Act
This sounds simple, but many small businesses owners unknowingly break the law. Never sell a product you know is defective or doesn't work, misrepresent something in your advertising, forge any signatures, or pull a bait and switch (offer a great deal to get people in the door only to tell them it is out of stock so you can sell a substitute.) Run your business HONESTLY and with INTEGRITY every day, and it will pay off in the long run.
2. Never Misrepresent Your Corporate Officers or Members
Don't ever lie about who is involved in your company. When it comes time to ask for investors, or get people to support you, you may be templed to exaggerate about who is actually working with you. If they haven't actually SIGNED your operating agreement, then they aren't your partner.
3. Make Sure Your Follow All Corporate Formalities
If you are going to claim you are a company, then you'd better act like a company. That means you have to file all important documents and keep them on file (your operating agreement, articles of incorporation, and DBA for example). You also have to keep detailed financial records. In Breaking Free, I provide samples of these documents and show you exactly how to create them yourself. This will literally save you thousands of dollars in legal expense because you won't have to pay a lawyer to create them for you. (Read more below)
4. Keep Your Business and Personal Assets Separate
The business has to have it's own bank account. The money in that bank account is not YOUR money. It belongs to the business. In fact, if you decide one day come along and take some money out to buy yourself a Hawaiian vacation, that is called embezzlement (a crime)! Many first time business owners (especially if they are the sole owner) don't understand this concept. The money in the company is not theirs. The company is like a separate person, and all assets must be treated as such.
5. Never Treat the Business' Assets as if They Were Your Own
Don't deposit your personal checks into the corporate account. Don't use company money to finance your personal life and hobbies. Don't lend the company car to your buddy for a weekend excursion. Don't set up a cot in the back of the office and start living there! Again, the business and yourself are two separate people. Treat them accordingly.
With these five basic steps, you will be well on your way to protecting your personal assets in the event your business goes under.
Many successful business people, from Donald Trump to John D. Rockefeller, went through periods of ups and downs in their life. Not every company they bet on was a success. But they managed to survive and lived to fight another day because they where smart enough to INCORPORATE correctly. They followed the above five steps to make sure they wouldn't lose their corporate status in the event of a lawsuit. They made sure that their PERSONAL assets were safe, even if the COMPANY went bankrupt.
About the Author
Brian Armstrong is the author of Breaking Free, and is an authority on How to Start a Business. Learn how to incorporate the easy way and protect your assets in our FREE Online Course. Click Now!
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