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The Guide to the Newbie Tenant

lease tips

So you posted on Facebook that you’re looking for a place to live. You read the fine print of every ad on yad2.co.il. You asked everyone – from your grandmother to your elementary school bestie – for help, and you were probably one of 50 people who showed up to see the place. And now the place is yours for the asking!

But before you commit, make sure to check these tips so that in the future you don’t regret signing the lease:

  1. Working with a realtor:

Before signing a letter of engagement with a real estate agent, make sure that:

  • The realtor holds a valid real estate license.
  • The letter of engagement you sign specifies the rent (i.e., monthly payment), the lessor (i.e., the property owner) and the term (i.e., time period) of the lease.
  • The tenant pays the realtor’s fee only after s/he has signed a binding lease with the lessor.
  • If the lease depends on certain conditions being fulfilled, it is important that you demand that your obligation to the realtor be binding only if those conditions are met and that you pay the realtor’s fee only after the conditions have been met in a timely fashion and the term of the lease has begun.
  1. Inspecting the property and its surroundings:
  • Before signing the lease, we strongly recommend that you, the prospective tenant, inspect the property thoroughly. This includes checking all systems, such as the AC, water heater, the electrical system, electric blinds, and so on. It is also important that you make sure there are no water stains or drips and leaks. We recommend you bring another person to the inspection so that you can hear a second opinion about the property.
  • It is also important to find out about ambient noise levels, determine if renovations or construction are planned in the immediate neighborhood, and check for cross ventilation. Also, talk to the neighbors and see if any of them is planning or is in the midst of renovations, including enhancing the building’s earthquake resistance (National Construction Guideline 38, abbreviated in Hebrew as TAMA 38).
  1. The lease:

We recommend the lease includes the following:

  • The lessor’s information and his/her rights to the property (it is important to make sure the lessor actually owns the property and is therefore entitled to rent it to you).
  • The term of the lease as well as an option to extend or renew it. It is important to make sure that the option is solely in your hands, rather than jointly or solely in the lessor’s hands, otherwise it’s pointless.
  • The rent for the term of the lease (including any annual escalations) and for the extension option if offered to the tenant.
  • The possibility of leaving before the term of the lease is over and/or the possibility of sub-letting the property and/or finding an alternativ tenant to take over the lease in every way. It is important that the lease includes the lessor’s agreement to allow the tenant to terminate the lease without any penalty should the need to renovate and/or participate in a TAMA 38 project suddenly arise.
  • When the term of the lease begins and the tenant receives the keys, the parties should sign a memorandum in which the tenant states the flaws and/or damage to the property that the lessor is obligated to repair.
  • Lease guarantee: It is necessary to come to an agreement on the nature of the guarantee the tenant must provide. In most cases, this involves a deposit or bank guarantee equal to three months’ rent, or, alternately, a promissory note equal to six month’s rent. It is necessary to make it clear in the lease that the lessor may use the guarantee only if the tenant has breached the lease and the lessor has informed the tenant of this in writing and has also provided a window of a few days to redress the breach. It is important to note that the demand for a guarantee is negotiable between the parties and it is important to clarify the terms up front.
  • Insurance: It is important to make sure the lessor has purchased a structure insurance policy. It is customary for the tenant to purchase a third party and house contents insurance policy. We recommend checking the cost of purchasing such a policy.
  • Contents: Find out ahead of time if the property is being rented together with any contents. If it is, a list of the contents and its condition should be drawn up. It is important to clarify this point during the negotiations so that the tenant can plan accordingly (i.e., demand that the contents be removed once the term of the lease starts or, alternately, inspect its condition).
  • Reasonable wear and tear: It is important that the lease include the lessor’s obligation to undertake repairs to the property needed as the result of reasonable wear and tear that occurred despite the tenant’s reasonable use, as well as the time frame in which such repairs can be expected. It is also important to make sure the lease includes a clause stating that the lessor’s failure to fulfill this obligation entitles the tenant to choose a service person to make those repairs and to demand the lessor provide a full refund for the expense incurred.

Lease breach: It is important that the lease contain a clause stating that a claim that the tenant has breached the lease must be submitted in writing by the lessor who must also provide several days for the tenant to redress his/her breach.

Tip: Before signing a long-term lease involving a significant monetary commitment, it is important to consult an attorney specializing in this field. Such an attorney can draw up the contract, conduct the negotiations, and ensure that your interests are safeguarded

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