Leasing a property lot to another party provides additional income without selling part of your real estate. A lease is a rental agreement regarding the use of a specific piece or item of property. The lessor owns the property and the lessee is the tenant. You can lease a lot for reasons such as farming, mineral, oil and gas drilling, utility company use or to a private business. You must execute the lease properly and follow all local laws.
Obtain the lot's survey and legal description. Contact the state department that handles surveyor licensing to find a qualified surveyor in your area. Request the surveyor prepare a survey--a graphic depiction of your property used in real estate transactions--and a legal description, which is your property's dimensions in measurements and words.
Write down your payment terms. Include the rent amount, its due date, and late fees and penalties you'll access for overdue rent. Include any special compensation, such as a percentage of farm crops or profits.
List your lease terms. Decide what can and cannot be done by the lessee on your lot. Decide what the lessee is allowed to build on your lot and how improvements made by the lessee factor into rent payments. Write down your responsibilities, such as paying property taxes, and the lessee's responsibilities, such as snow removal, and the lease's length.
Advertise your lot for lease, if you don't have an interested company. Use traditional and unconventional methods, such as word-of-mouth. Contact the manager of any businesses that are near your lot; the business may want to expand or need storage space. Include the lot size on your advertisements.
Show your lot to potential lessees. Make a list of information about the lot to use for reference during showings, such as average property maintenance costs. Keep a copy of the survey with you for lessee candidates to inspect.
Meet with prospective lessees. Run background checks and credit checks to weed out risky private businesses or individual renters. Obtain signed disclosures from potential lessees before performing checks.
Schedule a meeting with the selected lessee. Review all of your written payment and lease terms. Consider requested compromises between you and the lessee; note any agreed-upon changes to the listed lease terms.
Visit the local legal print store and obtain a blank land or property lease agreement. Fill out the forms. Date the document; enter your name as the "lessor" and the renter as the "lessee." List all payment and terms in the designated spots. Enter your legal description as the property or lot description, along with the address. Enter the end date of the lease. Attach a copy of the survey to the lease.
Meet with your prospective lessee. Review the lease terms; do not leave anything out. Sign and date the lease documents, along with the lessee.
Contact the clerk of the county recorder's office and ask if property or commercial lease agreements must be filed in your area. File the lease in the county recorder's office where the property is located, if required.
Contact an attorney and have your lease reviewed before signing; an illegal lease term may void the entire document.
Check your state leasing laws to verify you are not committing any violations.
Do not sign a lease you do not understand.
- Oil and Gas Mineral Services: Oil & Gas Leases: 10 Common Mistakes During Mineral Lease Negotiation
- FindLaw. "Rental and Lease Agreements." Accessed Sept. 28, 2020.
- USLegal.com. "Lessor Law and Legal Definition." Accessed Sept. 28, 2020.
- Ford. "Incentives & Offers." Accessed Sept. 11, 2020.
- FindLaw. "Commercial Lease Agreement Overview: Improvements." Accessed Sept. 11, 2020.
- USLegal.com. "Lessee Law and Legal Definition." Accessed Sept. 11, 2020.
Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.