Notarized Lease Agreement: What is it?
A notarized lease agreement is a rental contract that has been signed by both the landlord and the tenant in the presence of a notary public. A notary public is a state official who verifies the identity and signature of individuals who appear before them. Essentially, the notary public is certifying that the parties are who they say they are and that they are executing or signing the notarized lease agreement for its intended purposes, such as for a rental transaction with a landlord.
A notarized lease agreement is commonly used in situations where a tenant has never rented an apartment or home and may have no credit history. In these situations, the landlord may wish to ensure that they are dealing with the same individual that signed the lease agreement. By having the tenant sign the lease agreement in the presence of a notary public , the landlord is safeguarded against an individual who signs the contract but has no intention of following through with the rental after it is signed. It may also be required by the state or county where the building is located.
In some cases, a notarized lease agreement can protect a landlord against tenants who want to back out of the lease. For instance, if a notarized lease agreement is executed before the tenant moves into the rental property, the landlord will be better protected against tenants who fail to pay the rent for the property. If the tenant fails to honor the contract, the landlord may evict the tenant after established notice to vacate.
While notarized lease agreements are more complicated than standard agreements, they are intended to minimize the risk that a landlord or lessor encounters if a rental agreement is broken. An owner who has a notarized lease agreement in place can avoid the problem of trying to prove that a tenant’s signature on a rental contract is in fact theirs. In addition, the agreement will be admissible in court under federal law.
Advantages of a Notarized Lease Agreement
The legal advantages provided by notary public guarantees the property and possession rights for both you and your tenant. For example, the tenant cannot make any claim against you as a landlord on the basis that the tenant did not sign the document, and you are certain a claim cannot be made against the client (tenant). Furthermore, this will also prevent any potential abuse of the law through legal loopholes.
Although State laws vary, notarization of a lease agreement will not necessarily give a greater advantage, however, in some States, if you have a notarized lease agreement and your tenant happens to default, you might not have to appear in court to obtain a decision in your favor. It is strongly recommended to consult with an attorney knowledgeable on the specialty laws of your State.
When to Obtain Notarization?
The notarization of a lease agreement is not always necessary, but there are situations where it becomes a legal requirement. There are also instances when notarization, although not mandatory, is strongly advised.
Notarization may be mandatory if:
If notarization is not mandatory, it is nevertheless highly advisable in the following cases:
• The lease involves a term of five years or more: In this case, even if the lease does not require notarization, it is advisable to have a notary witness the signing of the agreement, as this can be essential for avoiding unpleasant surprises down the road.
• Sale of a residential real property: In a commercial lease, Consideration involves the total value the landlord hopes to receive on their investment, over the duration of the entire lease. For residential leases, the consideration typically consists of the bedrooms, kitchens, and bathrooms, with the total square footage factored into valuation.
• A person or persons enter into a commercial lease agreement with the intent to purchase the property within a year: The right to purchase the property is treated as an option to purchase real property, and takes the form of an easement. In New York there is a requirement that the lease have a term of at least one year.
• The property being leased is not owned by a natural person: A lease signed by a corporation, limited liability corporation, partnership or unincorporated association must be notarized, or it may be held invalid before a court, or in the case of an international or out-of-state lease, may be unenforceable in any jurisdiction.
• Common area maintenance, tax, insurance, and other expenses are included as part of the rent due for the property being leased: A court may not enforce a lease that doesn’t include this type of information—e.g., a list of rooms and a clear calculation of the square footages and haven’t been notarized.
• Anticipated rent may exceed $25,000 or more, and the lease term is at least six months: Anticipated rent is the sum of the rent, fees, and rent increases anticipated over the duration of the lease agreement, and could become subject to a court or other entity’s jurisdiction in the absence of notarization.
• Formal Acknowledgment: For a lease for a term in excess of a year, a copy of the lease agreement must be certified by a notary by means of formal acknowledgment.
It is the opinion of some legal professionals and members of the real estate industry that all leases should be notarized – that a legally binding lease agreement is the best guarantee that all parties will have full recourse in court if things go wrong, no matter the circumstances.
Signature blocks
New York State requires all leases to include a signature block with room sufficient to provide a signature, with space to append a notary seal adjacent to the title line for the officer witnessing the signing of the lease below the signature of both the landlord and tenant. This is a requirement of NY GOL § 291-a and §323-a.
Steps to Notarizing a Lease Agreement
When you are ready to notarize the lease, you will need to find a notary public. There are a number of notaries in your area, but the best place to start is finding a public or registered notary in a local bank or credit union. You should call ahead to find out if they are available and how much they charge for their services, as these fees can vary considerably from entity to entity. It is also a good idea to find out what type of identification the notary will require and whether you have the document with you at the time of your call.
Once you have an appointment to have the lease notarized, bring the lease, your identification, and payment to the notary. The notary will then sign the document, confirming that they witnessed you signing the lease, after which they will attach a seal to the document. Typically, a notary will witness the signatures of both parties – the landlord and the tenant – on a lease. If only one party is signing, however, you will only need one party present to have the lease notarized.
In some states, you are allowed to notarize your rental agreement online. Online notaries are also referred to as "remote notaries," "SnapDocs notaries," or "eNotaries." You will need to go through the service provider to find a notary. They will set up an online conference call between the parties to the lease and the notary, and the participant will then electronically sign the document. The notary will confirm the signers’ identities. But be advised that not every state allows for the electronic notarization of a lease, so you will need to consult with your local regulations to determine if this process is permitted.
Typical Myths about Notarized Lease Agreements
So, a landlord enters into a lease with another person.
This person legally becomes the tenant under the contract terms. The issue of porting utility services becomes pertinent when the tenant simply transfers the utility services into his/her name. The issue of maintaining good credit history arises if the landlord has the rent payments reported to a credit bureau. The issue is whether, in the event a security deposit has been provided, it is going to be refundable to the tenant once the lease term expires.
These are some concerns that stem from the legal tenant-occupant relationship, right?
Quite so, but what about the issue of notarization? After all, exemplar specimens of leases or sample lease language are available online, on real estate websites, in the offices of state governments etc., right? What’s the deal with getting a lease notarized? Is this a necessary component to the validity of a lease for the lease to be enforceable?
The Truth About Notarization:
It is indeed a common misconception among not just tenants but landlords that getting a lease agreement and the signatures of the parties notarized is mandatory (mandatory, here, is a reference to the law rather than the optional aspect of the action of getting something notarized). The concept arises perhaps from the context of selling a home or a car where getting a document notarized is sometimes advisable for practical purposes but not strictly required in all situations.
The fact is that notarization is not a legal requirement for the formation of a valid lease. Formation of a valid lease is predicated on whether the elements of a contract are present – there is an offer, acceptance and consideration, and all other requirements are met. For the most part, parties to a lease have only this in mind. The inconvenience of attempting to locate a notary public can sometimes be too much for tenants and landlords who simply want to sign the lease and move ahead on their relationship as landlord and tenant. So the commonly held view tends to be that notarization is perhaps not legally required but is nonetheless desired.
One reason that the notarization myth has become so deeply sunk into the minds of landlords and tenants may be because companies offering online legal services or template documents will often incorporate in the provision of a template for a lease agreement , the optional consequence of notarization. In other words, the corporation will indicate that the parties should have the document notarized. When a form that incorporates the public notary optional clause is downloaded or purchased and "notarization" is not at issue, it is common for landlords and tenants to simply ignore any reference to notarization in the template lease. It is, however, an important piece of information that should be considered: whether or not to notarize a lease agreement.
Why Is This Important?
Because failing to notarize a lease can work to the disadvantage of a tenant. The absence of a notary does not affect the formation of the lease (the contract), but it affects the ability to evict a tenant or to file a collection lawsuit. If the signature is not notarized (i.e. not acknowledged), this lacks an important evidentiary value to the landlord: the ability to marshal evidence in court to prove that the tenant was that person signing the lease. The property interests of the landlord cannot be verified without notarization. If the landlord wants to evict a tenant and is seeking a court order for that purpose, the landlord would have to proffer evidence that the tenant was that person who signed the lease. It may prove difficult to locate that tenant (especially if the tenant has vacated the premises). If the tenant has left town, or even left state, it may be impossible to get that evidence without significant effort and cost.
But, if the tenant had the signature notarized at the onset of the tenancy and had the notary stamp affixed to the lease, a court could potentially order eviction without the proprietor expending the time and other resources to prove that the tenant had actually signed the lease. Again, a good rule of thumb is to ensure that the tenant has signed all lease documents in front of a public notary.
Possible Downsides to Notarization
Notarized lease agreements may represent an unnecessary step in the lease renewal process. Many landlords avoid notarization because they fear that their new tenant will attempt to leverage notarization to open the door to rent reductions or other claims. Because each leasing transaction is unique, however, landlords should consider the pros and cons of notarizing their lease agreements.
In addition to the cost savings from avoiding soy-based ink, laser printing, and more contemporary paper stock, the time saved from the elimination of notarization may be significant. Although additional time spent notarizing a single document may be minimal, the time (and notary cost) for notarizing an entire stack of lease agreements can add up. Notably, each lease must be notarized separately, as the notary needs to verify the identity of both parties to the lease.
Without a notary, landlords can still feel confident that their tenants will not attempt to seek rent reductions or other claims shortly after signing the lease agreement. California Civil Code Section 1698 provides that a contract (like a lease) may be modified or rescinded by mutual consent of the parties, and Section 1668 provides that contracts that restrain someone from exercising a legal right (such as rent provisions) are presumptively invalid.
If neither party would likely benefit from notarization, landlords should consider whether notarization really serves any purpose in their transaction, and if not, forgo the expense.
Conclusion: Decide Wisely
Making an informed decision about the necessity of notarized lease agreements and other notarized documents can save you significant hassle down the road and protect your legal interests. Rental property owners should be particularly concerned with the notarization of documents because tenant-related disputes often arise after the lease is signed and can turn on the meaning of certain lease terms . An un-notarized signature can open the door for a dishonest tenant to claim he or she never signed the lease in the first place.
Taking a more proactive stance, by having all rental property documents notarized, however, may not be necessary. We have outlined the major points to consider when weighing the pros and cons of getting your leases and other documents notarized. By following these points, owners can minimize liability and increase the likelihood that their legal interests are protected if a dispute arises.