What You Need to Know About Eforms Lease Agreements
As technology continues to transform the way we engage in business, the real estate industry is no exception. Especially in relation to the development and leasing of commercial property, eforms lease agreements have emerged as a significant and widely used tool, streamlining transactions by reducing administration and increasing convenience. The eforms lease agreement is a standardized, electronic lease document that is governed by the rules established by Land Titles Assurance Fund (LTAF). As a result of the automation and standardization produced by the eforms system, the cost (and time) to finalize commercial leases is significantly reduced when compared to the traditional method of drafting, reviewing and negotiating custom agreements. Given the huge volume of commercial leases that are executed in Alberta , the eforms lease agreement system represents an important and convenient alternative to standard leases and contributes significantly to the efficient operation of the commercial real estate industry. Eforms are used primarily by industry professionals to reduce time-consuming administrative tasks involved in the purchase and sale and financing of commercial real estate and minimize the possibility of human error (and reduce the associated risk of litigation). These use professionals include: real estate agents and brokers, mortgage brokers, real estate lawyers, real estate development consultants and others. The average eforms lease agreement will take a rule follower 12 minutes to fill out and then will be reviewed within 8 hours of submission. Fast, simple…efficient.
Essential Elements of a Lease Agreement
The fundamental components of an eforms lease agreement are no different than that of a traditional lease. You’ll first determine the basic information: who are the parties, how long will the agreement last, and what’s the monthly payment due. These are fairly self-explanatory, but also slightly deceptive.
The identity of the parties is generally straightforward, as it consists of the landlord/tenant names. However, depending on your scenario, the "parties" may not be individuals but groups or corporations – for example, a property management company or perhaps a third-party policyholder. Therefore, you must know exactly who the "parties" refer to in your lease agreement. Then there are the parties that sign the lease. A tenant and sub-tenant may both be listed, as they are both on the hook for the property. Leave off any parties that do not need to sign the lease.
How long the lease lasts can be trickier, as you have several options.
While each of these options has its advantages and disadvantages, they must all clearly state the terms. For example, the tenant must vacate by the end of the lease period or face legal consequences to remain.
Payment terms should include the amount due, acceptable forms of payment, the method of delivery, and the grace period for late payments. The lease must clearly state which forms of payment are allowed, such as money orders, checks, direct deposit, or apps such as Venmo.
The lease either includes a clause stating that payment must be delivered physically, such as through the mail, or electronically, such as through a bank transfer or app.
Grace periods require the tenant to pay rent on time or face penalties on late payments. A grace period is typically spelled out in the lease. It can include any number of days, but most are 3-10 days. If a tenant fails to pay rent within the grace period, the penalties outlined in the lease go into effect. This can include damages, eviction proceedings, and other acts.
The clauses of a lease are the catch-all provisions that spell out various situations, such as maintenance and repairs, guest policies, pet policies, eviction procedures, and more. Typically, each of these is its own section in a lease agreement. Every situation a landlord has ever faced with a tenant is usually included in lease clauses.
Advantages of Eforms Lease Agreements
Switching to eforms for lease agreements can make the process a lot smoother for landlords and tenants. With the added convenience, accessibility, accuracy, and security that eforms provide, there is a lot to like about using eforms for your lease agreements.
Following the same format as typical paper agreements, eforms offer all the advantages of the traditional paper lease agreement, but in a digital format. While eforms are not always favored in every situation, the benefits they offer certainly outweigh the drawbacks.
Convenience may be the greatest benefit of using eforms for lease agreements. As a landlord, you can create template agreements that contain all the required terms and conditions and then save them for each new tenant. So, instead of having to start from scratch every time you sign a new lease, you can quickly and easily access your eforms, customize the details, and deliver them to your tenant. This process is not quite as easy with traditional paper documents that always require formatting to look professional.
Like most everything today, eforms are just more accessible. Your tenants also benefit from easily accessing your lease agreement anytime they want. When renting digitally, tenants don’t have to worry about losing paper copies like they would when dealing with a physical lease agreement. And when something needs changing, it’s as simple as making the changes on a tablet or smartphone.
Accuracy is another benefit of eforms over traditional lease agreements. When there’s a mistake in a traditional lease agreement, you have to go and try to correct it without messing up the document. eforms, however, can be easily changed and edited as needed. And with eforms, you get alerts if any of the information is missing or entered incorrectly, which is not the case with many paper agreements.
eforms also provide more security than traditional lease agreements. For one, files stored electronically can be backed up on a cloud server so you never lose them. And eforms can be accessed from multiple devices anywhere you can get an internet connection, so you can easily print multiple copies for your records.
How to Draft an Eforms Lease Agreement
When creating an eforms lease agreement, the process of getting a rental or lease agreement signed electronically is incredibly simple. If you already have a lease agreement or rental contract prepared, you can create an electronic eforms document and send it to the tenant for signature. You can also create a lease agreement using a user-friendly eforms platform that provides you with various eforms templates from which to choose. Once you select a template, you can customize the lease agreement or rental contract to make it your own by adding your signature, the date, lease term, and other pertinent details and information.
Another added benefit to using an eforms platform is that there are various eforms templates to choose from, so if you don’t have a lease agreement or rental contract drafted, you can select one from the many templates made available online. You can also use an online lease agreement maker, which allows you to select key details and information for any lease agreement, including the terms and conditions. The online platform automatically prepares a lease agreement based on the information you provided after you review it and make any adjustments you see fit.
While the lease agreement or rental contract will most likely contain various terms and conditions that generalize the landlord-tenant relationship, it is important to obtain the tenant’s consent or acknowledgement on various details related to the tenancy. These can include the rent amount and due date, as well as the terms and conditions of occupancy, such as whether pets are allowed, is smoking permitted, is subletting allowed, etc. It is important to make sure that the contingent terms and conditions of occupancy are also listed in the rental contract, as this will protect you as landlord in the event of a lease violation.
Pitfalls to Avoid
The following are some of the most common mistakes that we have seen made in respect of eforms lease agreements:
Not Putting Attention on Standard Clauses
Tenants and landlords too often do not pay attention to and do not negotiate or customize the standard clauses. This can lead to negative results for both parties. When you consider that clause 24 of the standard residential lease is a representation clause, ignoring it could result in very serious consequences because landlords cannot insist that a tenant do anything that is not part of the lease agreement – regardless of whether the tenant did it or thought it was part of the deal.
So do read the standard clauses carefully and advise your real estate lawyer of any alterations you want.
Omitting Terms
You can add custom clauses to the standard residential lease agreement but keep in mind that only the standard clauses are binding and enforceable. So do keep a copy of the lease agreement on file and don’t erase the standard clauses you don’t want.
Not Signing on Page 2
Beware of scams where someone will prepare a signed lease agreement with your signature on page 2, to make it look like the deal has been signed, when in fact it hasn’t. They then put a listing on Craigslist or Kijiji with photos and will collect first and last month’s rent. If this happens, the tenants can show up on your doorstep in a couple of days and move in, but you don’t want them there . Your only recourse is against the person you think you were dealing with and this can be very difficult. So sign on the second page of the eforms lease agreement and make your own copy immediately – keeping the original with no signatures on it. This can save you a lot of money and headaches.
Forgetting the Schedules
We are seeing more and more landlords who are not completing the schedules and are instead just crossing them out and saying "see attachment". But the schedules are very important: they spell out the rent, deposit, appliances, snow removal, landscaping, furniture, parking, etc. Without the schedules, a lot of important aspects of the lease can be left to chance.
Not Fulfilling Conditions Precedent
You can put conditions in the standard residential lease agreement such as "subject to insurance", "subject to landlord’s approval of tenant’s dog". But then don’t forget to make those conditions happen! In other cases, we are seeing landlords requesting a condition to be removed in writing "for record purposes" and then forgetting about it altogether! Again this can lead to lots of headaches and money wasted.
This is a brief list of some of the main errors we have seen – but there are many. Best advice is to review the steps you need to take with your real estate lawyer prior to signing a lease so that you can be ready.
Legal and Regulatory Considerations
A common question that arises when it comes to eforms lease agreements is whether they can be considered legally binding from the outset. The short answer is yes – but certain legal requirements must be met in order for an online lease to be enforceable in court.
Most states require a rental agreement to be in writing if it cannot be performed within one year. So from this perspective, an eforms lease agreement meets the legal requirement of being in writing. When it comes to electronic signatures, the Electronic Signatures in Global and National Commerce (ESIGN) Act defines electronic signatures as "an electronic sound, message, or process attached to or associated with a record and executed or adopted by a person with the intent to sign the record." Since electronic signatures offered through eforms lease agreements are legally viewed as real signatures and the eforms lease agreement meets the writing requirement, it’s easy to conclude that eforms lease agreements are legally binding.
One of the most critical legal considerations when creating eforms lease agreements is making sure that electronic signatures are gathered in a legally sound way. For those using eforms for lease agreements through their websites, ideally you should use a lease creation tool that has built-in legal protections. Other integration options, such as using embeddings, do not offer the same level of protection and can actually be used as evidence in court against you.
When a case goes to court, the written lease agreement and related documents will be reviewed by a judge to determine if the agreement was created in accordance with the law. If the electronic signature process is not secure, you could lose your case.
To be sure that your eforms lease agreement are legally protected, it’s a good idea to work with a reputable online forms and lease agreement creation software. Look for a solution that includes e-signature tools that have electronic signature authentication and other safeguards to verify signer identities and keep digital signatures secure and legally protected.
Using a secure online forms and e-signature solution ensures that if there is ever a need to take a lease agreement to court, the important question of whether the electronic signature is legally binding will not be called into question. Having a thorough understanding of the legal requirements around eforms lease agreements will help you create a process that ensure the long-term success of your business.
Common Questions
As in any industry, the eforms rules and process tend to bring with them a set of common questions and queries. Their answers are not always apparent in the rules themselves, so our experts have compiled a list of FAQs to help inform your leasing journey and to ensure that you remain at the forefront of the industry.
1. HOW DO I MODIFY AN EFORMS LEASE?
Once an eforms Lease is created, the terms cannot be modified on the system. However, issues of this kind can be dealt with in the usual way by way of Side Letter, Amendment, etc., and a reference to the eforms lease being modified may be included within that document. If a new eforms Lease is needed (for example, because of a new rent review date), this will require registration of the new Lease and discharge of the old one (assuming that there is no change in the parties). A form LR9 should be used for this purpose. Ordinary stamp duty must be paid on any new Lease and on any LR9.
2. HOW SHOULD GLAZING SCHEDULES BE ATTACHED TO AN EFORMS LEASE?
The records can be attached to an eforms Lease in a number of different ways. Ordinarily, it should be possible to attach the schedule as a separate document. If the records are too large, the records can be attached as images, either individually or in a set.
3. WHAT ARE THE DEFAULT SETTINGS FOR EFORMS?
The default setting for eforms leases are: 1 year; present rent. The default settings can be changed during the creation of an eforms lease. Further, the final term of an eforms Lease can be set after the creation process has been completed by clicking on the "Update" link from the "Leases Created" screen.
4 . HOW AND WHERE ARE EFORMS FILES STORED?
eforms databases are stored on secure fileservers at Everton House, in accordance with the Land Registry’s expected standards and are backed up every 24 hours.
5. HOW DO I DEAL WITH ISSUES OF DISPUTE BETWEEN THE SYSTEM AND THE WEBTAKEON/LIS BATCHED/ON-LINE SYSTEMS?
The eforms system is a "black box" means of taking data from a landlord’s system and feeding it into the Land Registry system. When an eforms Lease is being prepared, no-one would know what information is being sent to Land Registry, and therefore if some of the data has been incorrectly input on the eforms system, it will not be possible to know what the problem was from the eforms system alone.
If a piece of information has been entered incorrectly, the eforms Lease should be cancelled, and restarted. If a Lease has been sent to Land Registry for registration and an LR9 is needed for any reason, the eforms Lease should first be cancelled, and then a LR9 (in the usual manner) filed before registering the Lease.
If an eforms Lease has some error that means that it should not be registered (for example, there is no right to make alterations and floor plans need to be attached) and, if Land Registry were to register the Lease, the Lease would be invalidated by the registration, the best course of action may be to (a) cancel the Lease and then (b) create a Side Letter, Amendment or Reversionary Lease which gives the full details of the Lease but does not invalidate it.
6. DOES THE EFORMS SYSTEM CREATE ENCOMPASSING CLAUSES (I.E. "Saveas Clause")?
No. Any Clause 7 or 8 will provide for the creation of a standard form of "Saveas Clause". This Clause will be drafted at the same time as the eforms Lease itself.