Renting Realty

Chapter 22

What is a Lease? (22-1)

• Lease• An agreement in which one party receives

temporary possession of another’s real property in exchange for rent

• Rent• The consideration given in return for temporary

possession

Those Involved in a Lease

• Landlord• The person who actually owns the realty

• Tenant• The person receiving the possession

• Leasehold estate• The ownership interest of the tenant

The Agreement

• Lease or Rental Agreement• A written document that describes the rental

transaction

• Oral arrangements• If the lease is for more than a year it has to be

written or courts may not enforce them

• If it is important include it in the lease agreement

Types of LeasesPeriodic Tenancy

• The leasehold is for a renewable period of time with rent due at stated intervals• Sometimes a rental period is identified

• Tenancy from Month-to-Month• When rent is paid monthly

• Automatic renewal unless notice is given • Notice is generally equal to the length of the

payment period

Types: Tenancy for Years

• When a leasehold is for a definite period of time• 6 months, one year, ninety-nine years

• Different because there is a specific date for the ending of the lease

• At the end of the lease period it terminates automatically without notice

Types: Tenancy at Sufferance

• If tenants have a hard time leaving the rented property before the day when the lease ends

• AKA: holdover tenant

• Consequences• Eviction: The sheriff forcibly removes the tenant

• Liable for reasonable rent for the holdover period• Can be double or tripled

• Can be forced to pay for another lease period

Types: Tenancy at Will

• Possession of land with the owner’s permission but without an agreement as to the term of the lease or amount of rent

• May be terminated at any time by either party with minimal notice

Tenant’s Rights (22-2)

• Right of Possession• The tenant has the right of possession on the time agreed

upon in the lease

• Landlords GENERALLY don’t have a right to enter leased properties without that right being spelled out in the lease

• Eviction• If the landlord blocks the tenant from possession of all the

real property• If the eviction is improper the tenant may recover

damages

Tenant’s Rights

• Constructive Eviction• IF the landlord fails to perform certain duties as

defined in the lease or by statute

• IF the tenant abandons the premises because of the breach

Tenant’s Rights

• Right to use the property as stated in the lease or for any purpose for which it was designed

Tenant’s Rights

• Assignment of a lease• Takes place when the tenant transfers his or her

entire interest in the lease to a third person

• Sublet• Leases all of the property to a third person

• For less than the remaining time on the lease

• For the entire time remaining on the lease

• The original tenant is still directly liable

• Generally require the landlord’s prior approval

Tenant’s Duties

• Duty to Pay Rent • Pay the agreed-upon rent when it is due

• It may also be a percentage of the profits of a business

• Generally required to pay first and last month’s rent up front

• Residential rentals may require a cleaning or security deposit• The deposit is refunded at the end of the lease if

nothing is damaged

Tenant’s Duties

• Duty to take care of the property• The tenant must return the property in the same

condition as when the lease began• Can include making all minor repairs• Tenants will be held responsible for misuse or

negligence • Tenants can’t make major changes without

permission• Notification of landlord is expected when major

repairs are needed

Tenant’s Duties

• Torts Duty• Duty to care for those who enter the property• An injury to an invitee caused by a tenant’s

negligence• Exception is when the landlord knew about a

danger but didn’t disclose the information

• Renter’s Insurance • Insurance to protect against loss from injury

claims and other loss when renting

Landlord’s Rights and Duties22-3

• Right to Rent• Tenant vacates early they are still responsible

for the unpaid rent• Duty to mitigate

• The landlord has to make an effort to rerent the property

• The original tenant is liable for the remaining rent if it can’t be rerented

• If it is rerented but at a lower rent the original tenant is responsible for the difference

Landlord’s Rights and Duties

• Tenant Fails to Vacate• If the tenant fails to pay rent but remains in

possession of the premises

• The landlord may sue to evict• They may not do it themselves

Landlord’s Rights and Duties• Right to Regain the Realty and Fixtures

• The landlord is entitled to regain possession at the end of the lease

• Any added fixtures are to remain with the property• Trade fixtures added by business tenants are not

subject to this same rule

• Duty to Maintain the Premises• The landlord is responsible for the upkeep of the

exterior and common or public areas• Hallways, stairs, elevators, yards, exercise rooms,

pools, etc

Landlord’s Rights and Duties

• Duty to Maintain the Premises• Warranty of habitability

• Landlords are required to provide residential property in a condition fit for human living

• Housing Code• In large cities this is law that prescribe in detail the

required condition of housing properties

• Can include• Electrical, roof, ceilings and walls, outside doors and

windows, bathrooms,ventilation

Landlord’s Rights and Duties

• Torts Duty• Landlords are responsible if someone is injured

in common areas

• Landlords can be held responsible for injuries sustained by renters

• IF the injuries result from defective conditions of the property

• IF the conditions are concealed or not readily apparent

Landlord’s Rights and Duties

• Duty to Pay Property Taxes• Landlord’s generally pay all property taxes

• Long-term leases of commercial property• The taxes can be paid by the tenant

• Fire insurance can also be paid by the tenants

Landlord’s Rights and Duties

• Fair Housing Act Duties• Cannot discriminate on the basis of race,

religion, sex, national origin, handicap or family status

• Duty to Voluntary Termination• A lease can be terminated by agreement before

the expiration of the term• This has to be expressed to and accepted by the

landlord