©2011 Cengage Learning. Chapter 11 Landlord and Tenant Relations California Real Estate Principles...

Chapter 11Landlord and Tenant

Relations

California Real Estate Principles


Chapter 111. Define a lease and the 4 types of leasehold estates.

2. Outline the requirements for a valid lease or

rental agreement.

3. Explain the difference between a sublease and an assignment of a lease.

4. Discuss the duties and responsibilities landlords and tenants owe each other.

5. Describe how tenants may be lawfully evicted.

6. Explain the role played by professional property managers.


LEASE

A lease or rental agreement is a legally binding contract between an owner (lessor/landlord) and a tenant (lessee) where a tenant has possession and use in exchange for rent or services.


2 . L ess -Th an -F reeh o ld

E S TA TEF O R Y E A R S

TE N A N C YA T W IL L

TE N A N C Y A TS U F F E R A N C E

P E R IO D ICTE N A N C Y

P O S S E S S O R Y -L IM ITE D D U R A TIO N(R ig h ts o f Ten an t)

L E A S E -L E A S E H O L D -C H A TTE L R E A L


Leasehold Estates

Types of Leasehold Estates

LEASEHOLD ESTATES (Less-than-freehold estates)

1. Estate for years Tenancy for years or lease Fixed term (You know when it ends before it begins.

2. Estate from period to period Periodic tenancy or period to period (month-to-month) Unsure when it ends - requires notice by either party.

3. Estate at will Tenancy at will Is a leasehold interest that can be terminated without

notice at any time by the landlord. Not used in California Insist that advance notice be given prior to termination…

usually 30 days.4. Estate at sufferance

Tenancy at sufferance Possession at the end of a lease


VALID LEASE REQUIREMENTS

1. Written, if more than one year(Statute of frauds)

2. Names of lessor and lessee3. Adequately describe the property4. Show amount of rent and how paid 5. Give date lease term begins and length of

term6. Be signed by lessor7. Involve capable parties8. Renewal provision in boldface type

(Residential property)©2011 Cengage Learning

Maximum durationUrban Property

99 yearsAgricultural Land

51 years


RESIDENTIAL RENTAL AGREEMENT

1. Utilities2. Maintenance3. Tenant improvements4. Use of the property5. Maximum number of occupants6. Security and damage deposits7. Property taxes and insurance8. Rules regarding pets, guests, parking,

anything else of importance


SECURITY DEPOSITS (Legal Maximums)

Total security limits, including pets:• Unfurnished = 2 months• Furnished = 3 months

Legal deposits including: Waterbed (or insurance), Pet Deposit, Key Deposit, OpenersUnused deposit must be returned or written accounting

for expenses within 21 daysCannot be called NON-REFUNDABLERent Off Set: Maximum twice in any 12 month periodNo more than 1 month’s rent


ASSIGNMENT

A transfer by the lessee (assignor) of ALL the unexpired interest he holds at the time of the assignment


LESSORLeases

toLESSEE “A”

Who assigns

Lease toASSIGNEE “B”

ASSIGNEE “B” pays directly to LESSOR

SUBLEASE

A transfer by the lessee of only part of his interest to another (sub-lessee) at the time of the sub-letting


LESSOR

Leases to

LESSEE “A”

Who sublets to

SUB-LESSEE “B”

Who paysLessor $1,000

LESSEE “A”

Sandwich

Pays Lessee$2,000

TYPES OF LEASES Gross Lease

• Landlord pays operating expenses (TIM)• (taxes, insurance, maintenance)

Net Lease (Triple Net Lease)• Tenant pays operating expenses (TIM)• (taxes, insurance, maintenance)

Percentage Lease• Tenant pays rent based on tenant’s gross income

Fixed lease (Month-to-Month)• Tenant pays a fixed rent amount

Graduated Lease (Lease)• Tenant pays a fixed rent amount for the period with

periodic rent increases at specific times


LEASE TERMSEXTENSION:

Upon expiration of rental contract, the rental continues under the original terms.

RENEWAL:

Upon expiration of rental contract, the rental continues under new terms

ESCALATOR CLAUSE:During the rental period, the rental agreement allows for rent increases based upon some index


Landlord Duties and RightsKeep property habitablePeriodically inspect the premisesInsure outside of living quartersMaintain quiet use and enjoymentProhibit discrimination by all subordinates


UNLAWFUL ACTS BY A LANDLORD

Tenant lockoutSeizure of tenant propertyRemoval of doors and windowsShutting off utility servicesCausing uninhabitabilityInterfering with tenant’s use and

quiet enjoyment


Unlawful Detainer Serve 3 Day Notice Tenant fails to respond, landlord files in

superior court If landlord wins a judgment then ask for a Writ

of Possession Authorities remove the tenant

3 DAY VERSUS 60 DAY NOTICE


TENANT OBLIGATIONSPay rent when due according to the contractGive minimum 30 day notice for terminationKeep the premises occupied, clean and sanitaryLiable for negligence to othersDispose of all rubbish, garbage and waste from the

unit in a clean and sanitary mannerProperly use and operate all electrical, gas and

plumbing fixtures and keep them clean and sanitaryNot interfere with other tenants rightsRefrain from willfully or wantonly destroying, defacing,

impairing or removing any part of the structure or appurtenances

Occupy and use the premises only for the intended or designed use


RENTAL OFFSETREPAIR & DEDUCT

Notify landlord of necessary repairs and allow adequate time for repairs to be made

If landlord refuses:1. Abandon the property with no future rent. 2. Spend up to one month’s rent on repairs, send

receipts for repairs, offset amount on next month’s rent payment.

NOTE: Can only use twice in any 12 month timeCannot be used for decorative purposes, only for

habitability.


TERMINATION OF A LEASEExpiration of the termMutual agreement (surrender)Violation of terms and conditionsDestruction of the premises

• Or government action: condemnationEviction

• Notice• Unlawful detainer action• Non-payment of rent• Illegal use of premises• Sheriff serves the eviction


PROPERTY MANAGER

Controls operating expenses to maximize income

Obtains tenants and leasesMaintains property by keeping it in repair and

modernizing or renovating when neededOversees the on-site resident manager

for residential apartments of 16 or more units.C.P.M. = Certified Property Manager


RENT CONTROLIntent is to make property available for rent at

reasonable rates when there is a shortage of available space

May not be effective because artificially low rent may increase demand and discourage new construction


Review Quiz Chapter 11

1. It is illegal to screen and eliminate potential tenants based on:

(a) income levels

(b) credit rating

(c) past delinquent rental history

(d) martial status



2. Lessor A leases to Lessee B who legally subleases to Sublessee C. Which of the following is correct?(a) Lessor A looks to Lessee B for payment(b) Lessor A looks to Sublessee C for payment(c) Lessee B does not have a contract with

Sublessee C(d) There is only one contract in this transaction


Review Quiz Chapter 113. Most month-to-month rental agreements can be

classified as an:

(a) estate for years

(b) estate from period to period

(c) estate at will

(d) estate at sufferance


4. A lease on agricultural land cannot exceed:(a) 15 years(b) 37 years(c) 51 years(d) 99 years


5. The maximum security deposit for an unfurnished apartment is:

(a) one month’s rent

(b) two month’s rent

(c) three month’s rent

(d) four month’s rent


6. A landlord signs a 6 month lease and the lessee takes possession but never signs the lease. Under these circumstances the lease is:(a) valid(b) void(c) voidable(d) illegal




7. If a lessee abandons a lease prior to the expiration date, the lessor may:

(a) leave the premises unoccupied and sue for the entire lease amount

(b) lease the property again and collect from two sources

(c) leave the premises unoccupied and sue for each installment as it becomes due

(d) either (a) or (b)



8. How many units would there have to be in an apartment building to make it necessary for the owner to hire an on-site resident manager?(a) 20 or more units(b) 18 or more units(c) 16 or more units(d) 14 or more units



9. Under the rental offset rule, which of the following is true? The tenant can do housing code repairs up to:

(a) one month’s rent, once per year

(b) two month’s rent, twice per year

(c) one month’s rent, twice per 12 month period

(d) one month’s rent, twice per year


Review Quiz Chapter 1110. If you were to lease a mountain cabin from April 5 to

April 30 of the same year, the lease would be recognized as an:

(a) estate at will

(b) estate at sufferance

(c) estate from period to period

(d) estate for years


Answers to Review Quiz Chapter 11

1. D 6. A

2. A 7. C

3. B 8. C

4. C 9. C

5. B 10. D


©2011 Cengage Learning. Chapter 11 Landlord and Tenant Relations California Real Estate Principles...

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Transcript of ©2011 Cengage Learning. Chapter 11 Landlord and Tenant Relations California Real Estate Principles...