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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.

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Presentation on theme: "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."— Presentation transcript:

1 Renting Realty Chapter 22

2 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

3 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

4 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

5 Types of Leases Periodic 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

6 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

7 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

8 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

9 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

10 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

11 Tenant’s Rights Right to use the property as stated in the lease or for any purpose for which it was designed

12 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

13 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

14 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

15 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

16 Landlord’s Rights and Duties 22-3 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

17 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

18 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

19 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

20 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

21 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

22 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


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