1. California Real Estate Principles, 10.1 Edition
Chapter 12
Landlord and Tenant Relations

2. Chapter 12: Student Learning Outcomes
Define a lease and the four types of leasehold estates.
Outline the requirements for a valid lease or
rental agreement.
Explain the difference between a sublease and an assignment of a lease.
Discuss the duties and responsibilities landlords and tenants owe each other.
Describe how tenants may be lawfully evicted.
Explain the role played by professional property managers.

3. 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.

4. Types of Leasehold Estates

5. Leasehold Estates (Less-than-freehold estates)
Estate for years
Tenancy for years or lease
Fixed term (You know when it ends before it begins.
Estate from period to period
Periodic tenancy or period to period (month-to-month)
Unsure when it ends - requires notice by either party.
Estate at will
Tenancy at will
Is a leasehold interest that can be terminated without notice at any time by the landlord.
Not in California
Insist that advance notice be given prior to termination,
usually 30 days.
Estate at sufferance
Tenant stays in possession of a property after the lease has expired or been legally terminated without the consent of the owner/landlord.  .

6. Valid Lease Requirements
Written, if more than one year
(Statute of frauds)
Names of lessor and lessee
Adequately describe the property
Show amount of rent and how paid
Give date lease term begins and length of term
Be signed by lessor
Involve capable parties
Renewal provision in boldface type
(Residential property)

7. Maximum Duration- Commit to Memory--
Urban Property
99 years
Agricultural Land
51 years

8. Residential Rental Agreement- Must Include:
Utilities
Maintenance
Tenant improvements
Use of the property
Maximum number of occupants
Security and damage deposits
Property taxes and insurance
Rules regarding pets, guests, parking, anything else of importance

9. Security Deposits (Legal Maximums)
Total security limits, including pets:
Unfurnished = 2 months rent required as deposit
Furnished = 3 months rent required as deposit
Legal deposits including: Waterbed* (or insurance), Pet Deposit, Key Deposit, Openers (e.g. garage, gates, etc.)
*Waterbed may require additional deposit
Unused deposit must be returned or written accounting for expenses within 21 days.
Cannot be called-- NON-REFUNDABLE

10. Assignment
A transfer by the lessee (assignor) of All the unexpired interest he holds at the time of the assignment:
Who assigns
Lease to
Leases to
Lessor
Lessee “A”
Assignee “B”
Assignee “B” pays directly to Lessor

11. Sublease
A transfer by the lessee of only part of his interest to another (sub-lessee) at the time of the subletting:
Leases to
Who sublets to
Lessor
Lessee “A”
Sub-Lessee “B”
Who pays
Lessor $1,000
Pays Lessee
$2,000
Lessee “A”
Sandwich lease

12. Types of Leases Gross Lease Landlord pays operating expenses (TIM)
(taxes, insurance, maintenance)
Net Lease (Triple Net Lease)
Tenant pays operating expenses (TIM)
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 scheduled rent increases at specific times.

13. Lease Terms- Under Expiration of Contract…..
Extension: 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.

14. Landlord Duties and Rights- Fundamental
Keep property habitable
Periodically inspect the premises
Insure outside of living quarters
Maintain quiet use and enjoyment
Prohibit discrimination by all subordinates

15. Unlawful Acts by a Landlord
Tenant lockout
Seizure of tenant property
Removal of doors and windows
Shutting off utility services
Causing uninhabitability
Interfering with tenant’s use and quiet enjoyment

16. TENANT OBLIGATIONS- Fundamental
Pay rent when due according to the contract
Give minimum 30-day notice for termination
Keep the premises occupied, clean and sanitary
Liable for negligence to others
Dispose of all rubbish, garbage and waste from the unit in a clean and sanitary manner
Properly use and operate all electrical, gas and plumbing fixtures and keep them clean and sanitary
Not interfere with other tenants rights
Refrain 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

17. Rental Offset-Repair and 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 time
Cannot be used for decorative purposes, only for habitability.

18. Unlawful Detainer- Unpaid Rent
Landlord must serve 3-Day Notice
If tenant fails to respond, landlord files in superior court.
If landlord wins a judgment, then will ask for a Writ of Possession.
Authorities remove the tenant.

19. TERMINATION OF A LEASE- Reasons to---
Expiration of the term
Mutual agreement (surrender)
Violation of terms and conditions
Destruction of the premises
Or government action: condemnation
Eviction
Notice
Unlawful detainer action
Non-payment of rent
Illegal use of premises
Sheriff serves the eviction

20. Property Manager: Controls operating expenses to maximize income
Obtains tenants and leases
Maintains property by keeping it in repair and modernizing or renovating when needed
Oversees the on-site resident manager
for residential apartments of 16 or more units.
CPM = Certified Property Manager

21. Rent Control
Intent 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.