Real and Personal Property Objective 09.02 Part C Compare the legal rights of acquisition, transferal and renting/leasing of real or personal property.
RELATIONSHIP BETWEEN LANDLORDS AND TENANTS
Relationship between Landlords and Tenants • Parties to the contract to lease or rent – Lessor/Landlord – Lessee/Tenant
• Tenant - Wants possession and occupancy free from interference or annoyance • Landlord – Wants rent money and property in good condition at the end of rental term
Rights and Duties: Covenants of the Contract • • • •
Covenant = Promise Affect both the landlord and the tenant May be express or implied Number and type vary depending on type of property
Quiet Enjoyment • Tenants have a right to: – expect the undisturbed possession of the property called quiet enjoyment. – expect exclusive use of the property free from interference or annoyances.
• State laws vary and the landlord may or may not have the right to enter the premise without prior notice. – Add covenant to lease to address entry issue
Implied Covenants • Implied warranty of habitability by landlord – May be enforced by city housing codes – Health and safety of citizens is considered – Duty of landlord to provide property free of defective conditions
• Waste - The landlord expects reasonable wear and tear by tenant, but unreasonable damage is called waste and tenant can be required to pay the cost to repair waste.
Assignment and Subletting • Assignment and subletting – When a tenant transfers the remaining period of time on a lease to another party
• May or may not be allowed by landlord • May have to get prior approval by landlord
Renewals of Lease • Tenancy ends at the expiration of stated time • Lease may have renewal clause making provisions for renewal by the parties to contract • Agreement usually requires either party to give advance notice of their intent to nonrenew the lease
Security Deposits • A money deposit as security for payment of rent due or repairs for damages done by the tenant • Most landlords require one or two month’s rent in advance as security deposit • When lease expires, if all rent is paid in full and there is no waste, the security deposit is returned to tenant by landlord.
Payment of Rent • A critical issue to both parties. Be sure contract is clear on: – What is cost of monthly rent/lease? – When is payment due? – Is there a late fee if payment is late? – What constitutes “late”? – Is late payment grounds for breach of contract and termination of tenant rights?
Termination of Lease • If the contract has a specified term, it is a tenancy for years. • Leases can be terminated prior to the end of the term by either party, but penalty clauses may apply. • Breach of contract exists if the tenant chooses to vacate and the property cannot be leased to new tenant in a timely manner. • Landlord may sue for monetary damages. Landlord must attempt to lease property and mitigate any damages from loss of rents.
Rent Control • Rent control is the maximum rent that can be charged for a property. • Applies in many large cities where housing is in short supply. • Tenant organizations asked for laws to keep rent from going up. • Laws vary greatly on rent control.
Anti-Discrimination • Anti-discrimination laws such as the Civil Rights Act bind landlords in the selection of tenants. • Special emphasis is given on human rights and needs. • Law forbids discrimination on basis of race, religion, color, national origin, sex, age, ancestry, marital status, blindness, military service or future plans to have children.
Tort Liability • Applies to both landlord and tenant • May require responsibility for injuries occurring on the premise • Landlord is usually responsible for common areas where landlord is in control • Tenant is usually responsible for injury caused by defects in the portion of the premise over which he/she has control.
Fixtures • Fixtures are items of personal property attached to real property. • The addition of fixtures by the tenant causes problems when tenant prepares to vacate the premise. – Who owns fixtures that become real property? – What damage will be caused if item is removed? – Will tenant be reimbursed for improvement to premise?
Breach of Lease and Remedies • Eviction – The landlord has the right to deprive the tenant of physical possession of the premises but landlord – Must obtain a court order allowing removal of tenant – Must provide just cause, such as: • Nonpayment of rent • Damage to property • Violations of lease provision
• Lien may also be attached to tenant’s property to pay back rent or costs of repair due to waste
Breach of Lease and Remedies • Constructive eviction – When the landlord breaches his or her duties of the lease covenant, the tenant may consider the lease terminated, leave premise and cease rent payment • Example: Landlord deprives tenant of gas, electricity, or other fundamental service