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Real Estate

Chapter 14 Conclusion

admin 2019.05.16 22:42 Views : 254

Chapter Review

The Uniform Residential Landlord and Tenant Act (URLTA) is a model law enacted as a blueprint for state laws to regulate leasing and management practicesof landlords with residential properties.

The act aims to:

  • equalize and standardize rights of landlord and tenant
  • protect tenants from unethical practices
  • prevent unfair, complex leases and their enforceability

A lease is both an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations. The legal essence of a valid lease is that it conveys an exclusive right to use and occupy a property for a limited period of time in exchange for rent and the return of the property after the lease term is over.

Leasehold estates are distinguished from freeholds by their temporary nature. Every leasehold has a limited duration, whether the term is 99 years or not stated at all. While the lease conveys exclusive use, it may also restrict such use to conform to the landlord's desires.

Like other contracts, a lease becomes a binding agreement when the parties accept the terms of the agreement and communicate their agreement to the other party.

In a lease arrangement, the owner is the landlord, or lessor, and the renter is the tenant, or lessee.

There are four basic types of leasehold estates:

  • Estate for years continues for a definite fixed period of time. The lease can be for any specified length of time measured in days, weeks or months.
  • Estate from period to period (periodic estate) is more commonly referred to as a periodic tenancy, periodic lease, or month-to-month lease. 
  • Estate at will has no time limit. California does not recognize estate at will, because California statute requires a notice to terminate all leases.
  • Estate at sufferance is created when a tenant takes legal possession of the property but then remains on the property without the owner’s consent after the lease terminates. A tenant who doesn’t leave when the lease expires is called a holdover tenant.

lease agreement is a legally enforceable contract where an agent or owner of a property gives the exclusive right of possession for a specific amount of time in exchange for money.

Once a lease is in effect, the tenant’s leasehold interest in the property is considered personal property.

California's Statute of Frauds requires a lease to be in writing if:

  • It has a term longer than one year
  • It has a term less than one year, which expires more than one year after the agreement is reached.
  • The property is managed by a property manager and the property manager or an employee will be signing the lease agreement as the owner’s legal agent.

The covenants (agreements or promises) in the lease are very important.

  • Capacity to contract
  • Demising clause
  • Description of the premises
  • Clear statement of term
  • Specification of rent and how it is to be paid
  • In writing
  • Signatures
  • Delivery

 

 

gross lease requires the landlord to pay the property's operating expenses, including utilities, repairs, and maintenance, while the tenant pays only rent.

In a net lease, the tenant pays not only the rent for occupancy, but also pays maintenance and operating expenses such as taxes, insurance, utilities, and repairs. 

In a graduated lease, the rent payments start at a fixed amount but increase as the lease term matures. 

ground, or land lease, concerns the land portion of a real property. The owner grants the tenant a leasehold interest in the land only, in exchange for rent.

percentage lease is a lease whose rental is based on a percentage of the monthly or annual gross sales made on the site.

proprietary lease conveys a leasehold interest to an owner of a cooperative.

An index lease provides for the adjustment of rent according to changes in a price index.

security deposit is money that a tenant deposits with the owner of the apartment, in advance of possession, for the repair of any damages to the apartment for which the tenant is responsible. The maximum allowed security deposits in California are 2 months’ rent for an unfurnished rental and 3 months’ rent for a furnished rental.

A security deposit is always refundable. Fees are nonrefundable.

A sublease is the transfer by a tenant of a portion of the leasehold interest to another party.

An assignment of the lease is a transfer of the entire leasehold interest by a tenant to a third party.

Landlords have the following rights:

  • Receive rent
  • Re-possess the property following the lease term
  • Terminate a month-to-month rental agreement
  • Inspect a property periodically, but must follow specific guidelines.
  • Monitor the tenant's obligations to maintain the premises

Landlords have the following obligations:

  • Guarantee that the property meets the minimum health and housing codes
  • Ensure the property’s common areas are safe
  • Respect the tenant's use and quiet enjoyment of the property
  • Follow federal and state fair housing laws 

In most cases, a landlord may enter a dwelling unit upon giving 24-hour notice. However, in emergency situations, under a court order, where the tenant has abandoned or surrendered the premises, or when the lease agreement stipulates other situations, no notice is required.

Tenants have the right to:

  • Exclusive possession and occupancy
  • Exclusive use
  • Quiet enjoyment
  • Necessary repairs are made in a reasonable time
  • Profits from use

Obligations the tenant has to the landlord:

  • Pay the rent when it is due.
  • NOT damage the property
  • Notify the landlord if any defect arises after taking possession.
  • Give appropriate notice to vacate property.
  • Not interfere with the rights of other tenants.
  • Keep the premises clean and sanitary
  • Comply with the rules and regulations of the building

Tenants are entitled to a safe and livable home, often referred to as the landlord’s “implied warranty of habit­ability.”

A tenant must provide notice to a landlord if repairs are needed. If the landlord receives this notice and fails to make the repairs necessary within a reasonable amount of time, the tenant has the right to:

  1. Spend up to one month's rent in repairs
  2. Abandon the premises, in which case the tenant is relieved from the requirement of paying additional rent and the performance of other conditions of the lease
  3. Call local building inspectors or the health department to complain about the violations.

The repair-and-deduct option allows the tenant to arrange and pay for repairs, then deduct the amount from rent payments. The tenant must wait a “reasonable time” (in California that is 30 days) for the landlord to fix the items before choosing to fix them his or herself.

A lease may terminate for any of the following causes.

  • Term expiration or appropriate notice
  • Voluntary agreement
  • Property destruction
  • Condemnation
  • Abandonment or surrender of the premises
  • Bankruptcy of tenant
  • Breach of contract
  • Eviction

Tenant default occurs most commonly from failure to pay rent or maintain the premises. If a tenant is in default, the landlord may file a suit for possession, also called a suit for eviction.

The most common form of landlord default is failure to provide services and maintain the property condition.

A successful suit for specific performance compels the defaulting party to perform the contract obligation that was breached.

Eviction is the legal procedure of removing a tenant from a property because there is a breach of the lease or rental agreement.

The required steps for a legal eviction in California include:

  1. Appropriate 3-day notice to vacate the property
  2. Filing of the unlawful detainer action
  3. Summons is issued to the tenant who has 5 days to respond to the charges
  4. If the tenant ignores the summons the landlord can file a default judgment and have the sheriff evict the tenant.
  5. If the tenant responds to the summons the parties will present their case to the court and the court will make a final ruling if the tenant must leave the premises or not.

Rent control is a government regulation of the amount of rent a landlord may charge a tenant.

California currently has two types of rent control ordinances:

  • Ordinances without vacancy decontrol - These ordinances limit rent increases for both new and existing tenants.
  • Ordinances with vacancy decontrol - These ordinances allow a property owner to set the rent for a new tenant without any restrictions.

Although they are called “mobile”, mobilehomes are not easily moveable since many are on foundations and have additional features such as decks and patios. Special rules apply to the rental of mobilehomes or lots in mobilehome parks. Chapter 2.5 of the California Civil Code outlines the Mobilehome Residency Law.