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Chapter 16 - Leases

Chapter 16 - Leases. D. Zaharopoulos. Definition of a Lease. A contract between owner of real estate (LESSOR) and tenant (LESSEE) To transfer rights of exclusive possession and use in exchange for the payment of rent and other obligations. Owner (LESS OR ).

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Chapter 16 - Leases

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  1. Chapter 16 - Leases D. Zaharopoulos

  2. Definition of a Lease A contract between owner of real estate (LESSOR) and tenant (LESSEE) To transfer rights of exclusive possession and use in exchange for the payment of rent and other obligations

  3. Owner (LESSOR) • Retains the reversionary right to possession • Lessor’s interest is now a leased fee estate plus reversionary right.

  4. Tenant (LESSEE) • Occupancy but no ownership rights • Occupancy right terminates at some point • A lease is both a conveyance & a contract • Establishes a lawful leasehold estate

  5. Requirements of a Valid Lease • Capacity to contract • Legal objective • Offer & acceptance • Consideration

  6. 4 Leasehold Estates 1. Estate for years (tenancy for years) • Termination date is fixed & known • Lease does not automatically renew • Notice to vacate at end of period not required • Lease survives the death of the landlord

  7. 4 Leasehold Estates 2. Periodic Estate (Estate from Period-to-Period) • Duration based upon an interval of time (month-to-month) • Lease automatically renews for another interval • Notice to terminate must be given in order to state the termination date • Lease survives the death of the landlord

  8. 4 Leasehold Estates 3. Estate at Will (tenancy at will) • Based upon intent of the parties to the lease • May be terminated by either party without cause when sufficient notice is given • “you can rent my home until sold” • Usually informal and oral • Automatically terminates at the death of either party

  9. 4 Leasehold Estates 4. Estate at Sufferance • Terminated lease with holdover tenant • Exists without landlord’s consent

  10. Lease Agreements • Complete description of premises, including specific facilities included • Dates should be precisely stated • Use of premises • Security deposit (AZ specific discussed later) • Rules & regulations

  11. Improvements • Generally, neither party is required to make improvements • Tenant may make improvements with permission • Any trade fixtures should be identified in the lease

  12. Accessibility • Federal Fair Housing Act:illegal to discriminate on basis of physical disabilities. • Americans with Disabilities Act:applies to commercial, nonresidential property

  13. Other • Maintenance of premises • Destruction of premises • Assignment & subleasing • Options

  14. Types of Leases • Gross • Net • Percentage • Variable • Ground • Oil & gas

  15. Fair Housing Laws Title VIII-Civil Rights Act of 1968 & FH Amendments Act of 1988 provide special protection to the following classes: race, color, religion, national origin, gender, handicap, familial status

  16. Covenant of Quiet Enjoyment for tenant is implied by law regardless whether or not addressed in the lease.

  17. Landlord obligations • Maintain fit premises • Security deposit

  18. Notices required: • Copy of Landlord Tenant Act (available at state office or www.az.sos.gov) • Construction-improvements:

  19. Remedies for non-compliance by Landlord • Failure to return security deposit • Failure to deliver possession • Self-help for minor defects • Failure to supply essential services • Fire & casualty damage • Constructive eviction

  20. Remedies for non-compliance by Tenant • Failure to pay • 5 day notice • Court date • Forcible entry & detainer • Writ of restitution • Actual eviction

  21. ARLTA AZ Residential Landlord & Tenant Act • Security deposit may not be more than 1 ½ times the normal monthly rent • Not obligated to put security deposit into an interest-bearing account • Must specify what non-refundable amounts are included in the cleaning deposit

  22. continued Landlord must provide tenants with: • signed copy of lease • Move-In Form • Written notice of tenant’s right to be present at move-out inspection • copy of ARLTA

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