Real Estate Ch 11

The Residential Rental Agreements Act

(only residential) -Used to ensure only HABITABLE UNITS are rented (heat, electricity, water, etc.) -Obligations of landlord and tenant are mutually dependent -Act CANT be waived (cant change lease bc condition isn't good)

Estate from Period to Period (Periodic Tenancy)

-Agreement is for SPECIFIC period of time and may AUTOMATICALLY renew for an indefinite period of time WITHOUT a specific ending date - Rent payable in definite intervals -Minimum notice required by law to vacate -If notice of termination is NOT given, parties are bound to ANOTHER term Ex: most residential leases

Estate for Years (tenancy for years)

-Continues for a DEFINITE period of time -Notice to vacate is NOT required. Lease AUTOMATICALLY ENDS. -Definite beginning and end -May be for less than a year -No automatic extensions ex: vacation rental

Statute of Frauds/Recordation

-Every lease LONGER than 3 years from the time of its MAKING must be in WRITING(statute of frauds) -Otherwise, an oral lease is perfectly valid (< 3 years) -A lease for LONGER than 3 years from the time of its MAKING should be RECORDED (Connor Act)

Estate at Will (Tenancy at Will)

-Gives the tenant the right to POSSESS the property with the consent of the landlord for an INDEFINITE term -can be terminated at ANY TIME by EITHER PARTY -NO notice is required to terminate

Net Lease

-In ADDITION to rent, the tenant pays some or all (percentage) of the PROPERTY CHARGES -can include maintenance, property taxes, or insurance -triple net lease

Landlord's Implied Covenant of Quiet Enjoyment

-Lessor (landlord) assures that the lessee shall have continuous possession of leased property (quiet enjoyment) -Landlord has NO right to enter the leased premises during the lease term UNLESS the lease specifically gives the owner or their agent this right

Retaliatory Eviction

-Prohibited -Tenant CANT be evicted by a landlord for certain protected activities: -Complaining to government agency -requesting repairs from landlord -exercising legal rights under a lease -exercising rights under fed or state law -Joining a tenants rights organization **If tenant is evicted WITHIN 12 months AFTER the occurrence of a protected act, the tenant can use retaliatory eviction as a defense

Laws for (protecting) Tenants in FORECLOSURE situations

-Protecting Tenants at Foreclosure Act of 2009 (expired) -Applies to any foreclosure on any FEDERALLY related MORTGAGE LOAN or any dwelling or residential property -New owner must comply with the act -If tenant has BONA FIDE LEASE that was in place BEFORE foreclosure notice, tenant may continue to occupy premises.. ONE EXCEPTION **If new owner wishes to OCCUPY the property as PRIMARY RESIDENCE- tenant is entitled to 90 day notice to vacate -If there is NOT a lease, 90 day notice to vacate can be given

Tenant Security Deposit Act

-Regulates the amount of money that can be REQUIRED and what the landlord can do WITH the deposit -ONLY applies to RESIDENTIAL properties

Estate at Sufferance

-Tenant PREVIOUSLY had permission to occupy the property but their rights have EXPIRED -Ex: tenancy for years expires and tenant refuses to give up possession -Tenant is called Holdover Tenant -Does NOT have any rights and can be evicted at ANY TIME

Laws for(protecting) Public Housing Tenants

-Tenants in government-subsidized housing (section 8) have ADDITIONAL rights under federal and state constitutions and federal/state laws -Tenant can ONLY be evicted for "GOOD CAUSE" (usually, wont evict for not paying rent) -Tenant is entitled to "procedural due process"

"Self-Help" evictions

-They are PROHIBITED (not allowed) -Cant padlock doors, change locks, turn off utilities **Landlord CANT seize tenants PERSONAL PROPERTY

Accounting to the tenant

-Upon TERMINATION, the landlord or agent must account for the deposit to the tenant in WRITING within 30 days -Must provide tenant with itemized list and return any unused money -Cant determine accounting in 30 days?? **Landlord must provide preliminary accounting within 30 days and final accounting within 60 days

Fixed Rental Lease (Gross Lease)

-Used in most residential leases - Payment of a FIXED amount at regular intervals -Landlord pays ALL of the property charges (HOA dues, maintenance)

Minimum notice required to terminate lease for (Estate from period to period )

-Year to Year= 30 days -Month to Month= 7 days -Week to Week= 2 days

Ground Lease

-a lessee leases a VACANT parcel for a LONG period of time for the purpose of ERECTING A BUILDING -often for 99 years or longer

Nonfreehold Estates

-also known as leasehold estates -any estate in real property that is LESS than freehold -NO ownership interest, only the right to POSSESS the property

Landlords obligations under Residential Rental Agreements Act

-comply with all building codes -make all necessary repairs -Keep COMMON AREA in safe condition -Maintain all major systems in good working condition - Provide smoke and carbon monoxide detectors and make sure they are MAINTAINED --Landlord must repair detectors WITHIN 15 days of RECEIVING NOTICE of necessary repair (tenant has to replace batteries)

Lease

-contract -It transfers the right of POSSESSION and use of the owners property for a SPECIFIED PERIOD OF TIME -Dual legal personality

Maximum Deposit (tenant security deposit act)

-depends on the term of the tenancy -Week to Week tenancy= 2 weeks rent -Month to Month= 1 1/2 Months rent -Longer than month to month= 2 months rent

North Carolina Vacation Rental Act

-establishes rules for SHORT-TERM rentals for vacation purposes -all agreements must be in writing -landlord required to refund payments if property ISN'T habitable -If property is SOLD, rentals must be honored for 180 DAYS -Creates an expedited eviction procedure -If tenant is ordered to evacuate, tenant is due a REFUND of rent, unless they were offered insurance to cover potential risk

Tenants Obligations under Residential Rental Agreements Act

-keep property clean and safe -dispose of waste and garbage -keep all plumbing fixtures clean - Not deliberately destroy the property -Comply with tenant housing codes -be responsible for damages OTHER THAN "normal wear and tear" -Notify landlord IN WRITING of the need for replacement or REPAIR to SMOKE DETECTOR

What does landlord do with Deposit of Tenant?

-may deposit it in a trust account -must be an insured bank or savings institution lawfully doing business -Can obtain a bond as a guarantee for a deposit -Landlord must tell the tenant the NAME of the bank or bond company **If an agent is holding the deposit, they only have ONE option= Trust Account

Permitted Uses of Security Deposit

-nonpayment of rent -damages other than "normal wear and tear" -Non-fulfillment of the rental period (leave early) -Unpaid bills that may create a lien on property -Cost of removing and storing tenants personal property -court costs associated with eviction

Summary Ejectment

-residential tenant can ONLY be evicted thru the court system -Hearing is before the MAGISTRATE in small claims court

Tenants rights in NC foreclosure

-tenant has statutory right to terminate lease with 10 day notice if: 1) real property contains LESS than 15 units 2) tenant has RECEIVED the required notice of foreclosure

Tenant Remedies for Breach by Landlord

-tenant may NOT withhold rent if a landlord has breached their duties (won't fix heat) -However, they may RECOVER damages, including past rent

Constructive Eviction

-tenant may VACATE the property and TERMINATE the remainder of the lease if the landlord FAILS to keep property habitable **Tenant WONT be responsible for rent when they leave

Other common provisions

-tenants use of premises -fixtures -assignments and subleases -renewal and termination -repairs

Upfit Provisions (upfitting improvements)

-when landlord provides for the initial customization of a leased property for new tenant (commercial) **fix property for tenants desires

Four Essentials of a Valid Lease

1) Mutual Assent 2) Legal capacity 3) Consideration 4) Lawful Objective

Bona Fide Lease requirements

1) tenant is NOT the mortgagor or the child, spouse, or parent of mortgagor 2) lease is an arms-length transaction 3) rent cant be substantially LESS than fair market value, unless its subsidized by government subsidy

Tenant transfers renaming term of lease to third party

= assigning the lease (3rd party fails to pay rent.. they are primarily liable; original tenant is secondary liable)

Landlord

= lessOR (owner of property)

Triple Net Lease

If a tenant pays ALL of the property CHARGES

Realtors Residential Contract

Includes provisions: -late payment fees -handling of teanant security deposits -tenants breach of contract (CANT have pets)

Tenant

LessEE

Graduated Lease

Provides for INCREASES in rent to occur at predetermined FUTURE dates ex: rental of office space

Percentage Lease

Rent is based on a PERCENTAGE of the GROSS OR NET INCOME received by a tenant doing business in rental property ex: retail business locations (mall)

Full Service Lease

Rent is paid as base amount, PLUS a share of the COMPLEXES OPERATING EXPENSES -Ex: used in large office or multi-tenant buildings (shopping center)

Sandwich lease

Sublease the lease, original tenant is PRIMARILY liable for rent

Holdover Tenant

Tenant whose lease has expired but refuses to give up possession

Fair Housing Laws

Tenants CANT be discriminated against based on: race, color, religion, familial status, sex, handicap, national origin -Violation of NC law for any lessor of residential property or lessors agent to HARASS a lessee or prospective client on basis of sex

Index Lease

allows rent to be INCREASED or DECREASED periodically, based on CHANGES in a stipulated INDEX -can be a private or government index

When Landlord can enter

inspections, repairs, or showing property to buyers or tenants

Pets allowed on premises

landlord MAY charge a SEPARATE, reasonable pet fee -Pet fee can be NONREFUNDABLE -If animal is a SERVICE animal, it CANNOT be regarded as a pet. Pet fees are NOT allowed for service animals

Law of Negligence (Landlord's Liability)

landlord is responsible to SAFELY maintain common areas and is liable for injuries that may occur (hallways, stairways, sidewalks) -typically NOT liable for failure to maintain leased property itself