CHAPTER
15

Leasing Versus Renting

In This Chapter

Contrary to popular belief, leasing is not the same as renting. Renting is a broader term meaning the use of, or a license to use, property belonging to another in exchange for payment or other valuable consideration. In this case, consideration might mean a tenant improves the property while living there, which has value to the owner of the property. Renting does not necessarily require the parties to enter into a lease agreement. Leasing means the rental of property under a lease, or rental agreement, or when any lease agreement is signed as evidence of the rental of something of value. Leasing is a form of renting. You can rent something without leasing it, but you can’t lease something without renting it.

In this chapter, we will discuss leases. We will explain the requirements needed to create a valid lease and how each paragraph within a lease transfers rights and responsibilities to the lessor, or tenant. We will discuss the different types of leases used in the residential world as well as talk about some key differences between the commercial and residential lease agreements.

The Differences Between Leasing and Renting in Real Estate

In real estate, a lease gives a tenant the right to live in a property for a fixed period—typically 1 year for residential leases, but it could be any length of time agreed on by the landlord and tenant.

Through a lease, the landlord and tenant mutually agree to a contract with fixed terms and conditions, such as the rental rate, rules regarding pets, duration of the agreement, etc. Neither party can change the agreement without written consent from the other.

When a lease expires, it usually does not automatically renew itself. A tenant who stays on with the landlord’s consent after a lease ends becomes a month-to-month tenant, subject to the rental terms in the lease.

The lease is mutually beneficial to both parties. A tenant can’t stop paying rent or vacate the property during the lease term without possibly being liable and in violation of the agreement. Likewise, the landlord can’t arbitrarily force the tenant to move or increase the rental rate.

A rental agreement, by contrast, is a month-to-month agreement. At the end of each 30-day period, the landlord and tenant are both free to change the terms.

Leasehold Versus Freehold Estate

As covered earlier in the book, a freehold estate is for an indeterminable amount of time whereas a leasehold estate is for a determinable amount of time, called the lease period. A leasehold interest is created when a fee simple owner, called the landlord or lessor, enters into an agreement, or rental contract, with a tenant, or lessee. The lessee gives compensation to the lessor for the rights of use and enjoyment of the land, much as when one buys fee simple rights. However, the leasehold interest differs from the fee simple interest in several important respects:

There are four types of leasehold estates: estate for years, estate from period to period, estate at will, and estate at sufferance.

An estate for years, sometimes called a tenancy for years, lasts for a fixed period of time, such as a week, a year, or more. The duration of the lease period is known, as is the date of expiration of the lease. The tenant must do nothing for the tenancy to expire. If the lease continues for more than a year, the lease should be executed in writing to satisfy the statute of frauds.

A tenancy for years may be terminated any time with agreement between the landlord and the tenant. The termination is known as surrender of the lease. If the term remaining on the lease at the time of surrender exceeds a year, the surrender must be executed in writing. The landlord may accept the surrender of the lease agreement from the tenant, but this may not relieve the tenant from possibly being liable for damages to the landlord. Furthermore, any of the tenant’s personal property not removed by the date within the surrender of the lease clause may become property of the landlord through constructive annexation.

DEFINITION

Surrender of the lease is when a tenant agrees to give up his legal rights and returns possession of the property with the landlord’s consent. This terminates the lease agreement and ends the landlord-tenant relationship.

An estate from period to period, sometimes called a tenancy for period to period, has a duration from some time period to some time period, such as week to week, month to month, or year to year. In the lease, this tenancy has a defined beginning date but no defined end date. At the end of the defined time period, the lease automatically renews itself for another similar time period. To terminate this tenancy, a written notice, given by either party, must be submitted at least one time period in advance, notifying the intention to terminate the lease. An unusual law allows the landlord to terminate a year-to-year tenancy with only a 6 months’ notice in writing to terminate.

An estate at will, sometimes called a tenancy at will, has no defined beginning date nor defined end date, but rather allows either the landlord or the tenant to terminate the tenancy at any time without notice, hence the phrase at will. This occurs mostly in the absence of a lease. But in the majority of residential tenancies, the landlord may not terminate the tenancy except for some cause, even though there’s no written lease. By law, the tenancy existing at the will of the landlord only grants a similar right to the tenant. But a lease existing at the will of the tenant does not give similar right to the landlord.

Tenancy at will is terminated by the operation of law if …

  • The tenant commits waste against his property.
  • The tenant makes an assignment of his tenancy.
  • The landlord transfers his interest in the property.
  • The landlord leases the property to another tenant.
  • The tenant or the landlord passes away.

An estate at sufferance, sometimes called a tenancy at sufferance, exists when a tenant possesses the property even after the lease has expired, creating a holdover tenant. The tenancy lasts until the landlord evicts the tenant from the property by a court proceeding. The tenant, however, should pay rent until the landlord forces him to move out at any time without prior notice.

DEFINITION

A holdover tenant is a tenant whose lease has expired but who continues to occupy the premises without the landlord’s consent.

A landlord may unilaterally elect to hold a tenant to a new term—in effect renewing the lease under the old contract. When this decision is made, it can’t be changed. If the landlord accepts any money from the tenant, in the form of a rent check, after the expiration of the lease, that may automatically renew the lease for a new term. The election to hold the tenant to a new term must be made within a reasonable time or the right is lost.

Common Lease Clauses

Most leases must be in writing; however, a lease less than 1 year in length may be oral under the statute of frauds. This “1-year” rule states that contracts that cannot be completed within a year must be written down. The 1-year rule does not mean a contract needs to be completed within the year; it only requires that it can be completed within a single year.

A lease is a contract, and as such, it must meet all the requirements for a valid contract. (See Chapter 6 for a review on contracts.)

HELPFUL HINT

Remember, a lease is a contract, so real estate professionals, unless they’re also attorneys, cannot legally draft leases for a client. A competent real estate attorney should be used instead.

In addition to the major rights and responsibilities of the landlord and the tenant, residential leases address other matters of concern to the parties. The following clauses typically appear in a residential lease to resolve matters of common concern:

Fixtures clause The purpose of the fixtures clause in a residential lease is to obtain an understanding at the beginning of the lease that items of personal property belonging to the tenant will not become the landlord’s property at the expiration of the lease. If the residential tenant chooses to attach his personal property to the improvement owned by the landlord, that property would ordinarily become the landlord’s property after the expiration of the lease. On the other hand, these items could remain the tenant’s fixtures or more specifically, the tenant’s domestic fixtures, depending on the lease. The parties should provide for the disposition of these fixtures.

Entry clause The landlord does not have the right to enter the property without notice unless the lease has callouts for specific instances. The landlord may enter the property to collect the rent, stop waste against the property, or in cases of emergency, typically denoted as cries for help, fire, or the sound of free-flowing water. Due to this prohibition on their right to enter, landlords typically insert a clause in the lease that gives them some rights to “enter with a 24-hour notice” or to show the property to a new tenant before the original lease expires.

Renewal clause A common provision within the lease landlords desire is the requirement that the tenant provide written notice of his or her intention to renew the lease. The clause typically states that the tenant must inform the landlord within some given period before the expiration of the current lease of his intention to renew the lease. The clause typically asks for a written notice from the tenant that the lease will be renewed.

Insurance clause The landlord needs adequate insurance coverage against hazards, such as fire, earthquakes, and windstorms, to protect the investment in the rental property. The landlord can insert a clause in the lease requiring the tenant to carry such insurance and provide adequate proof of the coverage. Some landlords require the tenant to be name the landlord as “also insured” on the policy. If damage occurs due to the negligence of a tenant or the negligence of a visitor to the property, the landlord typically is not responsible. Consequently, the landlord will not have to compensate the tenant for losses of any personal property.

Security deposits clause Security deposits are a major consideration in leases. The landlord wants to collect an adequate amount of money that may have to cover any physical damage beyond normal wear and tear the tenant causes. The security deposit also can be used to defer losses if the tenant breaches the lease. In some states, security deposits are not required to follow the “no commingling of funds” rule earnest money must adhere to.

Maintenance and repair clause In most residential leases, maintenance and repairs, also called improvements, are completed by the landlord to avoid the tenant potentially causing serious damages. However, in commercial leases, these items may be absorbed into the tenant’s responsibilities, often called tenant’s improvements.

HELPFUL HINT

Maintenance of leased property is the first place agents see a drastic difference between the residential and commercial world. In the residential world, the landlord will make all repairs while in the commercial world, the tenant is responsible for the maintenance and repair of the lease property.

Miscellaneous rules and regulations clause In addition to the preceding specific clauses, the typical lease contains a section stating various rules and regulations the landlord wishes to impose. For example, this section of the residential lease might contain the following statements:

These rules and regulations specify the landlord’s preferences about the behavior of the individual tenants in an apartment building. The landlord’s concern is to establish a code of behavior that maximizes the benefits for all individuals living in the building.

Consequently, everyone may have to avoid some activities at certain times they find beneficial or enjoyable. For example, one tenant may prefer to do laundry at 2 A.M. but doing so would disturb other tenants. Therefore, the rule covering the use of the laundry room facilities benefits the community at some small cost to individual preferences.

Please be careful when creating miscellaneous rules and regulations that you do not cross into gray areas or violations of the fair housing act. Seek legal advice when creating leases if you’re not an attorney.

The Right to Assign

In an ideal situation for the tenant, the landlord allows them to move out before their lease ends without being liable for some sort of damages. If the tenant intends to leave permanently, the easiest, smartest, and quickest option is for the landlord to cancel the original lease, find a new tenant under a new lease, and weigh his options on whether to take the tenant to court for damages. However, in markets where a surplus of rental properties exists, a landlord might not be so kind to even consider this avenue. In that case, a tenant might consider whether a lease assignment or sublease is an option.

A lease assignment is a process by which the original tenant transfers his unexpired rights in the leasehold estate to a new tenant. The new tenant takes over the role of the original tenant. In other words, the new tenant who receives the property through an assignment assumes the rights to the provisions and the responsibilities for the obligations specified in the original lease.

Under the provisions of the lease, the landlord can obligate the new tenant to pay the rent. Furthermore, he can allow the new tenant the use of property as specified in the lease and require him to conform to all other stipulations in the lease. The landlord and tenant are contractually bound to each other through the assignment clause, so if the new tenant does not make the rent payment, the landlord can force the payment or seek court remedies.

Typically, an assignment of leased property does not automatically release the original tenant from the contractual duties imposed in the lease. A release from obligation, sometimes called a mutual release from obligation, could be granted to the original tenant at the time of signing the assignment with the new tenant. However, it is not in the best interest of the landlord to do so, or even to suggest it for that matter.

DEFINITION

A release from obligation is used when one party, such as a landlord, releases another party, such as a tenant, from contractual liability.

The Right to Sublease

A sublease is the process by which the original tenant enters into a separate and distinct lease arrangement with a new tenant. This lease agreement between the original tenant and the new tenant does not involve the landlord.

A sublease is a transfer of the original tenant’s rights in the leased property. A sublease presupposes that the original tenant maintains some portion of the property, either physical or temporal. The original tenant subleases all or some part of the original leased space, or the original tenant subleases some portion of the time remaining in the original lease. For example, the original tenant could sublease one of the bedrooms in a two-bedroom apartment to a friend while retaining possession of the other bedroom, or the original tenant could sublease the entire apartment to a friend for 3 months of a 1-year lease. The process of subleasing involves a transfer of only a portion of the original tenant’s leased property. However, the new sublease does not contain a provision by which the new tenant has any contractual obligation to the landlord.

The major distinction between an assignment and a sublease is that an assignment creates a contractual obligation between the new tenant and the landlord while a sublease does not. This is important in the landlord’s right to seek legal remedies in case of a tenant breach.

With an assigned lease, the landlord must first attempt to obtain payment from the new tenant. Only after failing with the new tenant can the landlord sue the original tenant for payment if he or she was not released via a release of obligation. However, in the case of a sublease, the original tenant still is liable for the rent payment without any interruption in the contractual obligation. If the new tenant, the sublessee, fails to make a rent payment, the landlord must sue the original tenant directly because there’s no contractual obligation between the landlord and sublessee.

Although the landlord has legal recourse against the original tenant under both the assignment (unless released) and the sublease, the landlord typically limits a tenant’s right to sublease or assign the property. A clause within a lease usually accomplishes this purpose by stating that “assignments and subleasing are forbidden without the express written consent of the landlord” or similar wording. This clause gives the landlord the opportunity to check the new tenant’s creditworthiness and decide what’s best for him.

Residential Versus Commercial Leases

In the world of real estate leasing, residential and commercial leasing are as far apart as east is from west. Residential leases and commercial leases share many similarities, but they also have many differences.

Residential leases are designed for properties in neighborhoods where residential building codes apply. Maintenance, upkeep, and appearance of the residence are just a few items to contend with in residential properties. However, commercial leases are for properties zoned for commercial use, where typically different, more stringent, codes apply, such as environmental, zoning, and greenspace issues.

A residential lease may be less detailed to ensure the owner follows the applicable codes. Maintaining a livable, clean, and safe property is priority number one because it’s assumed that the properties will be used as residential dwellings. Commercial leases generally go into more specific detail about the permitted uses of the property because commercial properties can encompass a wide range of uses.

Residential and commercial leases also differ in that residential leases typically assume the property to be an individual house, duplex, or apartment whereas a commercial lease is for a building in an area with multiple tenants operating as multiple different uses. The commercial lease must be more specific about what exact portions of the premises are being leased and what activities are allowed in there.

A final major difference between residential and commercial leases is the inclusion of clauses regarding owner improvements versus tenant improvements. Most residential real estate is rented as-is, with the assumption that the owner will fix or maintain the property and that the tenant must ask before making changes. Commercial properties often need to be changed to suit individual tenants, so there may be more shared responsibility in making property changes in a commercial lease.

REALTOR WARNING

Agents beware, residential and commercial leasing are vast worlds apart. Each requires a special skill set that the other may not need or warrant. I suggest you seek advice when switching from commercial to residential leasing or vice versa.

Gross Leases

The gross lease can be used in a commercial lease or residential lease. In a residential lease, it’s sometimes called a flat-rate lease or a fixed-rate lease.

Under a gross lease arrangement, the tenant pays a fixed, or gross, amount of rent, whether in the residential or commercial market. The landlord is then responsible for all the expenses connected with the leased property. The payment can be a flat, or fixed, amount per month or a price per unit, such as per square foot. The tenant is typically responsible for their own utilities connected with the leased space, such as cable, security monitoring, and utility payments.

Net Leases

The net lease breaks the rent payment into components: a fixed component and a variable component. In this arrangement, the tenant promises to pay the landlord a fixed sum periodically plus some or all of the expenses the landlord incurs in operating the property. The most typical expenses paid by the tenant under a net lease arrangement are the real property taxes and the property insurance premiums.

A net lease may provide that the tenant promise to pay either a flat fee plus the real property taxes, a flat fee plus the hazard insurance premiums, or a flat fee plus the real estate taxes and the hazard insurance premiums.

If the tenant pays the flat fee plus one expense, it’s said to be a single-net lease. This type of lease is rarely used due to a majority of the expenses being placed on the landlord. Typically, a single-net lease pays the flat fee, or rent, plus the real estate taxes.

If the tenant pays two expense items, the parties consider it a net-net, or double-net lease. In this lease, the tenant might pay a flat fee plus property taxes and insurance.

The lease can require that in addition to paying a fixed amount, the tenant bears all the financial responsibility for maintaining and repairing the structure as well as all other costs of operating the property, such as the real estate taxes and the insurance premiums. This type of lease is a triple-net lease, or net-net-net lease. The triple-net lease is the “golden goose” of leases because it relieves the landlord of all variable costs. Furthermore, the landlord in a triple-net lease receives a fixed amount of rent, which assures his yield on the property as long as the tenant makes the payments.

DEFINITION

A single-net lease is a lease that requires a flat fee payment plus one of the landlord’s expenses. A double-net lease requires a flat fee plus two of the landlord’s expenses, typically taxes and insurance. A triple-net lease requires a flat fee plus all the landlord’s major expenses, typically taxes, insurance, and maintenance of the property.

Graduated or Index Leases

A graduated lease initially allows for rent payments to be a fixed amount, either a flat rate or per unit. A graduated lease also contains an escalator clause that allows the rent to increase in the future based on anticipated increases due to inflation, an increase in the property’s value, or a rise in the landlord’s operating expenses. During the life of the lease and at set intervals specified in the lease, the payments increase accordingly. The lease agreement could state that rent increases at each interval by a predetermined percentage of the landlord’s operating expenses or an increase per some financial index, sometimes called an index lease.

DEFINITION

An index lease is one in which the base rent, or an increase in rent, is tied to a financial index or financial market in some manner, such as the consumer price index.

Furthermore, it could be stipulated that the tenant pays some flat-fee increase, such as $500 per month for the first year of operation, $750 per month in the second and third years of the lease, and $1,000 per month in the remaining years of the lease. This graduated lease agreement remains in force for the entirety of the lease.

If the rent increase is based on the value of the property increases, called a step-up lease, the increases might come at specified intervals or after periodic events, such as an appraisal of the property.

If the rent increase is based on percentage increases of the landlord’s operating expenses, it might stipulate that the landlord is responsible for providing each tenant with an audited statement of the operating expenses incurred by the property as proof of the increase.

The graduated lease can be an advantage to both the tenant and the landlord. It allows newer tenants to get established without incurring large rental expenses in the beginning, and it may let a landlord fill a vacancy he might not otherwise fill at a higher rate. It’s also an effective marketing tool for the landlord while providing a hedge against inflation.

Percentage Leases

In a percentage lease, which is typically used in retail and restaurants, the landlord and the tenant agree that the rent payment includes a specific percentage of the gross sales or gross revenues the tenant brings in.

The landlord and tenant define gross revenue, or gross sales, as a clause in the lease. For example, a grocery store might have sales of groceries off the shelf and also sales of food from the deli department. The landlord and tenant may agree on a percentage of the sale of groceries to determine the rent, which may not include the sales of premade sandwiches and such from the deli department. Furthermore, items like floral, magazines, lottery tickets, alcohol, etc., may not count as groceries. The definition of gross sales is important because it directly affects the tenant’s rent payment and, therefore, the landlord’s actual gross income from the property.

In addition, the tenant may have a policy of selling merchandise to employees at cost or a substantial discount. The tenant wants these sales excluded from the calculation of gross sales because the tenant makes little or no profit on them. If the landlord agrees, the lease may exclude these sales.

The commercial establishment’s gross sales are probably related to the hours and the days the store is open, so the tenant and the landlord might agree to a schedule of dates and times during which the tenant will conduct business. In seasonal businesses, the landlord and the tenant could agree to special rent payment provisions that would apply while the business is closed or during the slow time of year. The agreement might provide for a small fixed sum to defray expenses when the business is not in operation yet the tenant still occupies the property.

Under a percentage lease, the landlord shares in both the good times and the bad times of the tenant’s business. Consequently, some provisions, with some variations, may appear in a percentage lease to protect the landlord from the bad times. One provision may be requiring the tenant to pay a guaranteed fixed minimum rent, called a base. This protects the landlord from collecting no rental income due to a tenant having minimal or no sales. In effect, this protects the landlord’s downside in a percentage lease.

In addition to that provision for a base, another provision might require the tenant to pay a “base plus a percentage of the sales.” Due to the inclusion of a base amount of rent, there’s typically a floor below which no percentage is due to the landlord. The base would presumably be the portion that would be covering the amount below the floor but is always required, even in years of slow sales.

A third version of this provision might be a “base or a percentage, whichever is the greater of the two.” This would allow for no floor, but rather pay a percentage of all sales applicable to the lease definition.

For example, a tenant signs a lease for a commercial space under a percentage lease that states a base of $5,000 per month plus 4 percent of sales over $1 million (the floor) in gross revenue. If the sales were $1.7 million that year, the rent would be calculated as follows: The sales, $1,700,000, minus the floor, $1,000,000, would equal $700,000, called the overage. The percentage would be 4 percent of the overage, or $28,000. This is an annual rent; therefore, that would be equal to approximately $2,333 per month. Add that to the base, $5,000 per month, and you arrive at a $7,333 per month rent.

Using the same info as in the preceding example, now let’s assume the lease states “a base of $5,000 per month or 4 percent of gross revenue.” In this variation, there’s no floor and a percentage is calculated on all sales. Of course, only the sales that count and are memorialized in the lease are applicable. The percentage portion would be calculated as 4 percent of the total $1,700,000, or $68,000 annual rent, which is $5,666 per month. Because the percentage is greater than the base, the monthly rent would be $5,666, not $5,000.

Another provision in the percentage lease is called the recapture clause. This enables the landlord to regain the property and find another tenant whose business may be more successful if, for example, the original tenant has paid only the minimum rent for a predetermined amount of time such as 2 consecutive years. The exact percentage applied to the tenant’s gross sales to calculate that part of the rent is a point of negotiation, with the tenant desiring the lowest possible rate and the landlord wanting the highest rate.

REALTOR WARNING

In some states, Indiana for example, licensed agents work under a unified license. This means the same license that allows for brokerage activities, i.e. buying and selling, also grants permission to lease property for clients. In other states, a special license may be required to lease property.

Other Types of Leases

Unlimited lease combinations can be used between a landlord and a tenant. If the lease follows all the required rules of a contract and both parties agree, anything could be within the realm of possibility. The landlord and tenant could split bills in some manner, for example, or the landlord could pay a fixed amount of the bills, such as the first $500, and any amount over is paid by the tenant.

Or a tenant may be required to pay a portion of the landlord’s bills in pro rata fashion to the amount of space he uses compared to other tenants. In another case, one tenant may be exempt from a bill, while other tenants may be required to pay for it. For example, the maintenance of an elevator may exclude all tenants on the first floor.

Evictions

A state’s legal eviction procedures apply regardless of what a tenant has done or how a tenant behaves. Even if the tenant has not paid rent, has destroyed property, or has violated a term in the lease or rental agreement, a landlord may only legally remove the tenant by following state eviction procedures.

A self-help, or distraint, eviction occurs when a landlord retakes possession of a property without using the eviction process. The use of self-help may amount to landlord harassment. Nearly every state prohibits a landlord from using self-help to evict a tenant.

DEFINITION

Distraint is the seizure of someone’s property to obtain payment of rent or other money owed.

Instead of using landlord harassment and other illegal means to force a tenant to vacate a rental property, a landlord must follow applicable state laws when evicting a tenant. Although it may take longer and cost more money, it could protect a landlord from hefty fines.

Eviction Notice Requirements

The initial step for eviction is a landlord serving an eviction notice to the tenant. An eviction notice is not the eviction itself. When a tenant is served with an eviction notice, he or she still has rights and options. An eviction notice is meant to inform the tenant that a legal process of eviction is about to begin if the landlord grievance cannot be resolved.

If the eviction is not based on a grievance, there’s generally a much longer deadline to respond. In some states it could be up to 30 to 60 days versus 3 to 5 days for an issue-specific notice, like nonpayment of rent. In some cases, if the grievance is satisfied, such as paying the back rent, the landlord can stay, or stop, the eviction process immediately.

In any state, to be considered valid, an eviction notice must provide all the information a tenant may need to understand the landlord’s reason for eviction, along with all the information needed to respond within the required time frame. Legal eviction processes begin only if a tenant doesn’t use that information and respond appropriately before the deadline. The state courts determine what kind of information is necessary and how it must be presented.

A landlord’s exact grievance must be stated on the eviction notice itself, along with instructions on how to fix the problem within the time limit. Often, landlord’s issues involve accusations of a tenant breaking terms of the lease, such as failing to pay rent, disturbing neighbors, engaging in illegal activity, etc.

A notice of eviction is much like any other notice. If it or its method of delivery is invalid or defective in any way, it must be filed again by the landlord. At a minimum, this can provide the tenant with another week or two to work through a solution.

HELPFUL HINT

Constructive eviction is a process by which the tenant evicts themselves due to a landlord failing to make a major repair to the property. However, the key to constructive eviction is the property must become uninhabitable due to the failure to repair it.

The typical 10-day eviction notice, as the name indicates, requires a response within 10 days of receiving it. It will indicate, at the beginning of the notice, the exact time frames and deadlines to respond and will never be upheld in court if a notice did not clearly communicate them to the tenant.

Types of Eviction Notices

It’s important to note that the following types of notices are reasons for receiving a notice, not reasons for being evicted:

Notice to pay rent or quit If a tenant doesn’t pay rent when it’s due, a landlord can serve a notice, giving the tenant some time, typically 3 to 5 days, to pay the amount owed plus any associated late fees, or move out.

Notice to correct a violation of the lease or quit In most states, a landlord can give a tenant a notice to fix some violation of their rental agreement, such as a violation of zoning laws, an illegal pet, etc.

Notice to quit In some states, a landlord may give a notice for a tenant to move without any possibility of correcting something. For example, a tenant is who is repeatedly late with the rent, causes damage to the rental property, threatens the health or safety of the property or other tenants, sells drugs on the property, etc., might warrant a notice to quit.

30-day or 60-day notices In most states, a landlord can give an eviction notice for a tenant to move without giving any reason. The time allowed under most state laws for such a notice is usually 30 or 60 days, but it may be as short as 20 days or as long as 90 days. The landlord can’t give such a notice for reasons of discrimination or as retaliation against a tenant.

If the tenant fails to cure the violation or refuses to vacate the premises within the specified time, the landlord must file an unlawful detainer action to have the tenant lawfully removed. The landlord must file a “complaint” with the small claims court in the county or township the property is located within. A complaint contains the facts that justify the eviction and may contain a request for back rent and damages. The landlord must serve the tenant with the complaint, along with a summons, which is the document informing the tenant of the lawsuit.

HELPFUL HINT

Many leases favor the landlord rather than the tenant because a landlord is in the business of renting property over a span of years, while most tenants only rent either sporadically or for a few times in their life. Therefore, many states have adopted the Uniform Residential Landlord and Tenant Act (URLTA) to help guard tenants against unlawful, irregular, or abusive practices. ULTRA was created in 1972 by the National Conference of Commissioners on Uniform State Laws in the United States to govern residential landlord and tenant interactions.

If the tenant does not respond to the complaint, a default judgment is issued for the landlord. If the tenant does respond with an answer but the court rules in favor of the landlord, that judgment entitles the landlord to possession of the property. A writ for possession will be served to the tenant.

Even though the landlord is entitled to repossess the property, the landlord cannot remove the tenant without the assistance of a law enforcement officer. When an officer, typically a marshal or a sheriff, receives the judgment and a fee, he or she will notify the tenant of the lawful eviction and the number of days the tenant has to move. If the tenant fails to vacate the property within the time specified, the law enforcement official may physically remove the tenant.

The Least You Need to Know

  • Although leasing and renting are different concepts, leasing is a form of a rental agreement.
  • A leasehold estate is for a determinable amount of time.
  • A lease is comprised of many separate lease clauses that define the tenant’s right of control.
  • An assignment and sublease are different in respect to the contractual obligations between the parties.
  • Commercial leases have many variations, including gross leases, net leases, percentage leases, and graduated leases.
  • Eviction of a tenant must be handled through the court system and not via self-help by the landlord.