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Lease
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- - contract b/w lessor and lesse
- - transfers the lessor’s right to exclusive possession and use of property to tenant for a specific period of time
- - establishes the consideration of lease to pay rent for use of property
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Rent
- fixed, periodic payment made by a tenant to the owner for possession and use, usually by prior agreement of the parties
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Reversionary Right
- landlord retains Reversionary Right to possession after lease terms expires
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Writing Lease
- Statue of Frauds in most states requires Lease Agreements for more than 1 year to be in writing to be enforceable
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Oral Lease
- - for 1 year or less is enforceable
- - in practice it is always better practice to put a lease agreement in writing
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Leasehold Estate
- tenant’s right to possess the RE for the term of the lease
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Lease for life (or more than 49 years)
- - certain states give the tenant some of the benefits of ownership
- - right to use the leasehold interest as security for a loan
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Leasehold Estate kinds (4)
- 1) Estate of years
- 2) Estate from Period to Period
- 3) Estate at Will
- 4) Estate at Sufferance
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1) Estate (Tenancy) of years
- - kind of Leasehold Estate
- - another name – “estate of term”
- - is a Leasehold Estate that continues of any definite period (years, moths, days)
- - always has specific starting and ending dates
- - no notice is required to terminate the Estate of years – has expiration date
- - can be terminated before expiration date if both parties agree
- - any extension requires that a new contract be negotiated
- - lessor death or sale of property
- - the lessee rights to use premises for the entire lease terms are not affected
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If a tenant remains in possession after lease terms expired (no new lease agreement has been made)
- - Holdover Tenancy is created and landlord can …
- 1) evict the tenant
- 2) treat the holdover tenant as one who holds periodic tenancy
- - tenant can hold over for a term = to the term of the original lease
- - provided the period is one year or less
- - original lease for 6 months – new 6 moths tenancy
- - original lease for 5 years – cannot exceed one year
- - tenant is responsible for the payment of the monthly rent
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Holdover Tenancy is created if ...
tenant remains in possession after lease terms expired (no new lease agreement has been made)
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“estate of term”
- - Estate of years
- - kind of Leasehold Estate
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What kind of Leasehold Estate that continues of any definite period (years, moths, days)
- Estate of years
- “estate of term”
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2) Estate (Tenancy) from Period to Period
- - kind of Leasehold Estate
- - another names – “periodic tenancy”, “periodic estate”- has specific starting date but NO ending dates
- - landlord and tenant enter into agreement for an indefinite time (no expiration date)
- - to run for definite amount of time (month to month, week to week, year to year)
- - rent is payable at definite intervals
- - tenancy continues indefinitely until proper notice of termination is given
- - by landlord or tenant at least one period in advance
- - form and timing of the notice may be established by state statute
- - automatically renewable
- - often used in residential leases
- - original agreement may provide for the conversion form an Estate of Yeas to a Periodic Tenancy
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“periodic tenancy”
- - Estate from Period to Period
- - kind of Leasehold Estate
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“periodic estate”
- - Estate from Period to Period
- - kind of Leasehold Estate
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In what kind of Leasehold Estate landlord and tenant enter into agreement for an indefinite time (no expiration date)
Estate from Period to Period
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What kind of Leasehold Estate run for definite amount of time (month to month, week to week, year to year)
Estate from Period to Period
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In what kind of Leasehold Estate rent is payable at definite intervals
Estate from Period to Period
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What kind of Leasehold Estate is automatically renewable
Estate from Period to Period
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3) Estate at Will
- - not legal in CT
- - kind of Leasehold Estate
- - gives the tenant the right to possess property with the landlord’s consent for an unspecified or uncertain term
- - tenancy of indefinite duration
- - rarely used in a written agreement
- - viewed specially by the court
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Estate at Will continues until...
- 1) terminated by either party
- 2) automatically terminated by the death of either the landlord or tenant
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Estate at Will may be created by ...
- 1) Express Agreement
- 2) Operation of law
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What kind of Leasehold Estate gives the tenant the right to possess property with the landlord’s consent for an unspecified or uncertain term
Estate at Will
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What kind of Leasehold Estate is tenancy of indefinite duration?
Estate at Will
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4) Estate (Tenancy) at Sufferance
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- 4.1) Tenant continues in possession of the premises w/o the landlord’s consent after the right of possession is expired
- 4.2) Tenant for years fails to surrender possession at the lease’s expiration
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- - state will govern and will offer 3 options
- 1) Landlord
- - will accept rent offered by tenant
- - creates a new tenancy under condition of Holdover Tenancy
- - if original lease tern is > 1 year, new tenancy is limited to 1 year
- 2) Landlord
- - creates a Tenant at Sufferance by
- 1) objecting to Tenant Holding Over
- 2) informing the tenant of such treatment
- - creating “month to month” or “periodic tenancy”
- 3) Landlord
- - can treat the tenant as a trespasser
- - can proceed with eviction and damage process
- - must comply w the “notice to quit” requirement
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Tenant continues in possession of the premises w/o the landlord’s consent after the right of possession is expired
- - kind of Leasehold Estate
- - Estate at Sufferance
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Tenant for years fails to surrender possession at the lease’s expiration
- - kind of Leasehold Estate
- - Estate at Sufferance
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In Estate at Sufferance state will govern and will offer 3 options
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- 1) Landlord
- - will accept rent offered by tenant
- - creates a new tenancy under condition of Holdover Tenancy
- - if original lease tern is > 1 year, new tenancy is limited to 1 year
- 2) Landlord
- - creates a Tenant at Sufferance by
- 1) objecting to Tenant Holding Over
- 2) informing the tenant of such treatment
- - creating “month to month” or “periodic tenancy”
- 3) Landlord
- - can treat the tenant as a trespasser
- - can proceed with eviction and damage process
- - must comply w the “notice to quit” requirement
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Depending on the circumstances and requirement of Statute of Frauds lease can be...
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- Lease must meet the following requirements (same as in any other contract) (5)
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- 1) Offer and Acceptance
- - mutual agreement (meeting of the minds)
- 2) Consideration
- - supported by valid consideration
- 3) Consent
- - free and voluntary
- 4) Legal Objective (purpose)
- - objective must be legal
- 5) Capacity of Contract
- - legally competent parties
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5) Capacity of Contract
- - Lease requirement
- - all parties to the contract must have a legal capacity
- - legal age (in most state 18)
- - have enough mental capacity to understand the nature of consequences
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1) Offer and Acceptance
- - Lease requirement
- - all parties must reach a mutual agreement (meeting of the minds) on all terms of the contract
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2) Consideration
- - Lease requirement
- - must be supported by valid consideration, an exchange of promise
- - landlord promises
- - to provide occupancy
- - tenant promises
- - to pay the rent
- - typically monetary
- - tenant could provide agree-upon labor in maintaining or fixing up the property
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1) Description of leased premises
- - must be included in lease
- - Leased premises should be clearly described
- - address
- - supplemental space
- - should be no ambiguity
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Commercial Leases or complex Residential Lease...
- may constitute the practice of law
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Lease typically includes (8)
- 1) Description of leased property (premises)
- 2) “Covenant of Quiet Enjoyment”
- 3) Nondisturbance Clause
- 4) Limitation of tenant use of the property (Use of premises)
- 5) Term of lease
- 6) Security Deposit
- - must comply the state law
- 7) Statement of the weather improvement may be made by the tenant (Improvement)
- 8) Provision that maintenance of premises
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2) “Covenant of Quiet Enjoyment”
- - must be included in lease
- - Possession of Premises
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- - the lessor is usually bound
- - lessee can occupy the premises w/o interference from the owner of anyone else
- - conditions under which the landlord may enter the property to perform maintenance
- - tenant’s permission usually required except in emergencies
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Possession of Premises
- - “Covenant of Quiet Enjoyment”
- - the lessor is usually bound
- - lessee can occupy the premises w/o interference from the owner of anyone else
- - conditions under which the landlord may enter the property to perform maintenance
- - tenant’s permission usually required except in emergencies
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The lessee can occupy the premises w/o interference from the owner of anyone else
- - Possession of Premises
- - “Covenant of Quiet Enjoyment”
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4) Limitation of tenant’s use of property
- - must be included in lease
- - Use of Premises
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- - lesser may restrict a lessee’s use of premises through provisions included in the lease
- - to be uses only as a commercial space
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Use of Premises
- - Limitation of tenant’s use of property
- - lesser may restrict a lessee’s use of premises through provisions included in the lease
- - to be uses only as a commercial space
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The lesser may restrict a lessee’s use of premises through provisions included in the lease
- - Use of Premises
- - Limitation of tenant’s use of property
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5) Terms of Lease
- - must be included in lease
- - the period for which the lease will run
- - start and end dates
- - total period of lease
- - perpetual lease or indefinite term usually will be ruled invalid
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When perpetual lease or indefinite term will be binding on the parties?
If language of the lease clearly indicate that the parties intended such a term, lease will be binding on the parties
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6) Security Deposit
- - must be included in lease
- - will be held by landlord during the lease term
- - used if tenant defaults on payment of rent or destroys the premises
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- - state law govern (REP should be aware)
- - how they may be held
- - max amount
- - whether interest must be payed
- - how and when they are returned
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- - a lease should specify whether a payment is a
- - security deposit
- - cannot be final month rent
- - advance on rent
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State law govern Security Deposit
- - REP should be aware of
- - how they may be held
- - max amount
- - whether interest must be payed
- - how and when they are returned
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7) Improvements
- - must be included in lease
- - Statement of the weather improvement may be made by the tenant
- - neither Landlord (LL) nor tenant is required to make any improvements to the leased property
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- - tenant may make improvement …
- - w LL’s permission
- - as required to make the rented premises accessible
- - any alternation (fixtures) become the property of LL
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- - in commercial leases
- - tenant is permitted to install trade fixtures
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May tenant make improvement?
- - tenant may make improvement …
- - w LL’s permission
- - as required to make the rented premises accessible
- - any alternation (fixtures) become the property of LL
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Trade fixtures
- - removable fixtures
- - may be removed before lease expires and tenant restores the premises to the previous condition
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3) Nondisturbance Clause
- - must be included in lease
- - is included in the financing instrument used to mortgage leased premises
- - by accepting this provision
- - the mortgagee agrees not to terminate the tenancy of the lessee’s, so long as the lessee is current in payment of the require rent, should the mortgagee foreclose on the mortgagor’s building
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The mortgagee agrees not to terminate the tenancy of the lessee’s, so
long as the lessee is current in payment of the require rent, should the
mortgagee foreclose on the mortgagor’s building
Nondisturbance Clause
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8) Maintenance of Premises
- - must be included in lease
- - most states require a lessor to maintain dwelling units in a habitable condition
- - repairs to hallways, stairs, and elevators
- - maintain safety features
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- - tenant
- - must return premises in the same condition, w allowances for ordinary wear and tear
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