1. ©2011 Cengage Learning

2. California Real Estate Principles
Chapter 11
Landlord and Tenant Relations
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3. Chapter 11 Define a lease and the 4 types of leasehold estates.
Outline the requirements for a valid lease or
rental agreement.
Explain the difference between a sublease and an assignment of a lease.
Discuss the duties and responsibilities landlords and tenants owe each other.
Describe how tenants may be lawfully evicted.
Explain the role played by professional property managers.
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4. LEASE
A lease or rental agreement is a legally binding contract between an owner (lessor/landlord) and a tenant (lessee) where a tenant has possession and use in exchange for rent or services.
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5. Types of Leasehold Estates
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6. LEASEHOLD ESTATES (Less-than-freehold estates)
Estate for years
Tenancy for years or lease
Fixed term (You know when it ends before it begins.
Estate from period to period
Periodic tenancy or period to period (month-to-month)
Unsure when it ends - requires notice by either party.
Estate at will
Tenancy at will
Is a leasehold interest that can be terminated without notice at any time by the landlord.
Not used in California
Insist that advance notice be given prior to termination…
usually 30 days.
Estate at sufferance
Tenancy at sufferance
Possession at the end of a lease
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7. VALID LEASE REQUIREMENTS
Written, if more than one year
(Statute of frauds)
Names of lessor and lessee
Adequately describe the property
Show amount of rent and how paid
Give date lease term begins and length of term
Be signed by lessor
Involve capable parties
Renewal provision in boldface type
(Residential property)
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8. Maximum duration Urban Property Agricultural Land 99 years 51 years
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9. RESIDENTIAL RENTAL AGREEMENT
Utilities
Maintenance
Tenant improvements
Use of the property
Maximum number of occupants
Security and damage deposits
Property taxes and insurance
Rules regarding pets, guests, parking, anything else of importance
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10. SECURITY DEPOSITS (Legal Maximums)
Total security limits, including pets:
Unfurnished = 2 months
Furnished = 3 months
Legal deposits including: Waterbed (or insurance), Pet Deposit, Key Deposit, Openers
Unused deposit must be returned or written accounting for expenses within 21 days
Cannot be called NON-REFUNDABLE
Rent Off Set:
Maximum twice in any 12 month period
No more than 1 month’s rent
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11. ASSIGNMENT
A transfer by the lessee (assignor) of ALL the unexpired interest he holds at the time of the assignment
Who assigns
Lease to
Leases to
LESSOR
LESSEE “A”
ASSIGNEE “B”
ASSIGNEE “B” pays directly to LESSOR
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12. SUBLEASE
A transfer by the lessee of only part of his interest to another (sub-lessee) at the time of the sub-letting
Leases to
Who sublets to
LESSOR
LESSEE “A”
SUB-LESSEE “B”
Who pays
Lessor $1,000
Pays Lessee
$2,000
LESSEE “A”
Sandwich
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13. TYPES OF LEASES Gross Lease Net Lease (Triple Net Lease)
Landlord pays operating expenses (TIM)
(taxes, insurance, maintenance)
Net Lease (Triple Net Lease)
Tenant pays operating expenses (TIM)
Percentage Lease
Tenant pays rent based on tenant’s gross income
Fixed lease (Month-to-Month)
Tenant pays a fixed rent amount
Graduated Lease (Lease)
Tenant pays a fixed rent amount for the period with periodic rent increases at specific times
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14. LEASE TERMS
EXTENSION: Upon expiration of rental contract, the rental continues under the original terms. RENEWAL: Upon expiration of rental contract, the rental continues under new terms ESCALATOR CLAUSE: During the rental period, the rental agreement allows for rent increases based upon some index
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15. Landlord Duties and Rights
Keep property habitable
Periodically inspect the premises
Insure outside of living quarters
Maintain quiet use and enjoyment
Prohibit discrimination by all subordinates
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16. UNLAWFUL ACTS BY A LANDLORD
Tenant lockout
Seizure of tenant property
Removal of doors and windows
Shutting off utility services
Causing uninhabitability
Interfering with tenant’s use and quiet enjoyment
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17. Unlawful Detainer Serve 3 Day Notice
Tenant fails to respond, landlord files in superior court
If landlord wins a judgment then ask for a Writ of Possession
Authorities remove the tenant
3 DAY VERSUS 60 DAY NOTICE
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18. TENANT OBLIGATIONS Pay rent when due according to the contract
Give minimum 30 day notice for termination
Keep the premises occupied, clean and sanitary
Liable for negligence to others
Dispose of all rubbish, garbage and waste from the unit in a clean and sanitary manner
Properly use and operate all electrical, gas and plumbing fixtures and keep them clean and sanitary
Not interfere with other tenants rights
Refrain from willfully or wantonly destroying, defacing, impairing or removing any part of the structure or appurtenances
Occupy and use the premises only for the intended or designed use
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19. RENTAL OFFSET REPAIR & DEDUCT
Notify landlord of necessary repairs and allow adequate time for repairs to be made
If landlord refuses:
Abandon the property with no future rent.
Spend up to one month’s rent on repairs, send receipts for repairs, offset amount on next month’s rent payment.
NOTE: Can only use twice in any 12 month time
Cannot be used for decorative purposes, only for habitability.
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20. TERMINATION OF A LEASE Expiration of the term
Mutual agreement (surrender)
Violation of terms and conditions
Destruction of the premises
Or government action: condemnation
Eviction
Notice
Unlawful detainer action
Non-payment of rent
Illegal use of premises
Sheriff serves the eviction
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21. PROPERTY MANAGER Controls operating expenses to maximize income
Obtains tenants and leases
Maintains property by keeping it in repair and modernizing or renovating when needed
Oversees the on-site resident manager
for residential apartments of 16 or more units.
C.P.M. = Certified Property Manager
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22. RENT CONTROL
Intent is to make property available for rent at reasonable rates when there is a shortage of available space
May not be effective because artificially low rent may increase demand and discourage new construction
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23. Review Quiz Chapter 11
It is illegal to screen and eliminate potential tenants based on:
(a) income levels
(b) credit rating
(c) past delinquent rental history
(d) martial status
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24. Review Quiz Chapter 11
Lessor A leases to Lessee B who legally subleases to Sublessee C. Which of the following is correct?
(a) Lessor A looks to Lessee B for payment
(b) Lessor A looks to Sublessee C for payment
(c) Lessee B does not have a contract with Sublessee C
(d) There is only one contract in this transaction
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25. Review Quiz Chapter 11
Most month-to-month rental agreements can be classified as an:
(a) estate for years
(b) estate from period to period
(c) estate at will
(d) estate at sufferance
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26. Review Quiz Chapter 11 A lease on agricultural land cannot exceed:
(a) 15 years
(b) 37 years
(c) 51 years
(d) 99 years
The maximum security deposit for an unfurnished apartment is:
(a) one month’s rent
(b) two month’s rent
(c) three month’s rent
(d) four month’s rent
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27. Review Quiz Chapter 11
A landlord signs a 6 month lease and the lessee takes possession but never signs the lease. Under these circumstances the lease is:
(a) valid
(b) void
(c) voidable
(d) illegal
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28. Review Quiz Chapter 11
If a lessee abandons a lease prior to the expiration date, the lessor may:
(a) leave the premises unoccupied and sue for the entire lease amount
(b) lease the property again and collect from two sources
(c) leave the premises unoccupied and sue for each installment as it becomes due
(d) either (a) or (b)
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29. Review Quiz Chapter 11
How many units would there have to be in an apartment building to make it necessary for the owner to hire an on-site resident manager?
(a) 20 or more units
(b) 18 or more units
(c) 16 or more units
(d) 14 or more units
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30. Review Quiz Chapter 11
Under the rental offset rule, which of the following is true? The tenant can do housing code repairs up to:
(a) one month’s rent, once per year
(b) two month’s rent, twice per year
(c) one month’s rent, twice per 12 month period
(d) one month’s rent, twice per year
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31. Review Quiz Chapter 11
If you were to lease a mountain cabin from April 5 to April 30 of the same year, the lease would be recognized as an:
(a) estate at will
(b) estate at sufferance
(c) estate from period to period
(d) estate for years
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32. Answers to Review Quiz Chapter 11
D A
A C
B C
C C
B D
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