1. © 2015 OnCourse Learning Chapter 13 Leasehold Estates

2. IN THIS CHAPTER Landlord–tenant law. Defines and explains the parties in a lease. The essential elements of lease. Duties, obligations, and rights of the parties to the lease agreement. Leaseholds.

3. LANDLORD–TENANT RELATIONSHIP A lease is a contract between the owner of the property and the tenant. The owner transfers to the tenant a property interest of possession for a prescribed period of time. The owner is the landlord or lessor. The tenant is the lessee. Possession of the property will go back to the owner at end of lease.

4. LEASE ELEMENTS Property Description Term Rent Written or Oral Provisions Recordation

5. Michigan Truth in Renting Act Regulates rental agreements for residential properties. Prevent landlords from using leases to violate tenants’ rights. Tenants cannot waive rights. Excludes certain provisions from being in rental agreement.

6. Required Notice NOTICE: MICHIGAN LAW ESTABLISHES RIGHTS AND OBLIGATIONS FOR PARTIES TO RENTAL AGREEMENTS. THIS AGREEMENT IS REQUIRED TO COMPLY WITH THE TRUTH IN RENTING ACT. IF YOU HAVE A QUESTION ABOUT THE INTERPRETATION OR LEGALITY OF A PROVISION OF THE AGREEMENT, YOU MAY WANT TO SEEK ASSISTANCE FROM A LAWYER OR OTHER QUALIFIED PERSON.

7. Mutual Obligations The tenant’s consideration is rent. The landlord’s consideration is possession of the premises and the right of quiet enjoyment. The landlord’s obligation to give possession of the premises to the tenant is directly tied to the tenant’s payment of rent. If one party fails in his or her responsibility (consideration), the other party may be relieved of his or her duty.

8. Landlord’s Duties The landlord is required to put the tenant in possession. The landlord does not have an automatic right to inspect the leased premises. The landlord has the right to enter the premises in an emergency and with proper notification. The landlord is obligated to have the premises in habitable condition.

9. Tenant’s Duties Maintain the premises with ordinary wear and tear excepted. The tenant is expected to use the premises only for legal purposes and to conform to all local laws. Pay the agreed-upon rent in a timely fashion. Vacate the premises without the need for legal eviction by the landlord at end of lease.

10. Law of Negligence The failure to use care that a reasonable person would use in like circumstances. A person is liable for damages that result to another person if the duty is not performed in a reasonable fashion. The duty of care imposed upon the landlord is the care a reasonable and prudent person would exercise under like conditions.

11. Michigan Security Deposits Act Regulates how a landlord may handle security deposits received from tenants. These laws apply to residential leases only. A security deposit may not exceed one and one-half months’ rent. Tenant must give the landlord a forwarding address within four days after moving. Security deposits must be placed in a regulated financial institution or landlord must post a surety bond with the State.

12. Termination and Eviction Remedies At expiration of the lease. The landlord and tenant can mutually agree to cancel a lease. Eviction. Tenant’s claim of constructive eviction. Tenant abandons the premises and the landlord reenters to accept return of possession of the premises.

14. TYPES OF LEASES  Gross Lease  Net Lease  Graduated Lease  Escalated Lease  Index Lease  Fixed Lease  Reappraisal Lease  Percentage Lease  Ground Lease  Oil and Gas Leases  Sale and Leaseback

15. CHAPTER TERMINOLOGY REVIEW  assignment  escalated lease  eviction  fixed lease  graduated lease  gross lease  ground lease  holdover tenant  index lease  lease  lessee  lessor  Michigan Security Deposits Act  Michigan Truth in Renting Act  negligence  net lease  option to renew  percentage lease  quiet enjoyment  reappraisal lease  recapture clause  reversionary interest  sale and leaseback  security deposit  sublease