Chapter 12_updated - Chapter 12 Landlord and Tenant Hua Sun...

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Chapter 12: Landlord and Tenant Hua Sun Department of Accounting and Finance California State University, San Bernardino March 10, 2009 Hua Sun (CSUSB) Landlord and Tenant March 10, 2009 1 / 20
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Leasehold Estates Lease: a contract by which landlord conveys a property interest, the right to possess and use the property, to tenant in exchange of rent. I Lessor (landlord) conveys the leased premises to the lessee (tenant). I Consideration: rent I Lease is governed by California Civil Code. Hua Sun (CSUSB) Landlord and Tenant March 10, 2009 2 / 20
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Leasehold Estates Estate for years (tenancy for a fixed term) I Definite termination date Estate from period to period (periodic tenancy) I No exact termination date I Automatically renews by continue paying rent and accepted by landlord I Renewed term should be less than one year, often monthly I Terminate subject to proper notice Estate at will I Terminable at any time by landlord or tenant I No mutual consent required I Now subject to proper notice Estate at sufferance I Offensive: holding-over of a tenant past the agreed-on lease term without landlord’s consent I Landlord can terminate at any time Hua Sun (CSUSB) Landlord and Tenant March 10, 2009 3 / 20
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Create A Leasehold Lease agreement: must meet general contract requirements I Legal capacity to contract I Offer and acceptance I Definite terms: description of property, contract parties, rent level (consideration) etc I A lawful object I Must be in writing if terminate more than one year from date of agreement Rule of thumb: 4 P’s rule (Parties, Property, Period of time and Payment) Other provision: limitations on tenant improvements should be stated. Usually, landlord’s prior approval is required. Lease forms: California Apartment Association at www.ca-apartment.org. Hua Sun (CSUSB) Landlord and Tenant March 10, 2009 4 / 20
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Security Deposit Purpose: cover costs if default & reasonable repair or cleaning when ending the lease In residential lease, no more than I 2 months rent, unfurnished I 3 months rent, furnished Can never be labeled nonrefundable Residential: itemization and return of remaining amount within three weeks after tenant vacates Recommended practice: provide a statement of property condition as pre-check Hua Sun (CSUSB) Landlord and Tenant March 10, 2009 5 / 20
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Lease Obligations Landlord: I Covenant of quiet enjoyment: no interference on tenant’s lawful use of the property F Right of entry (subject to notice) under eligible conditions I
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