Unit 15 ARE 306 Tenancy I. Definitions A. Lessee B. Lessor C. Rent II. Essential elements of landlord-tenant relationship A. Contract between landlord and tenant B. Provisions for the payment of rent C. Transfer of estate to tenant (contrast with license) D. Possession and control in tenant E. Reversionary interest in landlord F. Real estate or an interest in real estate is subject matter III. Employment relationship distinguished A. Tax consequences 1. Withholding tax 2. Earned v. unearned income 3. Deductibility of tenant's expenses B. Liability issues IV. Partnership distinguished A. Liability issues B. Tax issues C. N.C.G.S. '42-1 states that the mere existence of a lease cannot be used to prove a partnership.
V. Statute of Frauds In North Carolina, a lease must be in writing if it is not capable of completion within 3 years from the date of making. VI. Recording A. With registrar of deeds in county where the property is located B. Protects tenant from sale or foreclosure during the term of the lease (unless express terms of the lease provide otherwise) VII. Classification of tenancies A. Tenancy from year to year 1. Automatically renewed, absent adequate notice 2. N.C.G.S. '42-23 agricultural tenancies in listed counties are from December 1 to December 1. B. Tenancy for years or for a term C. Tenancy at will Tenancy terminates at end of term unless renewed by mutual agreement, except where N.C.G.S. '42-23 results in renewal. D. Tenancy at sufferance May be terminated at any time by either party Holdover tenant E. Share lease agreement VIII.Notice to Quit Issue - material participation by the landlord A. At common law, 6 months for year to year tenancy B. N.C.G.S. '42-14 1. year to year 1 month
2. month to month 7 days 3. week to week 2 days 4. rental of space for a manufactured home 30 days, without regard to length of tenancy 5. As specified in the lease IX. Duties of tenant A. Pay rent B. Do not commit waste 1. Voluntary waste 2. Permissive waste 3. Ameliorating waste C. Reasonable use D. Farming in husbandlike manner (tenant may determine the cropping system absent a lease provision). E. Avoid exhaustion of soil through negligent or improper tillage F. Make repairs XI. Risk of loss A. "tenant shall maintain the property in good repair, absent normal wear and tear" - makes tenant an insurer B. N.C.G.S. '42-9 agreement to repair unenforceable if more than 50% of the value of a residence is destroyed by an accidental fire, not occurring from the tenant's "want of diligence". C. N.C.G.S. '42-10 tenant not responsible for accidental damage, absent an agreement to repair D. N.C.G.S. '42-12 lessee may surrender premises where purpose is destroyed, unless lease states to the contrary
XII. Crop ownership A. Generally in tenant B. N.C.G.S. '42-15 Landlord's lien on crops 1. For rent, advances, etc. 2. Superior to all other liens 3. Centralized filing - Food Security Act of 1985 C. Emblements N.C.G.S. '42-7 lease for years terminated by uncertain event determining the estate of the lessor or foreclosure, in lieu of emblements, the tenant holds out year with rent apportioned. Reasonable compensation for any tillage and seed for any crop not gathered by the end of the current year. XIII. Right to sue A. Tenant - for damage to crops B. Landlord - for damage to land and fixtures C. Lease may allocate right to sue differently XIV. Liability for injuries on leased property A. Landlord has no liability except for concealed defects of which the landlord knew or should have known B. Tenant's liability similar to that of an owner in possession XV. Assignments and Sublets XVI. Eviction A. No right to self-help B. Forfeiture of the remainder of the lease term for failure to pay rent due within 10 days of demand XVII.Right of tenant to remove fixtures XVIII. Farm program payments
XIX. Residential leases A. Retaliatory eviction barred B. Application 1. Hotels, motels not covered 2. Dwellings furnished without charge exempt 3. Mobile homes covered C. Duties of landlord 1. Provide fit premises 2. Comply with all building and housing codes 3. Make repairs necessary to property in habitable condition 4. Keep common areas in good condition 5. Maintain all equipment, electrical, plumbing, sanitary, etc. 6. Provide smoke detectors D. Duties of tenant 1. Keep tenant's part of premises clean and safe 2. Dispose of waste properly 3. Avoid deliberate destruction of the property 4. Comply with building and housing codes 5. Be responsible for damage occurring in areas of exclusive control 6. Notify landlord of malfunctioning or inoperative smoke detectors. Replace smoke detector batteries. E. No right to withhold rent. F. Early termination by military personnel
G. Late fee cap: $15 or 5%, whichever is greater, if rent more than 5 days late. May only be imposed once per period. H. Tenant Security Deposit Act 1. Must deposit into trust account 2. Amount a. 2 weeks if week to week b. one and one-half months if month to month c. 2 months for term greater than month to month 3. Return or account within 30 days of lease termination 4. Reasonable pet deposits allowed 5. Uses of deposit a. Nonpayment of rent b. Damage to premises c. Nonfulfillment of the rental period d. Unpaid bills that become a lien against the property, e.g., utilities. e. Costs of re-renting after breach f. Costs of removal and storage of tenant's property after summary ejectment proceeding 6. Remedies a. Damages b. Attorney fees for wilful noncompliance.