Leases 1
A lease may be written or verbal. 2
The property owner is called the landlord (lessor). 3
The landlord retains a leased fee estate. 4
The landlord also has a reversionary estate. 5
The tenant (lessee) has a temporary right of possession of the property. 6
The tenant s interest is called a leasehold estate. 7
Georgia Law defines a leasehold estate as real property. 8
Leasehold Estates Estate for Years Must have a definite starting and ending date. 9
Leasehold Estates Estate for Years It may be written or verbal. 10
Leasehold Estates Estate for Years If it is for more than one year it must be in writing to be enforceable. 11
Leasehold Estates Estate for Years Notice to terminate is not required by the landlord or the tenant. 12
Leasehold Estates Estate for Years It is not terminated by sale or other transfer of the property. 13
Leasehold Estates Estate for Years Death of the landlord or the tenant does not end the agreement. 14
Leasehold Estates Estate from Period-to-Period Upon payment of the rent, the tenant s rights are renewed for another equal period of time. 15
Leasehold Estates Estate from Period-to-Period This arrangement will continue until the landlord or the tenant gives notice to terminate. 16
Leasehold Estates Estate from Period-to-Period It is not terminated by sale or other transfer of the property. 17
Leasehold Estates Estate from Period-to-Period It is not terminated by the death of either party. 18
Leasehold Estates Estate at Will Occupancy by the tenant is for an unspecified and uncertain period of time. 19
Leasehold Estates Estate at Will The tenancy is not assignable. 20
Leasehold Estates Estate at Will If the property is sold or transferred the agreement ends. 21
Leasehold Estates Estate at Will If the landlord or the tenant dies the agreement ends. 22
Leasehold Estates Estates at Will In Georgia, a tenancy at will requires a 30 day written notice to vacate by the tenant. 23
Leasehold Estate Estates at Will In Georgia, a tenancy at will requires a 60 day written notice to vacate by the landlord. 24
Leasehold Estates Estate at Sufferance Arises when a tenant remains in the property after the term of the lease, or the notice to vacate has expired. 25
Leasehold Estates Estate at Sufferance The holdover tenant is not a trespasser. 26
Leasehold Estates Estate at Sufferance The landlord files a legal action of ejectment to have the holdover tenant removed from the premises. 27
Legally Competent Parties Requirements for a Valid Lease The landlord and the tenant must have the legal capacity to act. 28
Requirements for a Valid Lease Mutual Agreement There must be an offer, acceptance, and notice. 29
Genuine Assent Requirements for a Valid Lease The parties must have entered into the agreement of their own free will and were well informed. 30
Requirements for a Valid Lease Consideration Generally the consideration in a lease is the promise to pay rent in exchange for possession. 31
Legal Purpose Requirements for a Valid Lease The purpose of the lease must be legal. 32
Requirements for a Valid Lease In Writing Any lease for more than one year must be in writing to be enforceable. 33
Requirements for a Valid Lease In Writing An oral lease for one year or less is valid and enforceable. 34
Requirements for a Valid Lease Description of the Premises The lease must contain an adequate legal description. 35
Lease Term Requirements for a Valid Lease A lease usually has a very specific beginning and ending date. 36
Requirements for a Valid Lease Signature, Delivery and Acceptance A lease must be signed by the landlord and delivered to the tenant. 37
Requirements for a Valid Lease Signature, Delivery and Acceptance It is not essential for the tenant to sign the lease. 38
Requirements for a Valid Lease Signature, Delivery and Acceptance When the tenant takes possession and pays the rent, acceptance is implied. 39
Rights and Obligations of the Parties to a Lease Possession and the Right to Enter The tenant can refuse to accept the property if the landlord doesn t give possession at the agreed upon time. 40
Rights and Obligations of the Parties to a Lease Possession and the Right to Enter The landlord is not allowed to enter the premises after the tenant takes possession without their permission. 41
Rights and Obligations of the Parties to a Lease Use of the Premises Quiet Enjoyment - Guarantees that the tenant will not be disturbed or evicted because of a defective title into the landlord. 42
Rights and Obligations of the Parties to a Lease Use of the Premises Restrictive Covenant - States that the property can only be used for certain purposes. 43
Rights and Obligations of the Parties to a Lease Use of the Premises Protective Covenant - Prohibits a certain use of the property. 44
Rights and Obligations of the Parties to a Lease Rent Contract Rent - Is the amount of rent stated in the lease. 45
Rights and Obligations of the Parties to a Lease Rent Market Rent - Is the amount of rent that could be obtained under today s market conditions. 46
Rights and Obligations of the Parties to a Lease Rent If a lease does not state that the rent must be paid in advance, the rent would not be due until the end of the rental period. 47
Rights and Obligations of the Parties to a Lease Taxes And Insurance Unless the lease specifies otherwise, the landlord pays ad valorem taxes, special assessments, and insurance. 48
Rights and Obligations of the Parties to a Lease Repairs and Maintenance A tenant is obligated to keep leased property in good condition. 49
Rights and Obligations of the Parties to a Lease Repairs and Maintenance Neglect or misuse of the premises, resulting in a decrease in value, is called waste. 50
Rights and Obligations of the Parties to a Lease Repairs and Maintenance A tenant who commits waste is liable to the landlord for damages. 51
Rights and Obligations of the Parties to a Lease Implied Warranty of Habitability The landlord has an obligation to keep rented units at a minimum level of livability in order to collect rent. 52
Rights and Obligations of the Parties to a Lease Implied Warranty of Habitability If the landlord breaches this warranty, the tenant can make the repairs and deduct the cost from the rent owed. 53
Rights and Obligations of the Parties to a Lease Injury to The Tenant A landlord might be liable for injury to a tenant or a guest resulting from the landlord not making the necessary repairs. 54
Rights and Obligations of the Parties to a Lease Improvements A tenant can make leasehold improvements only if they are allowed to do so by the landlord. 55
Rights and Obligations of the Parties to a Lease Improvements Trade Fixtures - Are improvements made by a tenant in order to carry on a trade or business. 56
Rights and Obligations of the Parties to a Lease Improvements Trade Fixtures - Are personal property. 57
Rights and Obligations of the Parties to a Lease Improvements Trade Fixtures - Can be removed by the tenant prior to expiration of the lease. 58
Rights and Obligations of the Parties to a Lease Improvements Trade Fixtures - Trade fixtures not removed before the expiration of the lease become the property of the landlord by accession. 59
Rights and Obligations of the Parties to a Lease Security Deposits Security Deposits - The conditions of the lease will be fulfilled. 60
Rights and Obligations of the Parties to a Lease Security Deposits Security Deposits - The premises will be returned to the landlord in satisfactory condition. 61
A landlord may sell the property without the tenant s permission. Transfer of Landlord s Rights 62
Transfer of Landlord s Rights The new owner must honor all of the covenants in the existing lease. 63
Mortgage in Default If mortgage predates lease the mortgage prevails. Transfer of Landlord s Rights 64
Transfer of Landlord s Rights Mortgage in Default If the lease predates mortgage the lease prevails. 65
Mortgage in Default Subordination Clause - Tenant s rights have no priority. Transfer of Landlord s Rights 66
Transfer of Landlord s Rights Mortgage in Default Non-disturbance Agreement - Lender will not terminate the lease. 67
An assignment is a transfer of all remaining rights and interests. Transfer of Tenant s Rights 68
Transfer of Tenant s Rights The original tenant is called an assignor. 69
The person who receives the remaining leasehold estate is called an assignee. Transfer of Tenant s Rights 70
Transfer of Tenant s Rights The assignee accepts liability for future payment of rent to the landlord. 71
If the assignee defaults on the rent payments the original tenant is still liable. Transfer of Tenant s Rights 72
Transfer of Tenant s Rights In a sublease the original tenant is called a sublessor. 73
The person receiving this estate is called a sub-lessee. Transfer of Tenant s Rights 74
Transfer of Tenant s Rights A sublease conveys less than the entire estate. 75
The sub-lessee pays rent to the original tenant, and has no liability to the landlord. Transfer of Tenant s Rights 76
Transfer of Tenant s Rights This arrangement is called a sandwich lease. 77
Lease Options Option to Renew Gives the tenant the right to extend the lease for another term. 78
Lease Options Option to Buy Gives the tenant the right to buy at a set price within a designated period of time. 79
Lease Options Option to Buy The tenant is under no obligations to exercise the option. 80
Lease Options Lease Purchase Agreement The tenant/buyer enters into two contracts: a lease, and; an offer to buy. 81
Lease Options Lease Purchase Agreement The tenant is obligate to purchase at some specific time. 82
Lease Options The Right of First Refusal Does not obligate the landlord to sell. 83
Lease Options The Right of First Refusal If the landlord decides to sell the property, it must be offered to the tenant before anyone else. 84
Types of Leases Gross Lease The tenant pays rent and the landlord pays property taxes, insurance premiums, repairs and maintenance. 85
Types of Leases Net Lease The tenant pays the rent plus operating expenses such as taxes, insurance, maintenance and repairs. 86
Types of Leases Graduated Lease An escalator clause in the agreement protects the landlord against rising costs and inflation. 87
Types of Leases Graduated Lease Step-Up Lease - Provides for rent increases in predetermined amounts and times. 88
Types of Leases Graduated Lease Index Lease - Periodic rent adjustments are based on changes in a designated economic index. 89
Types of Leases Graduated Leases Escalator Leases - Rent increases are tied to operating costs. 90
Types of Leases Reappraisal Lease Provides for the rents to be reappraised at certain intervals. 91
Types of Leases Reappraisal Lease The appraiser will decide how much the rent should be adjusted to meet current market conditions. 92
Types of Leases Percentage Lease The tenant pays a fixed minimum or base rent plus a percentage of gross sales or profits. 93
Types of Leases Percentage Lease The percentage could be based on rent plus a percentage of net sales or profits. 94
Types of Leases Ground Lease Is for the rental of unimproved land. 95
Types of Leases Ground Lease Permission is granted to the tenant to construct a building or make other improvements at their expense. 96
Types of Leases Sale-Leaseback The owner sells the property to an investor with an agreement to lease it back on a long term net lease. 97
Types of Leases The Occupancy (Move-In) Agreement Used when a purchaser wants to occupy the property before closing or a seller wants to remain the property after closing. 98
The Occupancy (Move- In) Agreement Does not create a landlord-tenant relationship. Types of Leases 99
Landlord's Remedies if the Tenant Defaults Statutory Remedies Suit for rental payment or for damages - A landlord has the right to sue a tenant for unpaid rent or other breach of the lease. 100
Landlord's Remedies if the Tenant Defaults Statutory Remedies Eviction - The legal process used to remove a tenant for some breach of the lease. 101
Landlord's Remedies if the Tenant Defaults Statutory Remedies Unlawful Detainer - An action filed by the landlord through the courts when the tenant refuses to move. 102
Landlord's Remedies if the Tenant Defaults Statutory Remedies Unlawful Detainer - If the tenant doesn t move out within the specified number of days, the sheriff can forcibly remove them. 103
Landlord's Remedies if the Tenant Defaults Remedies Provided in the Lease Seize personal property. Accelerate due date of remaining rent payments. 104
Tenant's Remedies if the Landlord Defaults Suit for Damages. 105
Tenant's Remedies if the Landlord Defaults Warranty of Habitability or the Implied Covenant of Quiet Enjoyment A landlord must make the necessary maintenance and repairs to keep the property inhabitable. 106
Tenant's Remedies if the Landlord Defaults Warranty of Habitability or the Implied Covenant of Quiet Enjoyment Constructive Eviction Tenant may abandon the property and stop paying rent. 107
Termination of Leases Expiration In a tenancy for years, the lease expires at the end of the stated term. 108
Termination of Leases Notice In a periodic tenancy or tenancy at will, the lease ends when proper notice is given. 109
Mutual Agreement By mutual agreement the tenant surrenders the unexpired portion of the lease. Termination of Leases 110
Termination of Leases Mutual Agreement The unexpired portion of the lease must be accepted by the landlord. 111
Termination of Leases Merger If the tenant buys the property the lease is automatically terminated. 112
Termination of Leases Condemnation Usually the tenant is compensated for the value of the remaining leasehold estate. 113
Termination of Leases Eviction Actual or constructive eviction will terminate the lease. 114
Termination of Leases Destruction of the Premises Complete destruction of the premises will terminate the lease. 115
Termination of Leases Death Normally, death of either party will not terminate the lease. 116
Termination of Leases Death In an estate at will, death of either party ends the leasehold. 117
Termination of Leases Death The death of a lessor who holds a life estate terminates the lease or the leasehold. 118
Property Management The Property Manager Has an agency contract with the owner. The property owner is the principal. The property manager is the agent. 119
Property Management The Property Manager The manager must maintain, preserve and enhance the owner s investment. 120
The Property Manager The manager must generate the highest possible net return from the property over its economic life. Property Management 121
The management contract should contain: Name of the Parties Including the names of all owners and the name of the management firm. 122
The management contract should contain: Property Descriptions A precise legal description is needed. 123
The management contract should contain: Manager s Authority The agreement should be specific as to the manager s authority. 124
The management contract should contain: Reporting The frequency and content of needed reports should be stated. 125
The management contract should contain: Management Fee It can be a percentage of rents collected, a fixed dollar amount, or any other basis agreed upon. 126
Functions of the Property Manager Developing a plan Marketing (renting the space) Collecting rents 127
Functions of the Property Manager Keeping tenants Property maintenance Accounting and reporting 128
Functions of the Property Manager Sale of the property terminates the management contract. 129
Community Association Management A community association is an association of homeowners in a subdivision, planned development, condominium complex or cooperative. 130
Community Association Management Community Associations Maintain and operate recreational facilities Enforce protective covenants Collect dues and assessments 131
Subdivision Homeowner Associations (HOA's) Subdivision with no Governing Homeowner Association Owners have the protection of covenants, but no obligation to pay assessments. 132
Subdivision Homeowner Associations (HOA's) Subdivision with a Voluntary Association An owner who has no desire to use the amenities can elect not to join the association. 133
Subdivision Homeowner Associations (HOA's) Subdivision with a Mandatory Association Membership The association has the mechanism to ensure that the facilities are maintained and the covenants enforced. 134
Subdivision Homeowner Associations (HOA's) The Georgia Property Owners Association Act of 1994 Provides the option to submit it to a statutory scheme of development. 135
Subdivision Homeowner Associations (HOA's) The Georgia Property Owners Association Act of 1994 Benefits: Automatic statutory liens. Buyer and Sellers are jointly & severally liable. 136
Subdivision Homeowner Associations (HOA's) The Georgia Property Owners Association Act of 1994 Tenants must comply with rules & regulations. Access fines, suspend use of common areas, charge late fees. 137
Condominiums Condominium Management There are usually more common areas to maintain. 138
Condominiums Condominium Management Covenants are usually much more pervasive. 139
Condominiums The Condominium Association's Power Charges owners by imposing regular and/or special assessments. 140
Condominiums The Condominium Association's Power Adopts rules governing use of the units and common elements. 141
Condominiums The Condominium Association's Power Fines owners for violation of the covenants or the rules. 142
Condominiums The Condominium Association's Power Takes legal action to enforce obligations. 143
Condominiums The Condominium Association's Power Approves or disapproves alterations to building exteriors or common elements. 144
Occupancy is granted to those who subscribe to a stock purchase and sign a proprietary lease. Cooperatives 145
Cooperatives All contribute to common expenses, called carrying charges. 146
Cooperatives Members often do not have responsibility for repair and maintenance of their units. 147
Fundamentals of Community Association Management Role of Officers And Directors The board of directors is responsible for operating and conducting the business affairs. 148
Fundamentals of Community Association Management Role of the Community Association Manager Works with contractors, association employees, board members and owners. 149
Fundamentals of Community Association Management Role of the Community Association Manager Serves as a buffer between the directors and the owners. 150
Fundamentals of Community Association Management Fidelity Insurance Managers who handle any community association funds must be covered by a fidelity bond or fidelity insurance. 151
Fundamentals of Community Association Management Fidelity Insurance Brokers who never handle more than $60,000 are exempt. 152
Fundamentals of Community Association Management Fidelity Insurance The fidelity bond or insurance shall be written by an insurance company authorized to write such bonds in Georgia. 153
Fundamentals of Community Association Management Fidelity Insurance The fidelity bond or insurance shall cover the maximum amount of funds the broker ever handles. 154
Fundamentals of Community Association Management Fidelity Insurance The fidelity bond or insurance shall name the association as additional insured. 155
Fundamentals of Community Association Management Fidelity Insurance The fidelity bond or insurance shall cover the broker, partners, officers, affiliates, employees and anyone handling funds. 156
Fundamentals of Community Association Management Fidelity Insurance The fidelity bond or insurance shall provide that the policy cannot be canceled without 30 days notice. 157
Community Association Management Licensing Policies Must hold a real estate license or New classification CAM License. 158
Community Association Management Licensing Policies Must work for a broker. Must complete 25 hours of approved study. 159