The Landlord - Tenant Relationship - Presented by Title Stream

The Landlord - Tenant
    Relationship
 Presented by Title Stream

I. Overview of Lease Law
• Lease Defined
• Essential Elements of a Lease

What is a Lease?

• A lease is an agreement which legally
  binds both the lessor (landlord) and lessee
  (tenant) to the terms for a period of time
• Obligation is heritable

Essential Elements of a Lease
1.   Agreement
2.   Thing
3.   Rent
4.   Term

Agreement
• Agreement may be made orally or in
  writing
  – The lease may be oral or written
  – Oral agreements may be impossible to prove
    in court should a dispute arise
• Parties must intend to be bound

The Thing
• All things, corporeal or incorporeal, that
  are susceptible of ownership may be the
  object of a lease, except those that cannot
  be used without being destroyed by that
  very use, or those the lease of which is
  prohibited by law
  – La Civ Code Art. 2673

The Thing
• Description of the thing should be
  sufficient to identify the property between
  the parties

The Rent
• Agreement as to rent is essential
• The rent may consist of money,
  commodities, fruits, services, or other
  performances sufficient to support an
  onerous contract
• Rent should be in proportion to the
  property’s value

The Term
• Fixed Term Lease: Duration is a fixed
  period of time
• Cannot exceed ninety-nine (99) years
• Lease terminates at a designated date or
  upon the occurrence of a designated event
• Expires at the time agreed upon without
  need for notice unless agreed otherwise

The Term
• Indeterminate Term: If no duration stated,
  it is presumed to be month-to-month
• The tenant or the landlord may terminate
  or change the terms of the lease with ten
  (10) days written notice before the end of
  the month
• Lease continues into next month without
  10 days notice

The Term
• Tacit Reconduction – If the landlord allows the
  tenant to remain for one week after expiration of
  the term, the lease is continued as an indefinite
  term lease on a month-to-month basis
• All other terms and conditions of the lease
  continue
• 10 day notice to vacate by tenant is required
• Any change to the terms of the lease must be
  made with ten (10) days written notice prior to
  the end of the monthly period

Expiration of Term
    Automatic Renewal Clauses:
• Can renew the lease for another term
  equal to the original term
• Either the tenant or the landlord can avoid
  automatic renewal by giving written notice
  of his/her intent to vacate
• Most leases require written notice for
  termination at least 30 days prior to the
  current lease’s expiration

Expiration of Term
          Renewal Clauses:
• Other leases contain automatic month-to-
  month renewal clauses
• All lease terms will remain the same
• Any alteration to these terms must be
  made with the proper notice as provided
  for in the lease

II. Obligations & Rights of Lessor
•   Delivery of premises
•   Condition of premises
•   Maintenance and Repair
•   Guarantee Possession
•   Refrain from making alterations
•   Pay taxes and other charges

Delivery of Premises
• Deliver the property to the tenant at the
  agreed time and in good condition for its
  leased purpose
• What if the prior tenant is not out?
• What if property is unavailable due to
  delayed repairs?

Condition of Premises
• Warranty against vices and defects
• Can be waived
• Waiver must be clear and unequivocal
• Waiver not effective if landlord knew / should
  have known prior to the lease and did not
  remedy
• Warranty does not extend to 3rd parties
• Landlord can also transfer responsibility for the
  condition of the leased premises to the tenant

Condition of Premises
• Landlord can also assign responsibility for
  the condition of the leased premises to the
  tenant
• Assignment not effective if landlord knew /
  should have known of vice / defect prior to
  the lease and did not remedy

Maintenance and Repairs
• Must maintain the property in a suitable
  condition for the purpose for which it was
  leased
• Responsibility for maintenance can be
  shifted to the tenant by mutual agreement

Peaceful Possession
• Cannot be waived by agreement
• Can enter with reasonable notice for
  repairs
• Place for rent / for sale signs and show
  property with reasonable notice
• What about acts of 3rd parties?

Peaceful Possession
• What if property is sold?
• Purchase “subject to” lease
• Assignment / assumption agreement with
  buyer

Registry of Leases
• 3rd parties are not bound by the terms of
  an unrecorded lease, even if they have
  actual knowledge
  – This includes third party buyers and other
    lessees
• Tenant can protect himself from eviction
  by third party by recording lease

Registry of Leases
• Extract / Memorandum of Lease
 – Signed by both lessee and lessor
 – Property description
 – Date, term and provisions for any extensions
   or renewals
 – Reference to any options, rights of first refusal
 – If a sublease, reference to recorded primary
   lease

Refrain from Making Alterations
• Alterations only allowed if they can’t be
  postponed
• May give rise to rent reduction or
  cancellation of lease

Taxes, Insurance and
           Other Charges

• Responsibility can be shifted to the tenant
  by mutual agreement
• Gross Lease vs. Net Lease

III. Obligations & Rights of the
                  Lessee
•   Pay Rent
•   Return property in the same condition
•   Refrain from altering the premises
•   Allow landlord to make necessary repairs
•   Use property for the leased purpose
•   Inform landlord of damage/needed repairs

Pay Rent
• To pay the rent in accordance with the
  lease terms
• Late fees are permissible if agreed upon in
  advance
• The law sets no specific amount for late
  fees, but unreasonably high fees can be
  contested

Condition of the Property
• Return the property in same condition,
  “normal wear and tear” excluded
• Good to fill out and sign Landlord / Tenant
  Checklist prior to executing lease
• Good to have the landlord do a final
  inspection one week before termination

Alterations
• Alterations require landlord’s written
  consent
• At termination of the lease, tenant must
  return property to its former condition
• If tenant does not remove:
  – Pay tenant for the cost of improvements for
    enhanced value, whichever is less; or
  – Landlord may demand removal by tenant
    within a reasonable time

Alterations cont’d
• If tenant fails to remove the improvements
  after demand, landlord may
  – remove the improvements at tenant’s cost
  – acquire the improvements without any
    obligation to reimburse the tenant

Allow Necessary Repairs
• If the repair cannot be postponed until the
  end of the lease, then the tenant must
  allow the landlord to make these repairs,
  even if they are an inconvenience.
  However, a reduction in rent may be
  possible.
  – La Civ Code Art. 2693

Use Property for Leased Purpose
• Lease will generally spell out permitted or
  prohibited uses
• Any misuse could give rise to dissolution
  of the lease or breach claim

Inform Landlord of Damage or
         Necessary Repairs
• The landlord must maintain the property
  by making all necessary repairs
  – La Civ Code Art. 2691

• The tenant is responsible for the damages
  caused by his fault, the fault of his guests,
  and those exceeding normal wear and tear
  – La Civ Code Art 2692

Maintenance & Repairs
• All requests for repairs should be made in
  writing and/or in the presence of witnesses
• Tenants are strongly advised to keep a
  record of all maintenance problems,
  repairs and failures to repair

Maintenance & Repairs
• If landlord refuses to repair, Tenant can:
  – File complaint with Attorney General’s
    Consumer Protection Section
  – If structural or hazardous defect, tenant can
    complain to local building officials
  – Terminate the lease
     • Requires substantial proof --- seek legal advice
       first
  – Repair and deduct

Repair & Deduct
• Louisiana law allows tenants to pay for
  “necessary” repairs and to deduct the
  repair cost from the rent due or demand
  immediate reimbursement from the
  landlord.

Repair & Deduct
• In order to deduct repair costs, tenants
  must be able to prove each of the
  following:
 1. The repairs were necessary.
 2. The landlord failed to act within a reasonable
    time after being notified.
 3. The price paid was reasonable.

Repair & Deduct
• The tenant should keep copies of
  estimates, letters, receipts and other
  documents which support his/her case

Co-Signing a Lease
• Either or both tenants can be held
  responsible for:
  – Entire amount of rent
  – Damages
  – Other breaches

IV. Dissolution of Leases
• Expiration of Term
• Loss of Thing Leased
• Failure of Parties to fulfill obligations

Expiration of Term
• Lease expires at the time agreed upon
  without need for notice unless agreed
  otherwise

Loss of the Thing Leased
• If the leased thing is lost or totally
  destroyed, without the fault of either party,
  or if it is expropriated, the lease terminates
  and neither party owes damages to the
  other
  – La Civ Code Art. 2714

Failure of Parties to Fulfill
               Obligations
• When a party to the lease fails to perform
  his obligations under the lease or under
  this Title, the other party may obtain
  dissolution of the lease…"
  – La Civ Code Art. 2719

Failure of Lessor to Fulfill
             Obligations
• If a serious problem is ignored, then the
  tenant may terminate the lease
• Terminating the lease requires substantial
  proof of failure to perform obligations
• Terminating a lease without sufficient
  cause will result in serious financial and
  legal consequences

Failure of Lessee to Fulfill
              Obligations
• When lessee defaults, the lessor has the
  following remedies available:
  – Sue to cancel the lease
  – Sue to enforce the lease

Suit to Cancel Lease
•   Lease is terminated
•   Landlord is returned possession
•   Landlord may recover accrued rentals due
•   Waives right to collect future rentals

Suit to Enforce Lease
• Lease remains in place and tenant retains
  right of occupancy for remainder of lease
  term
• Recover accrued rentals
• Recover future accelerated rentals if lease
  contains an acceleration clause

Abandonment by Tenant
• Landlord has the right to take possession
  of the premises and relet the premises to a
  3rd party without canceling the lease or
  relieving the lessee of his obligations
• Rent collected applies towards tenant’s
  lease obligation subject to a charge off for
  landlord’s costs
• If landlord reenters premises for own
  benefit, he effectively cancels the lease

Past Due Rent
• A landlord may file a separate suit to
  collect past due rent and may seize
  personal items, such as furniture and
  appliances, found in the property
• If the landlord is unable to locate the
  tenant, the landlord may get a court order
  to seize personal property in the property
  without posting a bond or other security
• Best to consult an attorney

V. Eviction Notice & Procedure
• Notice
• Sheriff’s Right to Execute Notice
• Tenant Damages for Wrongful Eviction

Notice to Vacate
• PROPER PROCEDURE MUST BE
  STRICTLY FOLLOWED
• Landlord must first deliver a written Notice
  to Vacate to the tenant giving tenant five
  (5) days to vacate, not counting weekends
  or holidays
• 5 day notice is often waived in the lease

Notice to Vacate cont’d
• If the tenant is not at home, notice may be
  posted on the door of the leased property
  – This has the same effect as delivering the
    notice to the tenant personally
• If a tenant fails to vacate within five (5)
  days of notice (or immediately if waived),
  landlord can begin eviction proceedings

Eviction Proceeding
• Landlord files petition with the justice of the peace or city
  court, and petition is served upon Tenant
• Trial is heard three (3) days after the tenant has been
  served
• Tenant is ordered to appear in court and state why
  he/she should not be ordered to vacate
• If the justice of the peace finds the landlord entitled to
  evict the tenant, or if the tenant fails to appear at the
  trial, then the court will rule in favor of the landlord
• Tenant must vacate the property within twenty-four (24)
  hours

Sheriff’s Right to Execute Notice
• If the tenant fails to vacate the premises
  within twenty four (24) hours after the
  judgment of eviction, then the court must
  issue a warrant commanding the local
  sheriff, constable, or marshal to seize the
  leased property, remove the non-
  complying tenant, and return possession
  of the leased thing to the landlord

Tenant Damages for Wrongful
             Eviction
• An attorney is recommended if you believe you have
  legally valid reasons to contest the eviction and/or wish
  to preserve your rights to appeal the judge’s or justice’s
  decision
• A tenant who has appeared at the trial and argued a
  defense can file a suspensive appeal within twenty-four
  (24) hours of judgment of eviction.
• If the landlord locks the tenant out of the leased property,
  puts the tenant’s possessions on the street or otherwise
  takes the law into his/her own hands, the landlord may
  be liable for damages for wrongful eviction

VI. Security Deposits
• The Rent Deposit Return Act (La. R.S. 9:
  3251 et seq.)

Rent Deposit Return Act
• The Rent Deposit Return Act requires the
  landlord to return deposits within thirty (30)
  days after the end of the lease, provided
  the tenant fulfilled the lease obligations
  and left a forwarding address

Rent Deposit Return Act
• If any part of the deposit is retained, the
  landlord must send the tenant an itemized
  list of deductions and any remaining
  balance within thirty (30) days
• If the landlord fails to return the deposit or
  to send the itemized list within thirty (30),
  the tenant may sue to recover the deposit

Rent Deposit Return Act
• If landlord fails to account for the deposit within
  thirty (30) days of a tenant’s written request for a
  refund, then the law allows the tenant to recover
  actual damages (amount of damages made) or
  $200.00—whichever is greater
• The judge may also award court costs and
  attorney fees to the person who wins the suit
• The law does not permit the tenant to give up, or
  waive, this right in a lease

Rent Deposit Return Act
• Tenants should request deposit refunds by
  certified mail, return receipt requested, on
  the last day of tenancy
• Tenant should give a forwarding address
  in the letter for his/her records

Deposits vs. Fees
           (Pets as an Example)
• Money held as a pet           • Money held as a “pet fee
  deposit is recoverable          or charge” is not covered
  under the Rent Deposit          by the Act and may or
  Return Act.                     may not be recoverable
• Tenants should apply for        according to the terms of
  refunds of pet deposits in      the lease.
  writing on the final day of
  occupancy, the same way
  they would request
  security or damage
  deposits.

VII. Tenant Damage Claims
•   Warranty of Habitability
•   Peaceable Possession
•   Unfair Trade Practices Act
•   Federal Fair Debt Collection Practices Act
•   Federal Fair Credit Reporting Act
•   Invasion of Privacy & Trespass
•   Property Damage

VIII. Equal / Fair Housing
• State / Federal Laws
• Prohibited Bases of Discrimination
• Examples of Discriminatory Practices

Louisiana Equal Housing
             Opportunity Act
• Prohibits discrimination in housing and related
  activities based on a person’s:
  –   Familial status
  –   Race
  –   Ethnicity
  –   Sex
  –   Handicap status
  –   Color
  –   Religion
  –   Nationality

Louisiana Equal Housing
          Opportunity Act
• Attorney General’s office conducts
  investigation upon receipt of complaint
• AG’s office will also assist landlords with
  understanding their obligations to tenants

Federal Fair Housing Act
• Administered through HUD through Office
  of Fair Housing and Equal Opportunity
  (FHEO)
• Same prohibitions as LA Equal Housing
  Opportunity Act
• Applies to landlords leasing space in their
  primary residence if the residence
  contains living quarters for three or more
  families living independently of each other