Lease – What to Know
July 5th, 2009
Categories:Home Buyer Education
This article will cover an array of information regarding leases and is meant to help renters understand specific lease terminology and their rights as tenants. Arizona’s Residential Landlord and Tenant Act can be found in PDF format in the resources section towards the bottom.
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Types of Leases
There are several types of leases available. Below is a list of the leases available in both the residential and commercial industry. Each type of rent will calculate the rent amount in a different manner.
Gross Lease
A gross lease is where the tenant pays a fixed amount each month. The landlord then pays for all the taxes, insurance, repairs, utilities, etc. This is the most commonly used for residential leasing
Net Lease
With a net lease, the tenant pays the monthly rent amount and all or some of the fees involved with the property.
Percentage Lease
A percentage lease the rent is based on a fixed monthly rental fee plus a percentage of the gross income received by the tenant doing business on the property. Both the gross lease and net lease can be percentage leases.
Lease Purchase
When a tenant wants to purchase the property, but at the current time they cannot afford the property, they can do a lease purchase. The lease purchase will allow the tenant to rent for a specific period of time and then purchase the property after the determined period of time. The purchase price of the property can be determined in advance or that the time of purchase.
Sale and Leaseback
A sale and leaseback occurs when a homeowner sells his or her home and instead of moving out, they stay and pay rent to the new owners of the home. This can be an alternative to reverse mortgages.
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Leases… The Fine Print
When deciding to lease a home, or lease a home to another individual consider what is involved in a lease. Below are some of the tenant’s rights to give you an idea of what to expect and look for before signing a lease agreement. Also, consult the Arizona Residential Landlord Tenant Act for more detailed information.
Possession of Premises
The lessee, or the one leasing the property has the right to quiet enjoyment. This doesn’t involve the neighbor’s barking dog next door. Instead it means the landlord agrees to not interfere with the lessee’s possession or use of the property. In the lease, the landlord normally reserves the right to enter the premise to perform maintenance, repairs or any other reason that is stated. In Arizona, the landlord must give 2 days or 48 hours notice before entering the home.
Use of Premises
A landlord has the right to limit what you can do with the premise. Review the contract to see if there is anything in it that would prevent you from enjoying the property as you intend to.
Term of Lease
The Term of the Lease should always state the beginning and ending date. This is for the protection of both the landlord and the lessee/tenant.
Security Deposit
Arizona state laws says the maximum deposit allowed to be held by the landlord for repairs and the last month’s rent is 1.5 times the monthly rent amount. Also, the last month’s rent that is being collected can not be used to pay for any additional damages done to the property, it can only be used to pay the last month’s rent or be refunded.
Improvements
Neither the landlord or the tenant is required to make improvements to the property being leased. However, if the landlord gives permission, the tenant may make improvements on the property. Any improvements become fixtures and property of the landlord, not the tenant.
Maintenance of Premises
The landlord is required to keep the property in a habitable condition. This includes the common areas, hallways, elevators, fire sprinklers, and any other safety features. If the landlord does not keep the property habitable, the tenant can repair the issue and request the landlord to pay for the repair up to $300. In the event the landlord will not make the necessary repairs, the tenant can follow a procedure notifying the landlord and if the landlord does not respond the tenant will be able to walk away from the lease.
Destruction of Premises
In leases involving agricultural land, the courts have ruled that when improvements are damaged or destroyed, the tenant is obligated to pay rent to the end of the term. The tenant’s liability does not depend on whether the damage was his or her fault.
Assignment and Subleasing
When a tenant transfers all of his or her leasehold interest to another person the lease has been assigned. The new tenant is legally obligated for all the promises the original tenant made in the lease. Subleasing is when less than all the leasehold interest are transferred. The original tenant then remains responsible for the rent being paid and any damages done by the new tenant.
Recording a Lease
It is usually not considered necessary to record a lease. The possession of the leased premise is considered constructive notice to the world of the tenant’s leasehold interests.
Nondisturbance Clause
A nondisturbance clause is a mortgage clause that states, in the event the landlord forecloses on the property, the lenders agrees to not terminate the leases of any tenant/lessee who is paying their rent.
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Resources
Here is a list of websites and documents to assist in further research. This list will be updated periodically, if don’t see what you are looking for in this list send us an email or leave a comment and we’ll find it for you.
Websites
Downloads
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