The Importance of Lease Administration
Then real estate experts are asked which is the most critical function they perform, lease administration has historically ranked low on the scale compared to managing transactions, design and construction, and facilities management. These functions address delivery of space to meet business needs as opposed to administration. However, in the wake of corporate scandals, increased regulations - most notably the Sarbanes-Oxley Act of 2002 - have created an elevated focus on the accuracy of financial statements and the strength of control systems. With real estate costs firmly placed among the top-five expenses for most organizations, lease administration is now perceived as a critical function, responsible for accurately managing and reporting often significant real estate obligations.
In large organizations, lease administrators are responsible for ensuring the accurate administration of millions of dollars each month. Thousands of transactions - including rent, real estate taxes, property insurance, common area charges, tenant improvement allowance reconciliation and recovery, and sublease payments - must be processed accurately. If the information in a lease administrator's database is inaccurate, the risks are substantial.
• Unintended lease renewals: Missed notification dates could result in unintended lease renewals; in some areas of the world such as the United Kingdom and other parts of Europe, 25-year leases are commonplace, so unintended lease renewals have the potential to create obligations worth millions.
• Payment delays: Inaccurate or delayed payments and notifications can result in penalties and incremental premiums to accommodate damages.
• Compliance challenges: Inaccurate reporting and insufficient controls could result in errors within financial statements significant enough to trigger penalties under Section 404 of Sarbanes-Oxley.
Some risks can be easily mitigated. Technology that is specific to lease administration is now available to ensure accurate, integrated, and automated data. Notices can be automated and information can be validated and shared companywide. With new imaging technology, leases can be scanned, imported into databases, shared by many administrators, and automatically verified for correctness. Software systems can notify administrators of key dates for required actions. Nonetheless, policies and processes must be in place to support accurate data input and maintenance, valid reporting, and follow-through on notices received. With these measures in place, companies can administer leases effectively and demonstrate that appropriate controls are in place to ensure the accuracy of financial information provided.
An alternative is to outsource the entire lease administration function. Suppliers invest substantially in technologies and platforms to deliver these services. They provide centralized expertise, leverage their expertise across multiple organizations, and take advantage of labor arbitrage offshore. They offer competitive prices and enable organizations to pay for only the level of service required as their portfolio sizes and needs change. By contrast, in-house delivery models can be more difficult to scale.
Whether an organization chooses to outsource or handle lease administration internally, the risk remains with the organization. The first and most important step is to recognize the level of risk and develop an effective plan to address it.
www.expensemanagement.com.
The landlord must invest the money in an interest-bearing account, and the interest rate must not be lower than the rate applicable to a savings account. Within 14 to 21 days of the end of the lease, the landlord must return the security deposit, with interest.
If the tenant remains in the unit after the end of the fixed term with the express or tacit consent of the landlord, the lease is deemed to be a periodic lease. Periodic leases can be terminated by giving a month’s written notice.
If the tenant refuses to vacate the property after the expiration of the lease, the landlord must obtain a summons from the court. If the tenant decides to respond to a summons, he or his lawyer must file within three days the “Notice of intention to defend” printed at the back of the summons. A hearing will take place. The court may then issue an eviction order. The landlord must supplement this with a warrant of eviction, stamped by the court. Under the law, notice must be given two weeks in advance before the tenant is evicted.
If the tenant poses an immediate threat to the landlord, then the landlord can file for a “summary judgment.” A summary judgment allows the sheriff to evict the tenant even if the case is still being heard in the court.
To fight off an eviction, the tenant can claim a right of retention, a right to stay in the house until the landlord compensates the tenant for any improvements made on the house.
The Sheriff with the help of the police carries out the eviction. If the tenant owes rent, the court can order the sheriff to attach the tenant’s properties to the house. It means the sheriff can take the tenant’s properties and sell them to compensate the landlord. A landlord can also file for an “interdict,” preventing the tenant from taking his things as long as the arrears are not paid.
Rental
Housing Tribunals use the same procedures as a Labor Court and give rulings
with the same power as those of a magistrate’s court. The tribunal has 30 days
to help the parties reach a solution. If any party is not satisfied with the
proceedings of the tribunal, he may take the case to the High Court.
Rather than the much misunderstood idea that renting property is “enriching somebody else” tenants should consider the benefits of renting and be willing to accept that in most cases, they are receiving a fair bargain. But like just about everything in life, even a bargain must be paid for. Hence the reasons why the obligations of tenants (as well as landlords) are covered in statutory, as well as non-statutory law.
Non-statutory (common) law
The tenant is obliged to:
does not provide the tenant with a seven-day grace period.
Statutary law (the Rental Housing Act)
The tenant is obliged to:
Then real estate experts are asked which is the most critical function they perform, lease administration has historically ranked low on the scale compared to managing transactions, design and construction, and facilities management. These functions address delivery of space to meet business needs as opposed to administration. However, in the wake of corporate scandals, increased regulations - most notably the Sarbanes-Oxley Act of 2002 - have created an elevated focus on the accuracy of financial statements and the strength of control systems. With real estate costs firmly placed among the top-five expenses for most organizations, lease administration is now perceived as a critical function, responsible for accurately managing and reporting often significant real estate obligations.
In large organizations, lease administrators are responsible for ensuring the accurate administration of millions of dollars each month. Thousands of transactions - including rent, real estate taxes, property insurance, common area charges, tenant improvement allowance reconciliation and recovery, and sublease payments - must be processed accurately. If the information in a lease administrator's database is inaccurate, the risks are substantial.
• Unintended lease renewals: Missed notification dates could result in unintended lease renewals; in some areas of the world such as the United Kingdom and other parts of Europe, 25-year leases are commonplace, so unintended lease renewals have the potential to create obligations worth millions.
• Payment delays: Inaccurate or delayed payments and notifications can result in penalties and incremental premiums to accommodate damages.
• Compliance challenges: Inaccurate reporting and insufficient controls could result in errors within financial statements significant enough to trigger penalties under Section 404 of Sarbanes-Oxley.
Some risks can be easily mitigated. Technology that is specific to lease administration is now available to ensure accurate, integrated, and automated data. Notices can be automated and information can be validated and shared companywide. With new imaging technology, leases can be scanned, imported into databases, shared by many administrators, and automatically verified for correctness. Software systems can notify administrators of key dates for required actions. Nonetheless, policies and processes must be in place to support accurate data input and maintenance, valid reporting, and follow-through on notices received. With these measures in place, companies can administer leases effectively and demonstrate that appropriate controls are in place to ensure the accuracy of financial information provided.
An alternative is to outsource the entire lease administration function. Suppliers invest substantially in technologies and platforms to deliver these services. They provide centralized expertise, leverage their expertise across multiple organizations, and take advantage of labor arbitrage offshore. They offer competitive prices and enable organizations to pay for only the level of service required as their portfolio sizes and needs change. By contrast, in-house delivery models can be more difficult to scale.
Whether an organization chooses to outsource or handle lease administration internally, the risk remains with the organization. The first and most important step is to recognize the level of risk and develop an effective plan to address it.
www.expensemanagement.com.
Pro-landlord laws
Rent: Can landlord and tenant freely agree rents in South Africa?
Rents can be freely negotiated in South Africa.
However, the tenant can file a complaint with the Rental
Housing Tribunal if the landlord is charging too much rent for poor-quality
accommodation. The tribunal can order the landlord to reduce the rent if the
building is not well maintained.
Deposits
There is no restriction on the size of deposit, but it must be stated in the contract.The landlord must invest the money in an interest-bearing account, and the interest rate must not be lower than the rate applicable to a savings account. Within 14 to 21 days of the end of the lease, the landlord must return the security deposit, with interest.
What rights do landlords and tenants have in South Africa, especially as to duration of contract, and eviction?
The landlord cannot prematurely end a fixed-term lease.If the tenant remains in the unit after the end of the fixed term with the express or tacit consent of the landlord, the lease is deemed to be a periodic lease. Periodic leases can be terminated by giving a month’s written notice.
If the tenant refuses to vacate the property after the expiration of the lease, the landlord must obtain a summons from the court. If the tenant decides to respond to a summons, he or his lawyer must file within three days the “Notice of intention to defend” printed at the back of the summons. A hearing will take place. The court may then issue an eviction order. The landlord must supplement this with a warrant of eviction, stamped by the court. Under the law, notice must be given two weeks in advance before the tenant is evicted.
If the tenant poses an immediate threat to the landlord, then the landlord can file for a “summary judgment.” A summary judgment allows the sheriff to evict the tenant even if the case is still being heard in the court.
To fight off an eviction, the tenant can claim a right of retention, a right to stay in the house until the landlord compensates the tenant for any improvements made on the house.
The Sheriff with the help of the police carries out the eviction. If the tenant owes rent, the court can order the sheriff to attach the tenant’s properties to the house. It means the sheriff can take the tenant’s properties and sell them to compensate the landlord. A landlord can also file for an “interdict,” preventing the tenant from taking his things as long as the arrears are not paid.
How effective is the South African legal system?
The Rental Housing Act [No.50 of 1999] provides for the establishment of Rental Housing Tribunals in all provinces of South Africa and grants them the authority to settle disputes between tenants and landlords. So far only three of the nine provinces have created housing tribunals, Gauteng, Western Cape, and North West.Rental
Housing Tribunals use the same procedures as a Labor Court and give rulings
with the same power as those of a magistrate’s court. The tribunal has 30 days
to help the parties reach a solution. If any party is not satisfied with the
proceedings of the tribunal, he may take the case to the High Court.Recent changes in African landlord and tenant law
Rental Housing Act [No.50 of 1999] repealed rent control which had been in place since 1976. It governs the relationship between the landlord and the tenant and applies to all written and verbal agreements made, effective August 1, 2000.The lease – an age old asset …..
http://www.nortonrosefulbright.com/knowledge/publications/71304/the-lease-an-age-old-asset-
Introduction
A colleague from the United States once told a room full of interested students that according to his research, a lease is the most common agreement of a commercial nature concluded around the globe. Having done a bit of my own research, I have reached a conclusion that there is no empirical manner in which to confirm, or reject, my esteemed colleague's finding, but the fact that leases are commonplace is undeniable.Lease defined
The word lease in its widest sense has been used colloquially to refer to an agreement by which one party uses the property (including movable property) of another, on agreed terms, either for a specified time or indefinitely in return for rent. Sometimes, it is even used to refer to agreements which we in South Africa will classify as installment sale or credit agreements. In such cases, the use of the word lease would in my view not be appropriate becomes the end goal of such installment- or credit agreements is usually the transfer of ownership, in case of a lease (as our Roman Dutch legal writers pointed out) upon the termination, complete possession is restored to the owner of the property.Lease as an asset
The purpose of this article however, is not to assemble the ghosts of those literary legal giants to further deliberate the elements of a lease. Instead, having considered recent developments in the real estate market, I felt obliged to delve slightly deeper into why a good solid commercial lease is becoming a valuable asset (for both lessor and lessee) in the current economic climate.Status of lease
One of the first elements that is often (and quite surprisingly) overlooked by parties to a commercial lease is that the Deeds Registries Act 1937 in s102 affords a status to a long term registered lease (in other words a lease longer than 9 years and 11 months) equal to that of land. Accordingly, the lessee may raise funds from a third party against the lease that grants it the security of tenure, to operate and grow its business. The third party has the comfort of knowing that the funds invested in the lessee's enterprise may be secured by means of a mortgage bond. If the owner of the property has no mortgage bond of its own registered over the actual immovable property, then the real rights of the mortgagee over the lease will provide sufficient protection in case any other party wants to take steps against either the lessee, or the owner of the immovable property. The owner of the property can then, for the duration of the lease not sell the property free from the lease and the mortgagee's rights. Not even if the owner of land is faced with the unenviable situation of having its property attached and sold in execution, can the sheriff sell the actual property free from the lease. The exception of course is that if the owner of the land did mortgage its property prior to the long term lease being registered, such mortgagee's rights will rank higher in law to those of the lessee and its mortgagee (i.e. the party who holds the lease as security). Even more surprisingly, few people realise that where you are dealing with a short term lease that is registered against the title of the immovable property, one can also use such lease as security by granting a notarial bond over the lease. Accordingly, a registered lease, whether long- or short term is an asset in the hands of the lessee.Lease income
We must never forget that the majority of the colossal glass palaces of office blocks, and ever expanding shopping malls that are reminiscent of our metropolitan landscapes, represent one important element – it’s a source of income for someone. The moment that a lessor (or landlord if you prefer) does not have sufficient occupancy levels in its buildings, it means that there is an interruption of its revenue stream. Once the revenue stream is interrupted, and such interruption is not addressed adequately, it is clear to all who read certain sections of the newspapers on a regular basis where that property will end up sooner or later. A lessor of commercial office space, industrial complexes and even residential units can only really call that immovable property on which the office block, factory of flats are situated an asset, if in some way it generates revenue. Regardless of whether you are a multibillion rand owner of a listed portfolio, or an owner of only one property that is being leased, if the purpose of ownership of that immovable property is to generate income, then merely owning it without a lease in place, turns that property into a money trap as will be explained below.Rates
Given the current dispensation of local authorities, having to address the needs of communities whilst still being sensitive to the overwhelming impact of inflation and high fuel and energy costs and general financial strife, it is quite possible that those individuals and companies that own land for the purpose of leasing it, will have to carry a heavier burden in future in relation to assessment rates payable on those properties. I commented extensively in a previous edition (Volume 15 Part 3 September 2011) on the proposed Municipal Property Rates Amendment Bill that was introduced in June 2011 by the Minister of Co-Operative Governance. From the wording of the bill, little doubt exists that properties being used to generate income through a lease, are being targeted to supplement the local authority coffers. So, the moment that a lessor experiences a vacancy in its building, there is no one to whom you can pass the cost associated with being an owner (i.e. rates, water and electricity charges). Having good solid leases in place, enables a lessor to continue to own, maintain and grow property their property portfolios and attract investment.Proposed Reit regulation
In recent newspaper articles, the statement was made by several of our country's largest listed property groups that demand for the upper grades of leasable space in certain of the hubs of Johannesburg, Cape Town, Durban and Pretoria is still strong. Even though the listed property sector did not achieve the same heights as a couple of years ago, the South African listed property sector (Sapy) still yielded a return in excess of 8 per cent which is better than most, if not all, other asset classes being traded. Our confidence in our listed property sector is further evidenced by the fact that Reit (Real Estate Investment Trust) legislation is hopefully going to be introduced in 2013 by the National Treasury. The concept is already well established internationally in countries such as Japan, France, Belgium, Singapore and the United Kingdom and is designed to provide greater certainty to investors through proper financial disclosure practices, and clear regulatory guidelines which will create uniformity. This in turn should provide international investors with greater certainty and facilitate some much needed foreign direct investments. In Asia and the United States, the use of Reit have sparked a return to the glory days of 2007 as investors sought to capitalise on the broader earnings base provide by the Reit. Currently, in South Africa two major systems provide an entry into the market for investors keen on the listed property sector namely Property Loan Stocks and Property Unit Trusts. Neither of these however seem to promote international investment to the degree many believe possible, and the introduction of Reit will hopefully have the same effect as it did elsewhere. The introduction of Reit may even coax some industry players who have until now been hesitant to become part of the listed property sector, to possibly moving some, if not all of their portfolios to the listed sector.Sector success
In space permitted for this article cannot unfortunately do justice to the relative success of the commercial property sector of South Africa over the last decade. Even in trying times, our country's real estate companies have made international strides by showing ingenuity and a calm head for identifying and realising opportunities. In all instances that I know of however, they underpin their successes in making sure to invest in property portfolios or projects where solid return on investment will be achieved. The solid return on investment is embodied in having a proper appreciation for the fact that a lease is a valuable asset. Despite global economic pressures, these companies have managed to keep vacancies at manageable levels, so as to not alarm their investors.Opportunity
Leases represent a double edged opportunity in our current economic climate. For those who struggle to overcome the rigours of the formal financing requirements, entering into a lease for a couple of years may allow them the opportunity to save capital which can instead be to expand a business to the levels required before making the huge capital investment in acquiring a property from where operations can de conducted. For those established owners of property stock, the relative low levels of interest makes the borrowing cost often associated with owning property slightly more palatable and it enhances the cash flow positions of many businesses provided proper and adequate measures are in place to effectively manage the lessee base and revenue stream.Conclusion
By no means am I saying that leases are always the preferable option to securing tenure because, for every business, different factors will determine the best course of action. We should however not be blind to the opportunities presented by a good lease – either as lessor or lessee.Laws that protect tenants
There are dozens of obvious and practical reasons why many individuals, families as well as businesses, rent property. For a start, renting provides the tenant with the benefits of fairly fast availability and choice. Although some may argue to the contrary, the flexibility enjoyed by tenants as a result of renting should be appreciated, as well as the relative freedom from unexpected or hidden costs and sudden market crashes. Tenants and landlords should enter into agreements with the intention of giving as well as getting reasonable value. In many cases, the attitude with which one approaches a deal will determine its long-term (or possibly short-term) viability and success.Rather than the much misunderstood idea that renting property is “enriching somebody else” tenants should consider the benefits of renting and be willing to accept that in most cases, they are receiving a fair bargain. But like just about everything in life, even a bargain must be paid for. Hence the reasons why the obligations of tenants (as well as landlords) are covered in statutory, as well as non-statutory law.
Non-statutory (common) law
The tenant is obliged to:
·
Pay the proper amount of rent in the proper
commodity at the proper place and time.
·
Take good care of the property and not use it
for other purposes than for which it was let.
·
Restore it to the same condition that he
received it at termination of the lease.
Common law states simply that the full rent must be paid at the proper time
– the time and date agreed by both the tenant and the landlord. Itdoes not provide the tenant with a seven-day grace period.
Statutary law (the Rental Housing Act)
The tenant is obliged to:
·
Make prompt and regular payment of rent and
other charges payable in terms of the lease.
·
Make payment of a deposit – the amount of which
should be agreed upfront between the landlord and tenant.
·
Have a joint incoming and outgoing inspection
with the landlord.
About the Importance of Lease Contracts
A lease is a legal document in which all rights,
responsibilities, use, costs and sometimes future ownership of a property or
other item are set up and agreed to when a lessor (the seller or property
owner) conveys interest to a lessee (the person who is leasing). Leases are
written for a certain period of time, with the plan to exit the lease spelled
out.
About the Importance of Lease Contracts
By Joey Campbell, eHow Contributor
- Share
- Pin
- Tweet
- Stumble
- Share
Other People Are Reading
1. Importance of Leases
o
A lease is a legal document containing language
that will spell out in certain terms all responsibilities of the lessor. The
owner of the property may have certain restrictions as to how it may be used.
It will list all costs involved to the lessee and all responsibilities of the
lessee (such as maintenance, insurance, repair and any other requirement the
owner deems necessary to insure that the property or item is kept in
satisfactory working condition), from the start of the lease until it ends.
Uses of Leases
o
Leases are used for the rental (either short- or
long-term) of homes and apartment dwellings, as well as automobiles and other
mechanical equipment. The purpose of the lease is to spell out the lease costs,
upfront deposits, maintenance, repair, insurance coverage, use and how and when
the lease will end. Leases spell out any future ownership of the property when
the lease ends, which could include a sale price in case the lessee is buying
the property or item at the end of the lease. They also will spell out legal
ramifications in the event the lessor or owner of the item or property does not
keep promises as agreed, and will spell out the coverage of court and legal
costs in the event that legal issues arise.
o
Leases on Real Estate
o
Leases are used in the rental of residential
properties (including apartments) to spell out the length of time a tenant will
reside in the home and what happens at the end of the lease period. A lease
will spell out dates that rental fees are due, costs, late charges and upfront
deposits. It will also spell out the tenant's responsibility of maintenance and
upkeep (small repairs, grass cutting, etc.) and the owner's responsibility
(major repairs such as repair of heat and air systems, appliances and any items
not required to be cared for by the tenant). The lease will discuss what
restrictions are placed on the property. It may state that no drug use or
similar illegal activity is to go on in the home or the lease will end and the
lessee will face eviction. The lease may cover the issue of pets and the number
of people in the household, as well as the number of people who may visit from
time to time.
Commercial Leases
o
Leases are used for tenants who rent commercial
properties. Space may be rented by the square foot, set as a dollar amount per
square foot of space. The tenant may be offered one of three different types of
lease:
The first is a gross lease, which mandates a set amount of rent to be paid each month. The owner agrees to pay taxes, insurance and all maintenance on the building.
The second type of lease is a net lease, which requires the tenant pay an amount for the use of the space (rent) plus some of the maintenance, insurance and other costs involved.
The third type of lease is a triple net lease. This is common for freestanding buildings, and has the tenant paying rent plus all costs involved with the building including insurance and taxes.
The first is a gross lease, which mandates a set amount of rent to be paid each month. The owner agrees to pay taxes, insurance and all maintenance on the building.
The second type of lease is a net lease, which requires the tenant pay an amount for the use of the space (rent) plus some of the maintenance, insurance and other costs involved.
The third type of lease is a triple net lease. This is common for freestanding buildings, and has the tenant paying rent plus all costs involved with the building including insurance and taxes.
Office Equipment leases
o
Leasing office or business equipment has its
advantages. When a new entrepreneur sets up a business, cash flow is usually
low. Leasing is an option to obtain needed equipment but avoid going into debt
with a loan. The business owner will spend a smaller amount for deposits, and
have only a monthly payment.
In the long run, equipment costs more when leased, but leasing has its advantages. An example of this would be with computers. Computer technology has changed so much and so often that computers become obsolete very quickly. A leased computer can offer the advantage of upgrades as technology changes, guaranteed for no extra cost in the lease. There is usually a clause to buy out the equipment at the end of the lease. Leasing can become a necessity if you find that you cannot get a loan to buy equipment, and leasing or buying with cash are your only options.
In the long run, equipment costs more when leased, but leasing has its advantages. An example of this would be with computers. Computer technology has changed so much and so often that computers become obsolete very quickly. A leased computer can offer the advantage of upgrades as technology changes, guaranteed for no extra cost in the lease. There is usually a clause to buy out the equipment at the end of the lease. Leasing can become a necessity if you find that you cannot get a loan to buy equipment, and leasing or buying with cash are your only options.
Leases on Automobiles
o
As the cost of new automobiles, vans, trucks and
SUVs have increased, so has the cost of the homes, food and energy it takes to
live. Consumers are always looking for ways to drive safe and dependable cars
and keep all of the necessary expenses within their budget. Automobile leasing
can do that by keeping the lease payment lower than an actual payment would be,
because all you are paying for is the depreciation on the vehicle, taxes and
rent.
Automobile leases are considered to be closed-end leases because at the end of the lease, you turn in the vehicle and walk away from the lease. You will be limited to a certain mileage per year (typically 12,000 to 15,000 miles), or you can negotiate for higher mileage for a higher monthly payment (which pays for increased depreciation of the vehicle's quality). You have the option to buy the vehicle at the end of the lease period for a depreciated price, or to select another new car and begin another lease period. Roughly 20 to 25 percent of all new cars, trucks and SUVs are leased, but 75 percent of high-end luxury cars are leased vehicles.
Automobile leases are considered to be closed-end leases because at the end of the lease, you turn in the vehicle and walk away from the lease. You will be limited to a certain mileage per year (typically 12,000 to 15,000 miles), or you can negotiate for higher mileage for a higher monthly payment (which pays for increased depreciation of the vehicle's quality). You have the option to buy the vehicle at the end of the lease period for a depreciated price, or to select another new car and begin another lease period. Roughly 20 to 25 percent of all new cars, trucks and SUVs are leased, but 75 percent of high-end luxury cars are leased vehicles.
o
Leasing cars, equipment, homes or anything else
gives the user the use of the item or property without a long-term obligation
to purchase. It can save the lessee money on monthly payments while giving him
the opportunity to try out something for a time. The language in a lease should
give both the lessor and lessee an exit to break the lease in the event that
leasing the item or home no longer serves its purpose, or if either party can
no longer perform as initially agreed.
Why is the Lease Important?
What Is a Lease and Why Is it Important?
A lease is the contract between a landlord and a
tenant. The lease sets forth the rights and responsibilities of both the
landlord and the tenant. The lease allows the tenant to occupy and use, for a
specific period of time, land and structures on that land. In return, the
tenant generally pays a set rent. The lease may set forth other duties and
responsibilities of the landlord and tenant. Once the parties sign the lease
both are bound by its terms. Landlords should select their leases with care.
Before selecting a lease, a landlord may wish to consult with an attorney who
regularly handles landlord and tenant matters. A tenant should carefully read a
lease before signing it.
What Should a Lease Contain?
The lease is a contract between the landlord and
the tenant. Unless the lease contains illegal provisions, a court will require
the landlord or tenant to do what the language of the lease requires. The
answer to most landlord-tenant questions can be found in the lease between the
parties. A comprehensive lease should include the following:
· Names of the tenant, the landlord or the
landlord's agent and the person or company authorized to manage the property.
· A description of the rental unit, identifying the
appliances included in the unit and the heat and cooling sources.
· The amount of rent and the date it is due,
including any grace period, late charges or return check fee charges.
· How rent is to be delivered to the landlord and
whether by check, money order or cash.
· Methods to terminate the agreement prior to the
expiration date and what, if any, charges will be imposed.
· The amount of the security deposit and the
account where it is held.
· Utilities furnished by the landlord and, if the
landlord charges for such utilities, how the charge will be determined.
· Amenities and facilities on the premises which
the tenant is entitled to use such as swimming pool, laundry or security
systems.
· Rules and regulations such as pet rules, noise
rules and whether or not breaking such rules can be grounds for eviction.
· Identification of parking available, including
designated parking spaces, if provided.
· Pest control, if provided, and how often.
· How tenant repair requests are handled and
procedures for emergency requests.
What Are the Advantages and Disadvantages of a Written
Lease?
The advantages of a written lease are generally
considered to be certainty and clarity. The lease sets the rent for the lease
term. Unless the language of the lease states otherwise, rent cannot be
increased during the lease term. A lease spells out the obligations of the
tenant and landlord. If there are any disputes between the tenant and the
landlord, the lease represents what was agreed upon by the parties. Where there
is not a written lease, there are often misunderstandings between the tenant
and landlord. The primary disadvantage of a lease is that it binds the tenant
to the premises for a specified amount of time. Therefore, if you are planning
to live in the unit for a very short period of time, you may not want a lease.
Leases can be made for any length of time, so you could ask the landlord if the
lease could be written for the time period you expect to live in the unit.
Alternatively, if you may have to move due to a job transfer during the term of
the lease, you can ask that the lease include a provision allowing the tenant
to terminate without a penalty if the move is required by the employer.
Similarly, if you intend to buy a house during the rental period, you may ask
that the lease include a provision allowing you to terminate without a penalty
upon closing on a home. Georgia law does give a tenant the right to break a
lease because they are buying a home or being transferred by their employer.
Does a Tenant Have Any Rights When There Is Not a Written
Lease?
A tenant who occupies rental property with the
landlord's consent and makes rent payments without a written lease is called a
"tenant-at-will." Georgia landlord-tenant law, including eviction
laws and security deposits laws, still apply. A tenant-at-will has the right to
occupy and use the rented premises subject to any restrictions upon which the
landlord and the tenant have agreed. Because there is not a written lease,
Georgia law regulates the type of notice which a tenant-at-will and the
landlord of the tenant-at-will must give to terminate or change the original
rental agreement. A tenant must give thirty (30) days notice to the landlord to
terminate or change the original agreement. A landlord who has a tenant-at-will
must give sixty (60) days notice to the tenant before seeking to terminate the
agreement or change any term of the original agreement. This means the landlord
must give a tenant-at-will sixty (60) days notice before imposing a rent
increase. To protect your legal rights any and all notices should be in
writing. When a tenant-at-will fails to pay rent, the landlord is not required
to give the sixty days notice before terminating the tenancy. If the
tenant-at-will fails to pay rent, the landlord can demand possession and
immediately file a dispossessory warrant seeking possession in court.
Aren't All Leases "Standard"? What Difference Does
it Make Whether the Tenant Reads the Lease Before Signing It?
Although many leases are similar, there is no such
thing as a "standard" lease provided or approved by any public agency
or court. Lease agreements differ from landlord to landlord. Therefore, it is
very important to read the lease carefully before signing it. The lease is a
legal document which defines the relationship between the landlord and the
tenant. Both the landlord and the tenant will be held to the language of the
lease. If there are provisions in the lease which you do not understand, get
help. Ask someone you trust to explain what the language means. Be careful of
lease terms which provide for the following:
· Automatic renewal of the lease for a specified
time;
· An extremely long lease term with penalties for
early termination;
· Automatic rent increases during the lease term;
· References to rules which are not provided to
you;
· Any attempt by the landlord to make you
responsible for repairs;
· Leases which provide that the tenant pays the
landlord directly for utilities rather than being billed by the utility
provider;
· Provisions which require the tenant to pay the
landlord's attorney fees if a landlord hires an attorney to enforce the lease,
unless the provision also makes the landlord responsible for the tenant's
attorney's fees;
· Lease terms which claim that the landlord can
evict you without going through the dispossessory process; and
· Lease terms requiring the tenant to have renter's
insurance.
Before a lease is signed, a tenant may request
changes to the lease. Some landlords will agree to the changes. Others will
not. Even if the landlord will not alter a lease, the tenant needs to read it
to decide whether or not to sign. If signed, both the landlord and tenant will
be required to comply with the lease.
When Should the Tenant Get a Copy of the Lease?
It is a good idea to get a copy of the lease before
signing so that you will have a chance to review it. A tenant should be given a
copy of the lease and any rules or regulations referred to in the lease after
both the landlord and tenant have signed. If the landlord does not voluntarily
give the tenant a copy of the lease and rules and regulations, the tenant
should request a copy in writing. Since the lease spells out the tenant's and
landlord's responsibilities, it is important for both parties to have a copy of
the lease to answer any questions. Keep your lease in a safe place.
Susan Reif
Georgia Legal Services Program
Last Revised: December 2003
Georgia Legal Services Program
Last Revised: December 2003
What Should a Tenant do Before Signing a Lease?
The lease is a contract. Unless the lease contains
illegal provisions, a court will require the landlord and tenant to do what the
language of the lease provides. The answer to most landlord-tenant questions
can be found in the language of the lease between the parties. A comprehensive
lease should include the following:
* Names of the tenant, the landlord or the
landlord's agent and the person or company authorized to manage the property.
* A description of the rental unit, identifying the
appliances included in the unit and the heat and cooling source. If it is a
house, a description of the property rented.
* The time period for which the property is rented
and the date the lease ends.
* The amount of rent and the date it is due,
including any grace period, late charges or return check charges.
* How rent is to be delivered to the landlord and
whether payment may be made by check, money order or cash.
* How to terminate the agreement prior to the
expiration date and what, if any, charges will be imposed.
* The amount of the security deposit and the
account where it is held.
* Utilities furnished by the landlord and, if the
landlord charges for such utilities, how the utility charge will be calculated.
* Amenities and facilities on the premises which
the tenant is entitled to use such as swimming pool, laundry or security
systems.
* Rules and regulations such as pet rules, noise
rules and whether or not breaking such rules can be grounds for eviction.
* Identification of parking available, including
designated parking spaces, if provided.
* Pest control, if provided, and how often.
* How tenant repair requests are handled and
procedures for emergency requests.
* Under what circumstances the landlord can enter
the property and with what notice to the tenant
When should the tenant be shown the apartment?
The tenant should insist on seeing the apartment they
will be renting before signing a lease. A tenant should not sign a lease before
inspecting the unit they will be renting.
The resident manager of my apartment complex refuses to
provide me with the name and address of the property owner. How can I find out
the name and address of the property owner?
Georgia law (O.C.G.A.§44-7-3) requires that at the
time the lease is signed the tenant isgiven the name and address of the
property owner or his authorized agent for purposes ofreceiving legally
required notices. The tenant should also be given the name and address of
theperson authorized to manage the property. If after signing the lease, there
is a change in thedesignated individuals or their address the landlord should
give notice to the tenant within thirtydays of the change. Such notice may be
sent to each individual tenant or posted in an obviousplace such as the complex
office or the community bulletin board. You may be able to find theowner of the
property or the designated agent for service through the intranet using the
GeorgiaSecretary of State's website at www.sos.state.ga.us.
If you were not given the required information when you signed the lease, the
person who signed the lease for the landlord becomes the agent of the landlord
for receiving notices, and performing the obligations of the landlord.
How Can the Tenant Find out Who Owns the Property?
At or before the tenant signs the lease or moves
in, the landlord or his agent is to disclose to the tenant in writing the names
and addresses of the following persons:
* The owner of the property or a person authorized
to act for and on behalf of the owner for the purposes of serving of process
and receiving and receipting for demands and notice; and
* The person authorized to manage the premises.
If there is a change in any of the names and
addresses required to be contained in such statement, the landlord shall advise
each tenant of the change within 30 days after the change either in writing or
by posting a notice of the change in a conspicuous place. If the landlord fails
to provide the above notice, the person who had you sign the lease or
authorized your move in is considered the agent of the owner and you can
deliver all notices and demands as well as serve any lawsuit against the owner
to them just as if they were the owner.
