Real Estate Exam: Landlord-Tenant Law, Lease Types, Eviction, Security Deposits

The four types are estate for years, periodic estate, estate at will, and estate at sufferance. An estate for years has a definite start and end date and terminates automatically without notice. A periodic estate automatically renews at the end of each period, such as month-to-month, and requires notice to terminate. An estate at will has no fixed term and either party can end it at any time, though most states require reasonable notice.

A gross lease requires the tenant to pay a fixed rent amount while the landlord pays all operating expenses including property taxes, insurance, and maintenance. A net lease requires the tenant to pay base rent plus some or all operating expenses. A single net lease adds property taxes, a double net adds taxes and insurance, and a triple net or NNN lease adds taxes, insurance, and maintenance, making the tenant responsible for nearly all property costs.

A percentage lease requires the tenant to pay a base rent plus a percentage of their gross sales revenue above a specified threshold, called the breakpoint. For example, a retail tenant might pay 3,000 dollars base rent plus 5 percent of gross sales exceeding 100,000 dollars per month. Percentage leases are used almost exclusively in retail commercial properties like shopping malls and strip centers. They align the landlord's income with the tenant's business success, incentivizing the landlord to maintain the property and attract foot traffic.

Tenants have rights to security deposit protection that vary by state but generally include a limit on the maximum deposit amount, typically one to two months' rent; a requirement that the landlord hold the deposit in a separate account; a deadline for return after move-out, commonly 14 to 30 days; and an itemized list of any deductions. Landlords may deduct for unpaid rent and damage beyond normal wear and tear but not for ordinary aging of the property.

Eviction is the legal process by which a landlord removes a tenant from a rental property, and it must follow strict procedural requirements. The landlord must first serve a written notice specifying the reason, such as nonpayment of rent or lease violation, and the cure period if applicable. If the tenant does not comply or vacate, the landlord must file an eviction lawsuit, often called an unlawful detainer action. The tenant has the right to a court hearing. If the court rules for the landlord, a writ of possession is issued and law enforcement carries out the physical removal.

Constructive eviction occurs when a landlord's actions or failure to act make the property substantially uninhabitable, effectively forcing the tenant to leave. Examples include failing to repair a broken heating system in winter, persistent water leaks causing mold, or allowing conditions that violate health codes. To claim constructive eviction, the tenant must notify the landlord of the condition, allow reasonable time for repair, and actually vacate the property. If the tenant stays, the claim fails.

The implied warranty of habitability is a legal doctrine recognized in most states that requires landlords to maintain rental properties in a condition fit for human habitation, regardless of what the lease says. This means providing working plumbing, heating, electrical systems, adequate weatherproofing, and compliance with building and health codes. If the landlord fails to maintain habitable conditions after notice, tenants may have remedies including rent withholding, repair and deduct where they fix the problem and subtract the cost from rent, or lease termination.

In a lease assignment, the original tenant transfers all remaining rights and obligations under the lease to a new tenant for the entire remaining lease term. In a sublease, the original tenant transfers only a portion of the remaining lease term or space to a subtenant while retaining some interest. With an assignment, the new tenant has a direct relationship with the landlord, while with a sublease, the original tenant remains the landlord's primary tenant and is responsible if the subtenant defaults. Most commercial leases require landlord consent for both.

An estate for years is a leasehold estate with a definite beginning and ending date, regardless of the actual duration, which could be days, months, or years. The key characteristic is that both dates are specified in the lease. An estate for years terminates automatically at the expiration date and does not require notice from either party to end. If the tenant remains after expiration without a new agreement, they become a holdover tenant with an estate at sufferance. ---