This post originally appeared on Burt M. Polson's Real Estate Journal and is republished with permission. Find out how to syndicate your content with theBrokerList.
The lease is an essential document as it gives a tenant the right to use a property from the owner. Knowing the terms in the lease before you sign and during your use will provide you with peace of mind with minimal surprises.
In part one, you learned how a lease is a contract that creates a relationship which gives the tenant a right to use a property.
In part two we discussed the commencement date and the responsibility of paying the rent promptly.
Part three explained the uses of the security deposit and repairs & maintenance issues.
We are going to wrap up this portion of the series as we discuss alterations, entry, subletting and early termination as it pertains to the ten page CAR (California Association of Realtors) “Residential Lease or Month-to-Month Rental Agreement.”
Making alterations or repairs
A tenant is required to have the landlord’s approval before making any alterations to the property. What may be allowed without approval varies widely by the landlord and in any case should be in writing.
Something considered minor as painting or the installation of a spa you would consider personal property needs to be approved by the landlord.
I do not recommend a landlord take a back seat allowing the tenant to make repairs while deducting the cost of the materials from the rent. A landlord will lose control of the quality of work, the knowledge of what was done, and could cause tax issues.
Giving notice and entering the premises
The lease provides the right for a landlord to enter the premises with 24-hours written notice. Usually, entering the premises is done during business hours.
The landlord can enter the premises without notice only if there is an emergency such as a fire or water leak. If the property is for sale entry gets complicated so read the lease.
Subletting (yes, this includes Airbnb)
Subletting is when a tenant allows another person or people use the premises or any part of the premises as a tenant for a short-term weekend rental, a month-to-month rental or even for the day.
The landlord reserves the right to approve any subletting of the premises and without prior written approval is considered a violation of the lease. Remember, couchsurfing.com, Airbnb.com, and VRBO.com are all considered subleasing.
Early termination is when the lease term is “broken” prematurely and could occur for several reasons but often is because the tenant is in default or the tenant must vacate by choice.
It is essential for a tenant to communicate with the landlord beforehand to potentially mitigate an early termination. The lease allows for the landlord to pursue damages from the tenant for lost rent, broker commissions, advertising expenses, and costs to get the property ready to rent.
The next article will begin our series on the commercial lease.
Burt M. Polson, CCIM, is an active commercial real estate broker. Reach him at 707-254-8000, or [email protected] Sign up for his email newsletter at BurtPolson.com.