LEASING ESSENTIALS Denise Holliday and Sue Flucke AAR

LEASING ESSENTIALS Denise Holliday and Sue Flucke

AAR Lease Forms • • • Tenant Advisory Form Lease Owner’s Property Disclosure Statement Owner’s Advisory Form Property Management Agreement Other AAR Forms

A Lease Grants • Temporary and valuable interest in real property

The AAR Lease

What is the risk with filling it out wrong

AAR’s Tenant Advisory • Warning…. . Important Stuff Ahead

Investigate Important Facts

Neighborhood Safe?

Shifting of Duty to Investigate. Stigmatized Property Rule • Crimes committed on the property • Death on site • Drug House

Registered Sex Offender Map

What are you agreeing to be responsible for? • Utilities

Where to get copy of ARLTA • ARS § 33 -1322(B)

If Otherwise Important to You School District Role of a Property Manager Vehicle Restrictions Use Restrictions

IDENTIFICATION OF PARTIES Who is the “Landlord”? Definition of the Landlord What you list here is Critical!! (Who will be sued and for what)

Who is the Tenant? • ARS 33 -1310(16) Right to occupy to exclusion of Others

Identification of Parties • What if you failed to notify the Tenant in the Lease of who the owner is? • What if you fail to list all the occupants? • What about naming a corporation, LLC?

Why include 18+ as leaseholder? VS

The Premises and what is included • Physical Address vs Legal Description Is there a different mailing address? ? ?

What is included in the lease? Maintained or “As is”?

ARS 33 -1324 • What appliances do you have to include? • What do you have to maintain/replace/repair? (ARS § 9 -1303)

Owner’s Stuff Left Behind?

OCCUPANCY • 1. List everyone by name, including minors • 2. What about non-custodial children?

What about? • Grandmother that comes every winter? • Nanny/Housekeeper? • Care-giver?

Assignment/Sublet

Lead-Based Paint

Move-In/Move-Out Checklist

Other Addenda • • Pet Crime Free Pest Mold Parking Satellite Rent Concession

TERM • Time of Day? Why? • Fixed Term vs Term with Month to Month Fall Back Provision. • Consequences of Holding Over.

EARNEST MONEY • 1. Specific details on how much, form of tender, and where held. • 2. Consequences of dishonored funds • 3. Details that this money becomes security deposit upon acceptance by all parties.

When does it become Non. Refundable?

RENT • Does the Amount include everything (taxes, HOA dues, etc)?

• Why include a provision regarding tax increase?

Late Fees • When is rent due? What about holidays? • Business Day Doctrine • BECOMES “RENT”

Acceptance of Partial Payments • Not required by law • But you might create a precedence or create a waiver

Rent Pro-ration • Check your math!! • 30 day Accountant’s Rule

What’s in the Box? • Max Deposits • Application of Deposits • Can’t use for last month’s rent

DEPOSITS VS FEES • Definition of Security: ARS 33 -1310 (14) NOTE: Does not include a reasonable redecorating or cleaning fee Can the tenant offer to pay more?

2014 -New Language

PETS • Fair Housing Issues • List name, age and breed. Take a picture • Pet Addendum?

Other Important Items • Specifies Certified Funds • Where deposits held, how applied • When Broker can release to anyone other than the tenant=10 days

Scenarios • Break into groups…. Each group pick one scenario and a leader to explain answer

Scenario #1 • Commercial Space vs. Residential Space WHO IS THE “TENANT”? ? ?

Scenario #2 • The Shed

Scenario #3 • Earnest $2000. How applied at move-in? What amount is still owed at move-in?

Scenario #4 • Tenant skips but leaves clean

Scenario #5 • $5000 deposit, $8000 in repairs

Scenario #6 • Acceptance of late rent without Late Fees

BACKGROUND REPORTS • BACKROUND REPORT: Who do you use? Do you investigate or hire a professional? What do you do with the info (Beware of Red Flags Rule) • Fee for Each Adult, Consent to Gather and Report, Consequences for False Info.

• Application fee is non-refundable • Right to gather and report later • Warning: falsification of information

HOT NEW ISSUE April 2016 HUD Guidance re:

KEYS • Be specific. How many keys and to what? How many remotes? • Mailbox Keys: Required or Optional? Who issues those keys? • Change of Locks?

UTILITIES, HOA FEES, MAINTENANCE CONSIDER WHO IS RESPONSIBLE FOR SPECIFIC ISSUES

Pool Issues: Repair vs Maintain

Pest Issues • Regular Pests vs • Abnormal Pests

Yard Maintenance?

UPKEEP • Duty to Inspect and Investigate

Duty to Maintain

Act Reasonably

Responsible for Pets

Responsible for Guests

Duty to Report

Crime Free • But what about using an Addendum? • Include police reports as evidence • Ability to rerun criminal at any point

• Crime Free -Suggest use an actual addendum that specifically precludes Marijuana issue.

Rules, Laws, Safety Devices • Copy of Rules • Duty to make sure it meets their needs

Duty to Notify Landlord • HOA fine notices • City violation notices

• Swimming Pool Barriers: HOT ISSUE • Lead-Based Paint • Safety Devices

Alterations, Liability and Insurance • Alterations: Must have written permission • Liability: • Insurance: Not an insurer of tenant’s stuff

Scenarios • Take 5 minutes

Scenario #1 I will mow the lawn if you pay for the water

Scenario #2 • Broken faucet but discovered…….

Scenario #3 Suspicious traffic = drug arrest

Scenario #4

ACCESS • Change of Access Law • Request in Writing

Obligations when moving out • Leave clean, undamaged • Normal wear and tear excepted

Trustee Sale • Keep mortgage current • Failure to cure breach • Notification at time execute lease and if goes into default

Death of Tenant-Supplement Permission to Retrieve Possessions Following Death, Disability or Incarceration-ARS 331314(F)

Breach • Can Sue • Attorney Fees and Costs……NOTE: No jury trial waiver in AAR lease

SCRA

• Electronic Signatures, duplicate originals • No Oral Modifications

Other Interesting Stuff • • • A. Entire Agreement B. Time is of Essence C. Construction D. Modification by Court E. How to Count Days F. Notices (What about electronic delivery, and proof? )

Suggested Additional Terms • • • Jury Trial Waiver E-mail Communication Professionally Cleaned Automatic Rent Increase Additional Addenda

Scenarios • Scenario #1: For Rent and For Sale

Scenario #2 • SCRA and Base Housing

Scenario #3 • Rent Reduction Clause

Scenario #4 • YOU are the tenant…. What to disclose

Scenario #5 • Certified 5 Day……. . Game of Hot Potato? ?

Last but not Least… Who and How • Who is the correct party? • What is their role? • How to reach them?

Tenant Acknowledgement

Indemnity and Release

Terms of Acceptance

Broker on Behalf of Tenant

Agency relationship

• Is Agency disclosure required under Arizona Statute? ? ? • Why is it important to disclose here?

Signatures • All Adults • Spouse

Landlord’s Acceptance Landlord’s Broker Property Manager

• Counter offers • Rejected offers

Small Group Discussion

Lease Scavenger Hunt

The Arizona Residential Landlord Tenant Act

Domestic Violence

Who is Covered by ARLTA Who is NOT Covered

Non-Compliance by Landlord • Notice • 10 days to cure unless Health and Safety

Failure to Deliver Possession

Self Help Law Essential Services Tenant’s Non-Compliance

Failure to Pay Rent

Failure to Maintain

Abandonment

Termination of Tenancy by Either Party ARS 33 -1375 1. End of Lease 2. Month to Month 3. Week to Week

Health and Safety Breach Casualty Damage

Residential Lease Owner’s Property Disclosure Statement Why is this form important? Standard of Care Owner vs Tenant Ownership and Property Information

What is covered? • • Structural Heating/cooling Plumbing Pool/Spa Electrical Utilities Environmental

Additional Important Stuff • Is there something unique about this property?

Bonus Discussion: Owner’s Advisory Form

What They Need to Know • Registration as Landlord • Pay TPT taxes • How to hire a property manager and what to look for

Other Types of Agreements • Lease Purchase • Lease Option Unique Dangers of both

PROPERTY MANAGEMENT AGREEMENT • What does AAR’s PMA have that yours doesn’t? BOTTOM LINE: What is required to be in it • Duties of Owner and Agent • Compensation • Auto-Renewal-30 day ntc

Who hires the vendor?

Licensed or Unlicensed?

What about commissions?

Be specific about what you get paid

Other Suggestions? • Jury trial waiver • Special arrangements with vendors • Additional Compensation-late fees, admin fees, inspection fees, witness fees

Involuntary Termination of PMA