Do you want to be a successful real estate investor/landlord? Success comes with understanding the lingo that successful landlords use. Below are definitions of terms that you need to understand in order to make it as a landlord. Just reading these terms once will definitely help you in the future. Remember, the more you learn, the more you EARN. Enjoy!
A landlord may consider rental property as abandoned by the tenant once rent has not been paid for a set time along with visual evidence of the tenant’s disappearance such as the accumulation of unopened mail, unkempt premises, or statements from neighbors. Usually, the landlord must make a good faith effort to locate the tenant for a reasonable time, usually 30 days, before reclaiming the property and disposing of or selling any of the tenant’s unclaimed possessions.
Assignment of Rent
A clause found in trust deeds whereby rent is included as addtional security to the real property described in a trust deed. The clause transfers to the lender the right to collect rental income from the income-producing property if there is a default on the note or other secured obligation that is held by the beneficiary or lender.
Complaint in Unlawful Detainer
A formal lawsuit used by a landlord after having given appropriate written notice to a tenant to vacate leased property within a set time based on the tenant’s breach of a material provision of the lease or by nonpayment of rent. It is typically a summary proceeding where the tenant has a shortened period to file a written answer or response to the lawsuit and to appear in court for an eviction hearing within a short period after service of the action or the filing of a response by the tenant.
Contract for Deed
Also referred to as a land contract or installment land contract, it is a contract for the sale of real property whereby the seller finances the transaction instead of a third party lender. The seller retains legal title to the property until the contract is satisfied and can more easily cancel the contract and repossess the property should the buyer fail to make the required payments or not fulfill other obligations without the need for foreclosure action or judicial action.
Covenant of Quiet Enjoyment
An implied covenant in every residential lease agreement that a tenant has the right to undisturbed use of the rental property including excluding others from the premises, to peace and quiet, and to a safe and clean unit along with essential services such as hot water, heat, plumbing and electricity. A breach of this convenant by a landlord may entitle the tenant to withhold rent until the conditon is remedied or to vacate the property and terminate the lease.
A court issued judgment in favor of the landlord in cases where a tenant fails to respond to a summons and complaint for unlawful detainer or other eviction action, or where the tenant fails to appear at an eviction hearing, and which allows the landlord to request an order that the tenant vacate the premises. A tenant also may receive a default judgment if the landlord fails to appear at the hearing.
A legal pleading used by tenants in some eviction cases wherein a party may agree with the underlying facts of a lawsuit but objects to certain allegations or counts in a complaint by arguing that it lacks legal sufficiency, validity or does not contain enough facts to support the opposing party’s cause of action. If sustained by the court, most courts will allow the opposing party to attempt to amend its complaint to cure the deficiency.
An unlawful eviction based upon a person’s protected status, which includes race, color, creed, religion, national origin, sex, sexual preference, pregnancy, marital status, children or disability.
A legal or judicial process by which a landlord or landowner forces a tenant to vacate the leased property and terminate the rental agreement for failure to pay rent, to follow certain terms of the lease or who has stayed beyond the expiration of the lease term.
A written statement that must be properly served or delivered to a tenant that contains certain language required by that jurisdiction, typically including the landlord’s declaration that the tenant has breached a specific material provision of the lease, has failed to pay a specified amount of rent on time, or committed some other substantial breach of the landlord/tenant relationship, and that the tenant must either vacate by a certain date or remedy the breach before a set date or the lease agreement will terminate. It must also state that legal proceedings will commence to expel the tenant from the leased property.
Fair Housing Act
The Fair Housing Act is part of Title VIII of the Civil Rights Act of 1968 and was designed to eliminate bias and discrimination in renting and in home sales on the basis of a person’s personal characteristics including race, religion, creed, national origin, gender, family status or disability. Suspected violations are reported to fair housing councils in a local area, a state’s department of fair employment and housing or to a private attorney for civil remedies.
Entry by a landlord upon leased property without the consent of the occupier or tenant. It also refers to a tenant who remains on the property after termination of the lease or after receiving written demand of possession by the landlord.
A concept whereby a landlord may claim that a tenant has forfeited his or her rights under a rental agreement because of nonpayment of rent, violation of a material provison in the lease, or by committing criminal acts on the premises. It is also a concept in land contract cases where the seller declares the buyer to have forfeited the contract if the obligations of the contract are not fulfilled or has engaged in conduct that violates the contract.
A holdover is a tenant who has remained on leased property after expiration of the rental term, who has used the premises for illegal activity or who has violated a provision of the lease other than nonpayment of rent. Some states use holdover petitions to evict a tenant.
A person or entity that leases or rents property to another person or organization and is referred to as a lessor. A landlord has certain obligations to the tenant either through a written rental agreement or which are implied or specified by state law.
A written or implied contract with a certain duration that allows a lessee to use or occupy property subject to its terms.
A contract wherein the buyer pays the seller of real property money to secure an option to purchase the property at a later time, usually at an agreed future price, and to lease the property for a set rental amount over a predetermined time. The buyer is not obligated to buy the property during the option period and no other person may buy it until the option expires.
A form of temporary right to property acquired under a lease or rental agreement for a set time at a certain price or rent. A leasehold is considered personal property.
Low Income Tax Credit Properties
An affordable housing program also known as LIHTC for low income renters that permits investors to take a dollar-for-dollar tax reduction or credits pursuant Section 42 of the tax code and which currently accounts for the majority of affordable rental housing in the US. Most tax credit projects are able to qualify for government subsidies at below market interest rates.
Any conduct or activity by a tenant that usually must be egregious in nature that materially affects the health or safety of other tenants or other people in the community. This could include unhealthy habits leading to infestations of vermin or insects, foul odors, chronic excessive noise or other conduct that interferes with another person’s right to quiet enjoyment of their property.
An unlawful eviction based on a tenant’s complaining to the landlord or to a governmental agency, or for participating in or joining a tenant’s union.
Section 8 Housing
A federal housing program that provides rental subsidies to qualified, low-income renters and homeowners who must demonstrate that their income is below 50 percent of the applicant’s area median income. A Section 8 housing voucher may be used in any housing authority in the US, regardless of where the recipient received it.
Unlawful activities or conduct by a landlord or the landlord’s representatives that are designed to forcibly evict or cause a tenant to vacate the leased property without using the judicial process. This includes shutting off the utilities, denying the tenant access to the property, threatening the tenant or creating conditons that make the property unfit to live in.
A rental agreement between the tenant or lessee and a third party that allows that party, called the sublessee, to use the lessee’s rental unit or property for a set time and who is obligated to the lessee. A lessee is still responsible for paying rent to the lessor or landlord for the duration of the underlying lease term.
The period of a tenant’s right to possess and use the property of another under a lease and usually upon payment of rent or the performance of services.
A person or entity that leases property from another and who is referred to as a lessee, who by paying rent has rights of possession and limited use of the property for a set time, usually pursuant to a written lease or oral agreement. A tenant has certain obligations to the landlord to abide by the terms of the lease.
An item or piece of equipment used by a tenant in his or her trade or business that may be removed from the leased business property at the expiration of the lease term. Such fixtures may ordinarily be considered part of the real property and not removeable if not for their business or trade status.
Uniform Residential Landlord and Tenant Act
A model code or legislative act that addresses residential landlord and tenant interactions and which has been adopted with many variations by most states. The act was designed to introduce more fairness and uniformity in landlord/tenant laws and to specify the statutory obligations of tenants and landlords.
Warranty of Habitability
An implied obligation by the landlord in every rental agreement to provide and maintain an apartment or unit in a safe and habitable condition. This includes providing running water, electricity, heat and a structurally sound premises. The landlord’s failure to provide these services or essentials may permit a tenant to unilaterally terminate a lease, pay reduced rent, make self-repairs and deduct the costs from the rent or withhold the entire rent until the conditions are remedied.
Writ of Possession
A court order granted after an eviction hearing or default whereby the landlord is granted possession of rental property and which advises the tenant to vacate the leased property by a certain date or be subject to forcible removal by the sheriff. A writ is served on the tenant by the sheriff or authorized law enforcement personnel.