SOM - State Of Michigan

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&UHDWLQJ DQG 7HUPLQDWLQJ 7HQDQFLHVDQG 8QGHUVWDQGLQJ WKH /HDVHRead the lease. Read the lease. Read thelease. When most people hear the term “lease”they think of the long sheets of paper writtenin very small type that they sign when theyagree to move in and rent an apartment orhouse. A lease contains a variety of legalterms. It is important to recognize and knowthe following terms of a lease and tounderstand the substance of the agreement. Landlord: The party agreeing to transferpossession and use of the rental property,usually the owner (but may also include anagent or employee of the owner, or amanagement company). Tenant: The party taking possessionand use of the rental property from thelandlord under a lease. A tenant’s right topossession and use is called a tenancy orleasehold. Lease (or Rental Agreement): Thecontract between the tenant and landlord,transferring possession and use of the rentalproperty. (See Sample Residential LeaseAgreement, page 32.) A lease can be written ororal, but a written lease provides the bestprotection for both the landlord and thetenant. Joint and Several Liability. If more thanone person signs the lease as a tenant, thelease may state that their obligations are “jointand several.” This means that each person isresponsible not only for his or her individualobligations, but also for the obligations of allother tenants. This includes paying rent andperforming all other terms of the lease. Escrow Account: A bank account orother account held by a third party, generallyestablished in the name of the tenant, intowhich whole or partial rent payments aredeposited to show that the tenant was ready,willing, and able to pay the rent—but iswithholding the rent until a certain problemis fixed that the landlord is legally responsiblefor fixing. Once the problem is fixed, theescrowed rent amount will be released to thelandlord. Plaintiff: A person who files a civil actionto seek judicial relief for some injury ordamage caused in violation of his or her rights. Defendant: A person against whom reliefor recovery is sought in a civil action. 7 ( 7(1 1& 4 :KDW DUH WKH W\SHV RI WHQDQFLHV"While the lease refers to the written (ororal) agreement, the “tenancy” refers to theactual property right a tenant receives underthe lease. When the owner conveys to anothera lesser interest in the property for a term lessthan that of the owner’s for valuableconsideration (generally rent), thereby grantinganother use and enjoyment of his or herproperty during the period stipulated, thatcreates a tenancy. In Michigan, there are threetypes of tenancies:1. Fixed-Term Tenancy. This type of tenancyis created when the lease agreement specifieswhen the tenancy begins and when it ends.It terminates automatically at the end of theperiod specified. Generally, a written leaseprovides that if a tenant holds over after thefixed term expires, the tenancy shall beconsidered a month-to-month tenancy. On theother hand, if the lease does not so provide,and the parties acquiesce—i.e., tenant stays inpossession and landlord accepts the rent—thelease is considered renewed for the same fixedterm upon the same conditions.2. Periodic Tenancy OR Tenancy at Will.This type of tenancy is indefinite in duration. Itis created by actual or implied consent.Usually a month-to-month tenancy, the lease isconsidered renewed at the end of each rentalperiod (month-to-month or week-to-week,depending on how often rent must be paid).Termination procedure is governed by statuteand requires notice.3. Tenancy at sufferance OR holdovertenancy. This type of tenancy is created byoperation of law only. A tenant holdspossession after his or her legal right to 3UDFWLFDO *XLGH IRU 7HQDQWV DQG /DQGORUGV

possession has ended (oftentimes based onlandlord’s failure to act). The person is justshort of being considered a trespasser. Theelements: (a) the tenant entered possessionlawfully, (b) the tenant’s legal right topossession has ended, and (c) the tenantremains without the landlord’s consent.4 UH WKHUH DGYDQWDJHV DQGGLVDGYDQWDJHV WR WKH GLIIHUHQW W\SHVRI WHQDQFLHV"Fixed-Term TenancyAdvantages. The advantage to the tenant isthat the rental period is fixed and the rentalamount is stable; the landlord may not regainpossession or raise the rent, with fewexceptions. The advantage to the landlord isthat the tenant is committed to pay rent for aspecified period of time; the tenant is boundby the lease terms, with few exceptions.Disadvantages. The disadvantage to thetenant is that he or she is bound by the leaseterm and may not simply move withoutremaining liable for the rent, permitting fewerchanges in arrangements. The disadvantage tothe landlord is that he or she is stuck with thetenant until the lease term ends.Periodic Tenancy OR Tenancy at WillAdvantages. The advantage to the tenant isthat he or she is free from any furtherobligation once proper notice of termination isgiven to the landlord—different housingarrangements can be made more quickly. Thesame advantage is true for the landlord; he orshe may decide to no longer rent to the tenantif the same proper notice is given.Disadvantages. The disadvantage to thetenant is that the landlord, with proper notice,can also raise rent. The disadvantage to thelandlord is that he or she is not provided withany certainty as to how long the tenant willremain.% 7 ( /( 6(4 UH WKHUH DGYDQWDJHV WR D ZULWWHQOHDVH"Although it is common for tenants to signsome type of written agreement, a lease is notalways put in writing. Sometimes it is nothingmore than an oral agreement as to the move-inand move-out dates, the address of the rental 3UDFWLFDO *XLGH IRU 7HQDQWV DQG /DQGORUGVproperty itself, and the amount of the rent andwhen it must be paid. However, if the leaseagreement is for a period of more than oneyear, an oral lease is not an option—it must beput in writing to comply with the Statute ofFrauds (MCL 566.106).Whether there is a fixed-term tenancy or aperiodic tenancy, it is best to have a writtenrecord of the rental agreement. A writtenrecord is a permanent record that may be usedfor reference if misunderstandings arise—andthey do. In the absence of a written lease,signed by both the landlord and the tenant, itis advisable to keep a personal written recordof the agreement.4 :KDW SURYLVLRQV VKRXOG EH LQFOXGHG LQWKH OHDVH"The Michigan Truth in Renting Act (Act 454of 1978, MCL 554.631 to 554.641) regulatesresidential leases—requiring the landlord todisclose certain information. Leases differsomewhat in terms, but a written leaseagreement should include:1. Name and signature of the landlord;2. Name and signature of the tenant;3. Rent amount to be paid, how frequently,and when and where it is to be paid;4. Address of the rental property;5. Starting and ending dates if it is a fixedterm tenancy;6. Landlord’s mailing address;7. Amount of the security deposit, if any;8. Name and address of the financialinstitution holding the security deposit;9. Notice of the tenant’s obligation to providea forwarding address to the landlord within4 days of terminating the tenancy;10. Who is responsible for paying utilities;11. Repair and

Tenant: The party taking possession and use of the rental property from the landlord under a lease. A tenant’s right to possession and use is called a tenancy or leasehold. Lease (or Rental Agreement):The contract between the tenant and landlord, transferring possession and use of the rental property. (See Sample Residential Lease Agreement .

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