The type of leasehold estate that has a definite beginning and ending date is an Estate for Years. An estate for years is a type of lease, with the tenant leasing real property for a specific amount of time. Since it has a beginning date and an ending date for the lease, the lease usually lasts for many years.
This type of leasehold specifies the amount of rent the tenant must pay the landlord. Once the lease expires, the tenant is expected to move out. Neither the tenant nor the landlord must give notice, as the lease states the date the tenant must vacate the property.
Another interesting factor about an estate is that a tenant can build on the property he leases. The lease can be for such a long period of time that the tenant may be able to make an income from buildings that he erects on the property. This is one thing that makes such a long – term lease attractive.
The lease cannot be terminated before expiration unless both parties agree. The rights and obligations of the owner or landlord and the tenant are spelled out in the lease.
For proper clarification and understanding of this type of leasehold, here are necessary and common clauses that are generally included in an Estate for Years leasehold.
- Joint and Several Liability
This term is used a lot in residential leases, this clause allows the landlord to treat multiple tenants as each being individually and jointly liable to uphold the terms of the lease. Howbeit, the group is responsible, but so is each individual. If there are six roommates sharing the rent and on the lease, the landlord need only serve one or more to meet lease terms for notice.
- Use of the Property
The one thing to do is to limit the number of unit occupants. You can leave the number open until you know how many, so if three people move in with your approval, the lease would then limit the occupants to three. This keeps unwanted boyfriends/girlfriends or family members from moving in.
In a lease contract like an Estate for years, there is always a need for a clause to set out what happens if either party to the lease defaults on the terms. It should also state when a party is considered in default. It is normal just to state that a default occurs when one party violates the terms of the lease, but it is better practice to list the ways in which an automatic default occurs to make it very clear. It would be a “not limited to” clause, meaning any other terms not listed would still trigger default, if violated.
- Late Fees
Note that to encourage on-time rent payments, late fees can be charged. But it is always advisable to check with state laws, however, to determine if specific grace periods are required or other rules related to late rent penalties. Ensure you are clear as to when a late fee kicks in and the amount. If this is not clear in the lease, backing up charging a late fee in court will be tough.
Have it in mind that this is an important clause. At times, sometimes due to changing laws, a portion of a lease can be declared illegal. This clause clearly states that if one portion of a lease is declared illegal, all other portions of the lease will still be legally enforceable.
Although leases forbid subleasing, it is not so uncommon with estate for Years leasehold. Landlords often say that it is difficult to impossible to enforce, so they allow it. You can charge a fee or increase rent if subleased. It is good practice in this clause to require a complete application process, including credit and background check for sublease tenants.
- Lease Renewal
In an Estate for Years leasehold, there are various ways to handle lease renewal. The most common are automatic or non – automatic. If automatic renewal is used, the tenant will be automatically liable for another lease period when the renewal date passes. This puts the onus on the tenant to inform the landlord in advance and terminate the lease.
Note that the more common non – automatic lease renewal will usually require a specific amount of notice if the tenant is not going to renew. If notice is not received by that date, there is some sort of monetary penalty, as the landlord does not have as much time to find a new tenant to reduce the vacancy period. Either way, it is always ideal for the landlord to set up internal alerts so that the tenants can be reminded before any important due dates.
In an Estate for years,” or “estate for term”, there is a defined specific beginning date and an ending date for a specific term. This means that no notice to vacate is required, as the ending date of the lease is when the tenant should vacate the property. However, mentioned above are also common estate for years lease clauses, but you always want to get a lease agreement properly constructed for your state, as laws vary and you want to stay on the right side.
- A Guide to Great Business ideas for the Future 2025 – 2030 - September 3, 2021
- How Long Do Cordless Drill Batteries Last in 2021? - August 2, 2021
- How Does the Use of Cargo Containers Benefit the Economy? - August 2, 2021