What Does Estate for Years Mean in Real Estate?
Definition: In real estate, one type of leasehold estate is the estate for years, or estate for term.
In this type of lease, 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.
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.
Also Known As: estate for term
Seven Common Clauses From Leases
1. Joint and Several Liability
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. In other words, 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.
There needs to be a clause setting 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's OK just to state that a default occurs when one party violates the terms of the lease, but it's 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.
Some leases forbid subleasing. Landlords often say that it's difficult to impossible to enforce, so they allow it. You can charge a fee or increase rent if subleased. It's good practice in this clause to require a complete application process, including credit and background check for sublease tenants.
4. Late Fees
To encourage on-time rent payments, late fees can be charged. Check state laws, however, to determine if specific grace periods are required or other rules related to late rent penalties. Be clear as to when a late fee kicks in and the amount. If this isn't clear in the lease, backing up charging a late fee in court will be tough.
This is an important clause. At times, sometimes because laws change, 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.
6. Lease Renewal
There are various ways to handle lease renewal in the agreement. 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.
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 isn't received by that date, there is some sort of monetary penalty, as the landlord doesn't have as much time to find a new tenant to reduce the vacancy period. Either way, it is a best practice for the landlord to set up internal alerts so that the tenants can be reminded before any important due dates.
7. Use of the Property
Be careful not to violate laws related to discrimination here. Generally, the one thing to be sure 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.
Those are common 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.