NAA Lease Overview for North Carolina PRESENTATION FOR THE APARTMENT - - PowerPoint PPT Presentation

NAA Lease Overview for North Carolina

PRESENTATION FOR THE APARTMENT ASSOCIATION OF NORTH CAROLINA BY BROWNLEE WHITLOW & PRAET, PLLC

The information provided in this presentation does not, and is not intended to, constitute legal advice; instead, all information in this report is for general informational purposes only. Information in this presentation may not constitute the most up-to-date legal or other information. Viewers of this material should contact their attorney to obtain advice with respect to any particular legal matter. No viewer

• f this material should act or refrain from acting on the basis of information in this presentation without first

seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this presentation does not create an attorney-client relationship between the reader and Brownlee Whitlow & Praet, PLLC or any contributing law firms. All liability with respect to actions taken or not taken based on the contents of this presentation are hereby expressly disclaimed.

DISCLAIMER

Objectives

• Explain what many of the Addenda are

used to address and highlight the more relevant provisions.

• To provide an in depth analysis of each of

the Addenda to the NAA Lease.

• Review of the interplay between the Lease

and the Addenda and how they work together.

Pre-Lease Forms

Rental Application-Part I

• Rental Application for Residents and Occupants (for criminal screening purposes)

–Basic Application which is very similar to the AANC Application –Application Agreement portion

• Requires the applicant to sign the Lease within 3 days after giving approval in person
• r by telephone and within 5 days of mailing approval.
• If the application is denied it provides for a refund of all application deposits.

Rental Application Continued…

• Supplemental application for Non-U.S. Citizens

–Asks for additional information to confirm status. –Warning: Certain jurisdictions object to questions that are not asked to all applicants

• The objectionable question was whether the applicant had ever been asked or
• rdered by a representative of any government to leave the U.S. or any other country.

(The allegation was National Origin discrimination.)

Rental Application-Part II

• Guarantor Pre-Leasing Application

–Seeks information qualifying the guarantor

• Supplemental Application For Units Under Government Regulated Affordable

Housing Programs –Asks for household composition and income information to confirm qualifications

Lease Addenda signed with Lease

Crime/Drug Free Housing Addendum

Extends the Definition of Premises (as used in the Lease) to include the dwelling unit, all common areas, all other dwelling units on the property, or any common areas or other dwelling units on or about other property owned by or managed by the Owner.

The purpose being to prohibit criminal activity in all of those areas. Makes it clear that a criminal conviction is not required in order to show a default

• f the Addendum and/or Lease.

Lease Addendum for Intrusion Alarm

Only used where the apartment is equipped with an intrusion alarm. Resident is still responsible for their own safety as the intrusion alarm is not a guaranty

• f their safety.

Indicates whether permit is required for operation. Requires the access code to be provided to management. No warranties are being provided and disclaims liability for any damage or loss.

Mixed Use Addendum

–If the premises is located in a mixed-use community which includes retail, restaurants and bars you want to be sure to use this Addendum. –It puts the resident on notice that they are choosing to live in such a community where there may be noises, vibrations, sounds and smells up to 24 hours a day. –Resident acknowledges they have conducted their own due diligence and are assuming the risk of living there. No habitability or quiet enjoyment related claims.

Construction Addendum

This Addendum should only be used where the property is under construction or there are planned renovations. Resident acknowledges that they have been informed of the construction project and the likely disruptions it may create including closure of amenities. Resident releases the landlord from any claims related to noise or closure of amenities related to the construction. Further explains rights if there is a delay in possession.

Either the start date of the lease will be modified to the first day that you provide premises to resident Tenant’s right to terminate as set forth in the Lease (Delay of Occupancy).

Utility and Services Addendum

Supplements Paragraph 7 of the NAA Lease. This Addendum goes into further detail regarding the utility set up for the community laying out those services that the resident is responsible for directly and those that will be sub-metered and/or that the landlord is providing. Paragraph 1 of the Addendum has an itemized list of services being provided and includes areas under each heading to set out whether billed directly or by you. Also has designation for some services that will be charged as a flat fee and an area to put in the fee to be charged.

Utility and Services Addendum cont…

• Further explains obligations of resident to pay such utilities as they are invoiced/billed and

when they are considered late. –While there is reference to failure to pay being a breach of the Lease you should always keep in mind that you cannot evict under NC law for non-payment of sub-metered utility services.

• Explains that failure to keep the account in the resident’s name is a default of the Lease.
• Limits liability of landlord for any disruption in service.

Mold Information and Prevention Addendum

This Addendum educates the resident about mold while also obligating them to take certain actions. Requires resident to: keep the premises clean, wipe down or remove any visible signs

• f moisture/mold,

use exhaust fans appropriately, maintain proper air circulation (through use of HVAC).

Mold Information and Prevention cont…

Requires resident to: Provides cleaning supply recommendations for small areas of mildew or mold growth. Failure to comply is a default of the Lease.

Provide notice of any water intrusion issue or malfunction in the HVAC system. Change out air filters in accordance with your guidelines/rules. Keep the thermostat set to automatically circulate air once temperatures rise to or above 80 degrees Fahrenheit.

Lease Addendum for Remote Control, Card or Access Gate

If you have a security gate or parking facility utilizing remote control or card access. Resident will be provided with a device at move in and is responsible for safeguarding it. If lost, a fee that will be charged for replacement. Mandates that the resident follow the written instructions related to use of the gate system and that it is not a guaranty of safety.

Remote Control, Card or Access Gate cont…

Disclaims any security component of the Access Gate system making it clear that it is not a guaranty of safety. Explains that the landlord may remove it in their discretion without notice. Sets out specific rules governing use of the vehicle gates.

Lease Contract Addendum for Enclosed Garage, Carport or Storage Unit

• If the property offers a garage, carport or

storage unit and the resident secures one as part of their lease this would be used.

• It sets out the deposit and monthly rent for

the space or storage unit.

• Makes it clear that any garage or storage unit

can only be used for storage of personal property and that no dangerous items are allowed to be stored therein.

Enclosed Garage, Carport or Storage Unit cont…

• An important addition was made a year or so ago setting forth that any outlets in a

garage are not to be used for charging electric vehicles. (Those outlets are frequently on the property’s common area account.)

• Specifies that they should maintain insurance on their property and be sure to keep

the garage locked.

• Prohibits modifications or additional locks being installed.
• Also makes it clear that any judgment for possession terminating the resident’s right

to possession of the premises extends to the space or garage.

Resident Parking Addendum

Only used if you have restricted parking in the community. Supplements Paragraph 22

• f the Lease. (Parking)

It includes a term for the parking addendum which should coincide with the lease term. Includes rules governing parking lot use, allows for specification of an assigned space if needed, and warns of towing at resident’s expense for any violations. It then identifies the cars being used by the resident and any occupants and allows you to remove the vehicle should the resident fail to do so following a lease termination.

Lease Addendum Liability Insurance Required

–If liability insurance is required to be carried by the resident this form should be signed with the lease package. –Makes it clear that the property policy is not covering the liability of the resident and that they must secure their own coverage. –Requires the resident to maintain said policy for the duration of the lease term and any renewals. –Failure to do so will be a default of the lease. –If you wanted to provide for Forced Place Insurance the Special Provisions paragraph of this Addendum would be a good place to put it.

Community Policies, Rules and Regulations Addendum

This Addendum sets forth the rules and regulations for the community governing the common area and amenities in further detail than the lease. Includes the right of landlord to close any amenity without further notice of any kind. Provides a hold harmless and assumption of risk notice to the resident covering the resident,

• ccupants, guests, invitees, etc. from personal

injury in their use of the amenities.

Community Rules cont…

• It has rules for the pool, fitness center,

package release, business center, and parking.

• Also provides rules for the premises regarding

fire hazards, exterminating services, drapes and shades, water beds, balcony and patio use, signs and satellite dishes.

• Makes it clear that a violation of this

Addendum is a material default of the Lease.

Short Term Lease Addendum

Used where the resident needs a short term lease. Allows for a shorter notice to vacate modifying paragraph 3 of the Lease. Important to note that if you are using this form in NC and the term is less than 90 days you are required to pay the hospitality tax as it is considered transient in nature. Consult with counsel as needed.

Addendum Prohibiting Short Term Rental or Subletting

–Restricts short term rentals or subletting by residents. –It is designed to restrict rental and more importantly advertising or solicitation for renting through businesses like Airbnb or VRBO. –It includes the prohibition on solicitation because it is much easier to prove. –Sets forth that a violation of this Addendum is a material breach of the Lease.

Lease Addendum for Satellite Dish or Antenna

This Addendum can be signed with the lease package or when the resident requests a satellite dish. Allows the resident to install a dish and sets forth how many may be installed, the location wherein it must be installed and the manor by which it is installed. Requires the resident to obtain a specific liability insurance policy to cover claims related to the dish along with a security deposit. Resident may not begin installation until the insurance has been provided, deposit delivered and written permission given by landlord.

Animal Addendum

Similar to the Satellite Dish addendum this one can be signed with the lease package or when the resident requests to have an animal. It does actually provide the opportunity to use it with the lease package to set forth the absence of an animal. It provides for the animal deposit, animal rent and non-refundable animal fee. Provides description of the animal and lays out the rules related to having an animal in the community. A violation of the rules could result in the demand to remove the animal or termination of the lease.

Support or Service Animal Amendment to Animal Addendum

This Amendment would be used if someone requested a service or support animal and was able to verify a disability and disability related need for the animal. Makes it clear that the resident is not required to pay any fees related to the animal but they remain responsible for any damages it may cause along with its care and maintenance. It also makes it clear that they are subject to the rules set forth on the Animal Addendum and a violation could result in removal of the animal or termination of the Lease.

Inventory and Condition Form

Simply a move-in checklist that is given to the resident at move-in and instructed to take an inventory of the condition of the premises and return it within 7 days (Paragraph 26 of Lease). If no damages or issues cited on the list or if it is not returned any damages to the premises noticed at move-out will be attributed to the resident.

Bed Bug Addendum

It has the resident acknowledge that they have inspected the premises and their personal property prior to move in and did not observe any bed bug infestation. They further certify that their current apartment did not have any infestation. Requires resident to allow access for treatment and inspection, that the resident promptly report any evidence of an infestation, and cooperate with treatment. It also contains educational information for the resident’s benefit in identifying and preventing bed bugs.

Lease Addendum for Rent Concession or other Rent Discount

–Used if the resident is provided a concession or rental discount. –Specifies whether the concession is a one-time discount or if it is spread over the lease term through monthly discounts. –Provides some opportunity for creativity where you are offering a non-monetary concession of some sort. –Finally, it informs the resident that if there is a default the landlord reserves the right to revoke the concession going forward.

• This is not a charge back of the concessions already received.

Photo, Video, and Statement Release Addendum

• Resident is authorizing use of their likeness in video and

images in social media, digital advertising, and any other form

• f media (similar to AANC form.)
• Residents and Occupants 18 or over should sign.
• If occupant is not 18, occupants guardian should sign.
• Gives resident right to revoke their consent by written

notice to you.

No Smoking Addendum

Used when the property or a building is designated as non-smoking. It defines what smoking is in the broadest way possible and makes it clear that smoking is prohibited anywhere inside buildings in the community. It designates smoking areas to the extent there are any. Makes resident responsible for any damages associated with smoking including lost rental income.

Smoke Free Community

• Makes it clear that a violation of this

Addendum is a material default of the Lease.

• Informs resident that the enforcement
• f this policy is a joint responsibility.
• Disclaims any guaranty/warranty of a

smoke free environment.

Package Acceptance Addendum

–Only used when the property offers and the resident elects to utilize the package acceptance service. –It sets forth that the owner is agreeing to accept packages for resident during normal business hours but reserves the right to reject any package in their discretion. –Requires the resident to show a photo ID to release a package. –It informs the resident how long you will keep their package before returning it. –Makes it clear that you are not a safeguard of their property and they assume the risk of using the service.

Addendum Regarding Medical Marijuana Use

–The purpose is to acknowledge that while there are some limited instances in which medical marijuana use may be allowed under NC law, federal laws still treat it as a crime. –It informs the resident that if a disability requires it, the resident must make a reasonable accommodation request but the property may not be required to grant it. –Otherwise the community remains a drug free community adhering to federal law.

Surety Bond Addendum

This Addendum is only signed if the resident elects to purchase a surety bond in lieu of paying a security deposit. It makes it clear that the cost of the bond is non-refundable and that it is designed to cover any damages to the premises.

Washer and Dryer Addendum

Used when the resident elects to rent a washer and/or dryer. It identifies the washer and dryer being rented by the resident and the amount of the rental fee to be paid each month. Makes it clear the resident is responsible for any damage to the washer and dryer or any one else’s property as a result of their use of the washer and dryer. Requires the resident to provide access to the equipment for maintenance, repairs, or emergencies. Resident agrees to use for intended household purposes only.

Asbestos Addendum

–Is to be used when you know or believe that the property was constructed using asbestos materials which are still in place. (Generally where built prior to 1981). –It discloses the possible presence of asbestos and assures the resident that there is no risk or health concern unless the material is disturbed or dislodged sending fibers into the air. –It restricts resident or occupant from disturbing or attaching anything to the walls, ceilings, floor tiles, etc.

Lead Based Paint Addendum

–Used for those properties built before 1978 wherein there is any concern that lead- based paint was used in construction. –Notifies the resident that the property was built before 1978 and that there may be lead-based paint on the property. –Provides education information on lead-based paint concerns and exposure. –There is a disclosure acknowledgment form along with a renovation form to the extent there are any renovations as they must be done in accordance with federal guidelines.

Lease Contract Guaranty

–Only used where a Guarantor is required and should be signed by the Guarantor at or before the lease signing. –If it is being signed outside of your presence it is recommended to have the form notarized. –Guarantor is agreeing to guaranty the resident’s performance under the Lease and it requires them to be primarily responsible (not secondary). –The Guaranty is irrevocable for the duration of the lease term or any renewals thereof.

Lease Contract Addendum for Units in Government Regulated Affordable Housing Programs

–It is used when the property or particular units are participating in such programs. –It simply sets forth some of the additional regulations for compliance by the resident and property and acts to override provisions in the Lease that may not comply with program requirements. (Such as notice requirements.) –Requires resident to cooperate as part of the recertification process, makes inaccurate information or the failure to update a breach of the lease.

Low Income Housing Tax Credit Addendum

Is to be used when the property participates in the Low Income Housing Tax Credit (LIHTC) program. It makes it clear that to the extent there is any conflict with the lease terms the Addendum controls. It limits all non-renewals to those for good cause. It also places additional obligations on you for accommodation and modification requests and responses thereto. Provides for periodic inspections.

Additional Special Provisions

• Quite simply this is a blank form allowing you as much creativity as you wish to utilize.
• Highly recommended that you engage with local counsel before getting too creative with

this Addendum. –Also space at the end of the main Lease for additional provisions.

Raleigh Addendum

• This Addendum was originally created to address the City of Raleigh’s Probationary

Rental Occupancy Permit program. –If a resident caused a ordinance violation or committed criminal activity at the premises causing the City to issue a strike it is a default of the Lease. –The PROP program is not currently active but there is nothing wrong with continuing the use of this Addendum.

Reasonable Modifications and Accommodations Policy

• This simply sets forth the state of the law as it

relates to accommodation and modification requests and what must be done to make such a request.

• Defines relative terms like Disability,

Reasonable Modifications and Reasonable Accommodations

Lease Forms to be Completed after Initial signing

NAA Lease Forms To Be Completed After Lease Signing.

• These forms assist with:

–Modification of the terms of the lease, such as changing co-tenants, or terminating early. –Disability related accommodations and modification requests. –Additional services, such as clubhouse rental.

Tenant Requested Lease Changes

• Lease Contract Amendment to Add or Change a Roommate During a Lease Term

–Needs to be signed by all parties to lease. –Provides for how the security deposit will be handled. –If new guarantors, then new Guarantees need to be signed too.

• Resident’s Notice of Intent to Move Out

–Only signed by resident until processed by office. –Acceptance of the form does not equal acceptance of an early move out We recommend providing in the “Special Provisions” section: Acknowledgment of receipt of this Notice shall amend the Lease to terminate your right to possession on the Move Out date provided above.

Lease Contract Buy-Out Agreement

• This form is probably one of the more misunderstood components of the NAA Lease

package.

• You should not sign this Agreement as part of the Lease package.
• It is a conditional Agreement (meaning all conditions must be met)
• It is designed to be executed when the resident requests to terminate their lease

early. –When that happens they are given the option of entering into this agreement; or –Remaining rent responsible until a new resident is found or end of lease.

Reasonable Accommodations and Modifications Request Forms-Pt 1

Request for Reasonable Accommodation/Modification Simple request form for convenience of resident. Cannot require the resident to complete it.

Request for Reasonable Accommodations And/Or Modification of Rental Unit More detailed request form. Cannot be required.

Reasonable Accommodations and Modifications Request Forms-Pt 2

• Reasonable Accommodation/Modification Verification Form

–To be completed by health care provider as authorized by resident. –Cannot be required.

• Approval or Denial of Reasonable Accommodation and/or Modification Request

–Detailed explanation form of decision whether to accommodated/modify and the extent such request is granted.

Clubhouse/Licensed Space Agreement

• This document should not be signed with the Lease

package as it is only used when a resident wishes to rent common area space which you make available for rental.

• Identifies the space to be rented, defines the

usage period and fees to be paid.

• Sets forth rules and regulations related to the

space including whether event insurance is required.

• Makes it clear that this is a license agreement and

that failure to follow the rules constitutes a default

• f the lease.

T A H

QUESTIONS? EMAIL: TWHITLOW@BWPF-LAW.COM

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