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Duties of the Landlord

Landlord responsibilities include an obligation to their tenant’s to keep a “warranty of habitability.” This is accomplished by making sure the rental is livable, safe and clean for your tenant. A landlord is also responsible for financials, taxes, utilities and property maintenance.

The landlord/owner has a reversionary right when there is a lease. (leased fee estate with reversionary rights)

Owner’s interest: Leased Fee

Renter’s interest: Lease Hold

Owner: Lessor

Renter: Leasee / Lessee.


A property manager is a GENERAL AGENT.

Owners pay property managers a fee or a percentage of the property’s rent while under a management agreement.


Management Agreement

The contract between the owner of the property and the real estate broker is called a Management Agreement.

The property manager establishes an agency relationship with the property owner by the brokerage engagement, commonly known as a management agreement.


Property Manager’s Fiduciary Duties to the Owner

Since a property manager is a fiduciary they must act with the highest good-faith and fair dealing with respect to the owner’s asset and disclose all material information that may affect the owner’s decision-making with respect to that asset.

The owner is due:

  • Confidentiality
  • Obedience
  • Loyalty
  • Disclosure
  • Accountability
  • Care

Maximize the Financial Return.

A property manager’s primary function is to maximize the financial return that the owner will receive from the property over its economic life so that the owner can obtain the desired rate of return from that property. To get the highest return from the property, the property manager undertakes or supervises various activities.

The highest NET return for the owner is the primary responsibility of a property manager.

As an agent, the property manager has a fiduciary responsibility to the property owner and must abide by all the requirements of license law, including depositing all funds collected on behalf of the owner or principal into a designated and registered trust account.




A manager usually is responsible for renting the space in a building. However, sometimes an owner takes care of this task directly or hires a real estate agent other than the manager to find tenants and negotiate leases.

  • Advertising for tenants is another rental responsibility. “For rent” signs on the building and print ads inappropriate media, such as newspapers for apartments and specialized publications for office or industrial space, can be useful. Billboard, direct mail and Internet advertising may be used. Radio and T.V. ads usually are less effective but may prove helpful in some markets. 
  • Recommendations by satisfied tenants can be significant advertising for a building.
  • The manager is also responsible for providing necessary services to the tenants as agreed to in the lease, trying to settle any disputes that may arise with tenants, and engaging in eviction activities if necessary.

Managing Tenants




Budget and Maintain Records

Property managers help owners create budgets, advertise rental properties, qualify tenants, collect rent, comply with local landlord-tenant laws, maintain properties, oversee preventative maintenance, cleaning, and construction.


Knowledge of Landlord-Tenant Law



Property managers sometimes analyze a building’s insurance needs or call in insurance experts to do it. Unlike a single-family house, which usually has a single insurance policy covering several things, large complex buildings may require different insurance policies to cover specific items. Proper insurance coverage is part of an overall risk management plan that a property manager needs to consider.

In general, managing risk, or in some way dealing with potential liability issues, can be handled by a system known as 


  • controlling
  • avoiding 
  • retaining
  • transferring risk

Controlling risk means anticipating it and preparing for it.

Avoiding risk means removing the source of danger.

Retaining risk means accepting the liability.

Transferring risk means buying the appropriate type and amount of insurance to cover the payment whenever an insured incident occurs. 


Landlord Insurance

The following are types of insurance that are available to cover different types of risks:

Boiler and machinery insurance: Because of the substantial cost of heating units and air-conditioning systems in large buildings, a particular type of insurance is needed to cover this machinery’s replacement and repair.

Casualty insurance: This type of insurance covers losses caused by theft, vandalism, and burglary.

Co-insurance: This coverage essentially is for situations in which the owner takes on the risk by self-insuring for a portion of the risk. Incorporating a large deductible before the insurance policy starts to pay off is one example.

Errors and omissions insurance: This type of insurance can cover property managers against any errors they make in the performance of their duties. This insurance doesn’t cover losses caused by fraud or other dishonest or malfeasant activities.

Fire and hazard insurance: Depending on what it covers, this type of policy sometimes is called an all-risk, all-peril policy. It covers loss of property caused by fire, storms, and other types of dangerous conditions. This type of policy usually does not cover flooding and earthquake damage.

Liability insurance: This type of insurance covers losses caused by injuries resulting from negligence on the landlord’s part. The classic case is the person who falls on an icy sidewalk that the landlord was supposed to have cleaned.

Rent loss insurance: This insurance sometimes is called business interruption insurance or consequential loss insurance. It pays the building owner for the loss of rent from tenants if the building is destroyed by fire.

 Surety bond: Technically, a surety bond provides payment whenever something is not done within an agreed-upon time. However, surety bonds’ coverage has come to mean making up for losses caused by an employee’s dishonest acts.


Types of Lease Agreements


What is a gross lease?

Gross Lease

A type of commercial lease where the Tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership, including taxes, utilities, and water. Most apartment leases resemble gross leases.


What is a net lease?

Net Lease

A net lease requires the Tenant to pay, in addition to rent, some or all of the property expenses that usually would be paid by the property owner.

These include property taxes, insurance, maintenance, repair, operations, utilities, and other items.

NNN Lease / Triple Net Lease

  1. property taxes
  2. insurance
  3. maintenance/utilities

NNN Lease, or triple-N for short and sometimes written NNN.

Double Net Lease

  1. property taxes
  2. insurance

 Single Net Lease

  1. property taxes

What is a percentage lease?

Percentage Lease

A percentage lease is a commercial lease in which the rental amount is computed as a certain percentage of the monthly or annual gross sales generated at leased property. In a percentage lease, the Tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. This type of lease is more common in commercial real estate markets. There is a charge for rent, operating expenses, maintenance of common areas, and even a share of the gross revenues generated.


What is a ground lease?

Ground Lease

A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.

A ground lease indicates that the property owner will own the improvements unless an exception is created and stipulates that the Tenant will pay all relevant taxes incurred during the lease period.

A ground lease involves leasing land, typically for 50 to 99 years, to a tenant who constructs a property building. The ground lease defines who owns the land and who owns the building and improvements on the property.

Ground leases usually require the Tenant to pay all property expenses, such as taxes, utilities, and maintenance. In this respect, a ground or land lease is similar to a net lease.

You could find a (Ground Lease) Long Term Lease on a Section 16.


What is a Oil and Gas Lease?

An oil and gas lease is essentially an agreement between parties to allow a Lessee (the oil and gas company and their production crew) to have access to the property and minerals (oil and gas) on the property of the Lessor.


What Is A Proprietary Lease For A Co-Op Apartment?

In a cooperative apartment, residents buy shares of stock in a corporation that owns the apartment building.They then rent a particular unit from the corporation, under a document called a proprietary lease.


What is an index lease?

A lease that makes some or all of the rent dependant upon calculations with reference to some type of index.  Cost of living index could be used.


What is a graduated lease?

long-term lease on a property where the rent is changed periodically to reflect the market value of the property. 


What is a lease option to purchase?

lease option is an agreement that gives a renter a choice to purchase the rented property during or at the end of the rental period. It also precludes the owner from offering the property for sale to anyone else. When the term expires, the renter must either exercise the option or forfeit it.


From Type Leases to Interests of the Lease


Tenancy for Years

A lease for a fixed period of time. For a tenancy for years lease, no notice is needed for termination, the lessee knows the termination date from the outset of the lease.

How much notice  do you need to give the landlord when you will be vacating your apartment when the one year lease is up?



Periodic Tenancy

This is established when the renter’s possession is contracted for an indefinite period, with no agreed-upon expiration date. The tenancy is originally created for a specific period, but the renter’s tenancy can continue until there is some notification of the lease’s termination.


Holdover Tenancy

A “holdover” occurs when a tenant continues to occupy and use the premises after the term of the lease ends. If the landowner continues to accept rent payments, the holdover tenant can continue to legally occupy the premises. … If the landowner does not accept continued payments, eviction proceedings can occur.


Tenancy at Will / Estate at Will

tenancy-at-will is a property tenure that can be terminated at any time by either the tenant or the owner/landlord. It exists without a contract or lease and usually does not specify the duration of a tenant’s rental or the exchange of payment.


Tenancy at Sufferance

A tenancy at sufferance occurs when a tenant continues to live in a rental property after their lease has expired. 


Actual Eviction

An actual eviction is when a tenant is physically forced to leave the premises.

The landlord may sue for possession.


Constructive Eviction

A landlord either does something or fails to do something that he or she has a legal duty to provide (e.g. the landlord refuses to provide heat or water to the apartment), rendering the property uninhabitable. A tenant who is constructively evicted may terminate the lease and seek damages.

To maintain an action for damages, the tenant must show that:

  • the uninhabitable conditions (substantial interferences) were a result of the landlord’s actions (not the actions of some third party) and
  • that the tenant vacated the premises in a reasonable time.

Setting Rents and Lease Rates (BROKER ONLY)

1. Using the home’s value

The amount of rent you charge your tenants should be a percentage of your home’s market value. Typically, the rents that landlords charge fall between 0.8% and 1.1% of the home’s value.

For example, for a home valued at $250,000, a landlord could charge between $2,000 and $2,750 each month

2. Researching Comparable Units

3. Calculate rental price per square foot

4. Consider the location.

5. Consider available amenities


Courtesy of Jack

Confession of Judgment Provision  📍NEW

A confession of judgment is a way to circumvent normal court proceedings and avoid a lengthy legal process to resolve a dispute. Signing such a confession of forfeits any of the rights the defendant has to dispute the claim in the future.

A tenant failed to pay rent.  Which provision in the lease would permit the landlord to avoid a civil trial yet enter a judgement against the tenant in the public records? 

A          Power of Sale Provision

B          Confession of Judgment Provision 📍📍📍

C          Subordination

D         Right of Redemption


Distraint 📍 NEW

Typically involves the seizure of goods (chattels) belonging to the tenant by the landlord to sell the goods for the payment of the rent.

In the past, distress was often carried out without court approval. Today, some kind of court action is usually required.

A residential tenant died.  The landlord seizes the tenant’s furniture in an attempt to collect the balance owing on the rent.  This is an example of illegal:

A          Distraint 📍📍📍


A single mother with two children applied to live in a singles complex. Her friend lived there and recommended the property. The single mother’s rental application was rejected based on her having children. When the complex management found out her friend that lives in an apartment on the property recommended,the friend got evicted. The mother’s rejection and the friend’s eviction violate federal fair housing laws.

Fixed expenses in a property management agreement occur regularly, such as gas, electrical, and maintenance expenses. It does not include repairs.

A property management agreement does not contain the legal address of the property. It includes terms and conditions of employment, the outline of expected duties, and scope of authority.

The owner permitted a property manager to have an air conditioner repaired. The owner gave the property manager $1000. The repair ended up costing only $600. The property manager cannot keep balance.

If rent is not paid by the due date, the property manager should first determine the problem and then, if needed, pursue an eviction. 

When Joe rents the ski lodge from November 2nd to March 1st, it is an estate for years. It has a definite beginning and an actual end.

When Joe buys the commercial property with three existing leases, he has to honor those leases.

(Leasehold) It’s a piece of paper that gives a lessee the right to live in a landlord’s real property. 

A lease is Personal Property.

A landlord can refuse to rent to a person with a violent criminal history.

If a lease vacates before the end of the lease, he can be held responsible for the lease’s rents.

A renter’s security deposit is to cover any repairs needed once the tenant vacates. It is not the last month’s rent.

The landlord holds a reversionary interest when his property is rented. 

During a time of inflation, a property manager would not wish to have long-term leases.

The renter is responsible for insuring his personal Property. Renter’s Insurance. It’s personal Property

A landlord can discriminate if the property is a two to four-unit residential property, the landlord lives there, a real state professional is not involved and no discriminatory advertising was used.