NAA Lease Overview for North Carolina PRESENTATION FOR THE APARTMENT ASSOCIATION OF NORTH CAROLINA BY BROWNLEE WHITLOW & PRAET, PLLC
DISCLAIMER 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 of 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.
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 or 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 ordered 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 of 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 of 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 of moisture/mold, use exhaust fans appropriately, maintain proper air circulation (through use of HVAC).
Mold Information and Prevention cont… Requires resident to: 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. Provides cleaning supply recommendations for small areas of mildew or mold growth. Failure to comply is a default of the Lease.
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 of 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.
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