Residential leases are the cornerstone of landlord tenant relationships. Whether you’re renting your one bedroom home or have a residential empire, you need a lease.
Firstly the North Carolina Residential Rental Agreements Act, Chapter 41, Article 5, governs residential leases.
Secondly, property and contract laws generally apply.
Thirdly, you must also consider consumer protection laws like usury and unfair and deceptive trade practices.
Fourthly, local ordinances and regulations are applicable.
Fifthly, health department and other agency regulations need to be followed.
Finally, your HOA and any restrictive covenants on the land apply.
What Can Be Leased
Turns out, residential leases aren’t always straightforward. I’ve been dealing with leases my entire legal career and as part of internships during law school. Additionally, I’ve been signing leases since I was 18. That said, I still occassionally encounter something that I’m not sure if it’s a lease or not. This is an important distinction because leases come with the protections of Chapter 41. Things that aren’t leases do not.
Traditional Lease. A traditional residential lease is one where the tenant gets exclusive use of an enclosed space like a house or apartment in exchange for regular rent. For example, my last apartment was a 2 bedroom, 2.5 bath townhome.
Lease with Option to Buy. This is actually subject to a different area of law, Chapter 47G. However, Chapter 41 still applies when not covered by 47G. The biggest difference is the eviction process.
Sublets/Room in Owner-Occupied Housing. Sublets and single room rentals are still covered by Chapter 41. However, they have some exceptions when it comes to evictions for the safety of the person dwelling in the house. For example, if you’re a woman and want only a woman roommate, that is fine.
Hotel rooms. Hotel rooms are generally subject to a different set of laws. However, long-term rentals are likely covered by Chapter 41.
Vacation Rentals. Chapter 42A covers vacation rentals. In order to fall into this category, the rental must be short term and transient in nature. The renter also has to have a separate primary residence. However, there is a lease when you’re talking vacation rentals. There are just different rules regarding that lease.
As you can imagine, there are a lot of situations that can fit into multiple categories. For example, I work with some halfway houses and had to define their contracts in a way that does not fall under Chapter 41. In those circumstances, it is important to remove a person from the property if they could harm the recovery of others. Chapter 41 has a long eviction process that could result in irreparable damage to the other residents at the halfway houses.
The Clauses You Need in Residential Leases
Since we’re dealing with a contract, you need the essential elements to any contract. Namely, you’ll need what you get and what they get. What you get is the price. What they get is the exclusive use of a certain space.
Because we’re dealing with property law as well, you must sufficiently describe the property that is being rented. For example, most residential leases provide the tenant exclusive access to the area indoors at a particular address. They then label everything outdoors as common space. Sometimes the exclusive space includes a balcony or patio as well. Why does this matter? Core to every residential lease is the exclusivity. There’s no sense in renting a space if the landlord can rent that same space to additional people while you’re there. Tenants also have a duty to upkeep the exclusive space whereas the landlord has to upkeep the common space. The tenant has a duty to not damage either.
In order to collect late fees or court costs, you must list them in the residential lease. You will also need any limitations on usage such as “no pets” or “no smoking”. Additionally, any community rules need to be listed.
North Carolina also requires that landlords provide information regarding mold and lead paint.
As long as they don’t violate any consumer protection laws or tenant protection laws, you can include basically any provision you’d like. I recommend you read a lot of worst tenant stories and write clauses to protect from those.
And, don’t forget your security deposit, pet fee, damage fees, smoke remediation fees, etc.
Summary ejectment is only available in traditional leases and sublets. If you have a lease with option to buy, hotel room, or vacation rental, you have a different eviction process. Here’s a fun chart:
As you can see, regular ejectment takes a lot longer, but trespass and Expedited Ejectment are very rapid. The reason regular ejectment takes longer is it has to be heard by a District or Superior Court judge. Summary Ejectment and Expedited Ejectment can both be heard by a magistrate in small claims.
Generally, there are very narrow circumstances where the expedited eviction or trespass options are available. Wrongful use of these faster proceedings can result in your tenant getting some form of special damages against you for wrongful eviction, so be careful when using them.
If you need help crafting your residential lease agreement, we’d be happy to help. Feel free to reach out to us at email@example.com or by calling 919-912-9640.