Most areas of the United States offer a wide variety of rented and owned housing. Whether to rent or buy depends on your preferences and what you can afford. In the short run, renting is usually less expensive than buying. In the long run, the opposite is true. Nearly 90 percent of all households headed by people younger than age 25 are rental households, compared with less than 20 percent of those headed by people aged 55 to 64.
Rented Housing
People may choose to rent their housing for several reasons. For some, the large down payment and high monthly loan payments are barriers to buying a home. Some people simply prefer the easy mobility of renting or want to avoid many of the responsibilities associated with buying. Prospective renters need to consider the monthly rental fees and related expenses, the lease agreement and restrictions, and tenant rights
Rent, Deposit, and Related Expenses
Rented Housing
People may choose to rent their housing for several reasons. For some, the large down payment and high monthly loan payments are barriers to buying a home. Some people simply prefer the easy mobility of renting or want to avoid many of the responsibilities associated with buying. Prospective renters need to consider the monthly rental fees and related expenses, the lease agreement and restrictions, and tenant rights
Rent, Deposit, and Related Expenses
Rent is the cost charged for using an apartment or other housing space. It is usuallydue on a specific day each month, with a late penalty being assessed if the tenant is tardy in making the payment. Other fees could be assessed for features such as use of a clubhouse and pool, exercise facilities, cable television, and space for storage and for parking. A damage deposit is an amount given in advance to a landlord to pay for repairing the unit beyond the damage expected from normal wear and tear. It is often charged before the tenant moves in and is often equal to one month’s rent. You may also be required to pay a security deposit to ensure that you do not move without paying your rent. Again, this amount is often equal to the last month’s rent payment. Thus, an apartment with a monthly rent of $800 might require payment of $800 for the first month’s rent, an $800 security deposit, and an $800 damage deposit for a total of $2400.
Lease Agreement and Restrictions
Lease Agreement and Restrictions
A lease is a contract specifying theblegal responsibilities of both the tenant and the landlord. It identifies the amount ofbrent and security deposit, the length of the lease (typically one year), payment responsibilitybfor utilities and repairs, penalties for late payment of rent, eviction proceduresbfor nonpayment of rent, and procedures to follow when the lease ends. Leases oftenbstate whether the security deposit accumulates interest, how soon the unit must bebinspected for cleanliness after the tenant vacates the premises, and when the security.
deposit (or the balance) will be forwarded to the tenant. Localb blaws may also address these issues.In the United States, two types of leases generally governbtenant-landlord relationships. The first provides for periodicbtenancy (for example, week-to-week or month-to-month residency),bwhere the agreement can be terminated by either of thebparties if they give proper notice in advance (for example, onebweek or one month). Without such notice, the agreement stays inbeffect. This arrangement also typically applies in situations inbwhich no written lease is established. The second type of leasebprovides for tenancy for a specific time (for example, one year).bWhen this period expires, the agreement terminates unless noticebis given by both parties that the agreement will be renewed.
Lease agreements may contain a variety of restrictions thatbare legally binding on tenants. For example, pets may or may notbbe permitted; when they are permitted, landlords often requireba larger security deposit. Excessive noise from home entertainmentbsystems or parties may be prohibited as well. To protectbother renters from overcrowding, a clause may limit the numberbof overnight guests. An important restriction applies to subleasingb(wherein an original tenant leases the property to anotherbtenant). Here a tenant who moves before the lease expires maybneed to obtain the landlord’s permission before someone elsebcan take over the rental unit. The new tenant may even have tobbe approved, and the original tenant may retain some financialliability until the term of the original lease expires.
Tenant Rights Tenants have a number of legal rights under laws in most states and many local communities. Some important rights are as follows:
deposit (or the balance) will be forwarded to the tenant. Localb blaws may also address these issues.In the United States, two types of leases generally governbtenant-landlord relationships. The first provides for periodicbtenancy (for example, week-to-week or month-to-month residency),bwhere the agreement can be terminated by either of thebparties if they give proper notice in advance (for example, onebweek or one month). Without such notice, the agreement stays inbeffect. This arrangement also typically applies in situations inbwhich no written lease is established. The second type of leasebprovides for tenancy for a specific time (for example, one year).bWhen this period expires, the agreement terminates unless noticebis given by both parties that the agreement will be renewed.
Lease agreements may contain a variety of restrictions thatbare legally binding on tenants. For example, pets may or may notbbe permitted; when they are permitted, landlords often requireba larger security deposit. Excessive noise from home entertainmentbsystems or parties may be prohibited as well. To protectbother renters from overcrowding, a clause may limit the numberbof overnight guests. An important restriction applies to subleasingb(wherein an original tenant leases the property to anotherbtenant). Here a tenant who moves before the lease expires maybneed to obtain the landlord’s permission before someone elsebcan take over the rental unit. The new tenant may even have tobbe approved, and the original tenant may retain some financialliability until the term of the original lease expires.
Tenant Rights Tenants have a number of legal rights under laws in most states and many local communities. Some important rights are as follows:
- Prohibitions against harassment (rent increases, eviction, or utility shutoff) for reporting building-code violations or otherwise exercising a tenant’s legal rights.
- Assurances of some legally prescribed minimum standard of habitability for items such as running water, heat, and a working stove and the safety of access areas such as stairways
- The right to make minor repairs and deduct the cost from the tenant’s next rent payment. This right is subject to certain restrictions, such as giving sufficient prior written notification to the landlord.
- Prompt return of a security deposit, with limits placed on the kinds of deductions that can be made. Landlords must explain specific reasons for deductions. Some state laws require that interest be paid on security deposits.
- The right to file a lawsuit against a landlord for nonperformance. Such suits can be brought in a small-claims court.
Owned Housing
Americans have historically favored single-family dwellings to satisfy their ownedhousing desires. However, other alternatives such as condominiums, cooperatives, manufactured housing, and mobile homes have increased in popularity.
Single-Family Dwellings
A single-family dwelling is a housing unit that is detached from other units. Buyers have many choices available for both new and existing homes with varying floor plans and home features. Some people prefer the modern kitchens and other features found in newer homes; others prefer the larger rooms, higher ceilings, and completed landscaping of older homes.
Condominiums and Cooperatives
The terms condominium and cooperative describe forms of ownership rather than types of buildings. These forms of ownership usually cost less than single-family dwellings, offer recreation facilities, and have reduced maintenance obligations. With a condominium (or condo), the owner holds legal title to a specific housing unit within a multi-unit building or project and owns a proportionate share in the common grounds and facilities. The entire complex is run by the owners through a homeowner’s association. Besides making monthly mortgage payments, the condominium owner must pay a monthly homeowner’s fee that is established by the homeowner’s association. This fee covers expenses related to the management of the common grounds and facilities and insurance on the building. Some areas of concern for condominium owners include potential increases in homeowner’s fees and limited resale appeal of the unit.
With a cooperative (or co-op), the owner holds a share of the corporation that owns and manages a group of housing units. The value of this share is equivalent to the value of the owner’s particular unit. The owner also holds a proportional interest in all common areas. A monthly fee for the cooperative covers the same types of items as does a condominium fee but also includes an amount to cover the professional management of the complex and payments on the cooperative’s mortgage debt. (The pro-rata share for interest and property taxes is deductible on each shareholder’s income tax return.)
Manufactured Housing and Mobile Homes
Americans have historically favored single-family dwellings to satisfy their ownedhousing desires. However, other alternatives such as condominiums, cooperatives, manufactured housing, and mobile homes have increased in popularity.
Single-Family Dwellings
A single-family dwelling is a housing unit that is detached from other units. Buyers have many choices available for both new and existing homes with varying floor plans and home features. Some people prefer the modern kitchens and other features found in newer homes; others prefer the larger rooms, higher ceilings, and completed landscaping of older homes.
Condominiums and Cooperatives
The terms condominium and cooperative describe forms of ownership rather than types of buildings. These forms of ownership usually cost less than single-family dwellings, offer recreation facilities, and have reduced maintenance obligations. With a condominium (or condo), the owner holds legal title to a specific housing unit within a multi-unit building or project and owns a proportionate share in the common grounds and facilities. The entire complex is run by the owners through a homeowner’s association. Besides making monthly mortgage payments, the condominium owner must pay a monthly homeowner’s fee that is established by the homeowner’s association. This fee covers expenses related to the management of the common grounds and facilities and insurance on the building. Some areas of concern for condominium owners include potential increases in homeowner’s fees and limited resale appeal of the unit.
With a cooperative (or co-op), the owner holds a share of the corporation that owns and manages a group of housing units. The value of this share is equivalent to the value of the owner’s particular unit. The owner also holds a proportional interest in all common areas. A monthly fee for the cooperative covers the same types of items as does a condominium fee but also includes an amount to cover the professional management of the complex and payments on the cooperative’s mortgage debt. (The pro-rata share for interest and property taxes is deductible on each shareholder’s income tax return.)
Manufactured Housing and Mobile Homes
Manufactured housing consists of fully or partially factory-built housing units designed to be transported (often in portions) to the home site. Final assembly and readying of the housing for occupancy occurs at the home site. Mobile homes, in contrast, are fully factory-assembled housing units that are designed to be towed on a frame with a trailer hitch.Mobile homes rarely appreciate in value like other forms of housing; in fact, they usually depreciate.
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