Real Estate Case Q & A
1. Q: It took me 4 months to find a house I like. The real estate agent brought me a pile of documents to sign. I was told that the house would soon be sold to another buyer if I do not sign off the purchase contract right away. What should I know about the contract before I sign it?
A: A buy-sell agreement of real estate is very technical and complicated. Most people adopt the “Residential Purchase Agreement and Joint Escrow Institutions” designed by the California Association of Realtors (CAR). There are eight pages in total. The major terms and conditions within the contract include: the date of the agreement, names of the buyer and seller, legal description, escrow closing day, selling price and deposit, mortgage and interest, contingency, date of delivery, treatment of termites, sharing of miscellaneous expenses, furniture and household appliances included in the sell, deadline for repair from the seller, damages for the losses (may be 3% of the sell price or uncertain), resolution for a dispute by either arbitration or litigation, agent fees, names of agents, escrow company, and so on. More attention needs to be paid to the restricted condition of the trade, which means that one condition needs to be met before the trade can go on. For example, the buyer wants to obtain an annual interest rate of less than 7% within 30 days; the buyer must sell the house he/she owns and the seller must also buy another house. Either buyer or seller any time has the right to cancel one’s own restricted condition.
2. Q: All our family members together found an inexpensive house with a good school district and a nice neighborhood. We signed a buy-and-sell agreement with the owner and then opened an escrow. We are supposed to move into the house on the escrow closing date when is 30 days later. When we informed the previous owner that they are required to vacate the house in 30 days, the previous owner suddenly changed their minds to sell their house to us and asked to cancel the escrow. Can the previous owner do this? What are our legal rights on the matter?
A: The owner of the house seriously breached the buy-and-sell contract. You have two options to choose. First, if you still want the house, you may ask your agent or retain an attorney to inform the owner that you insist in buying the house, requesting the owner to continue the escrow. If the owner still refuses to do so, you may have to hire a lawyer to help you file a lawsuit in court to get the house, at the same time record a document called “Lis Pendance” with the
County Recorders Office of where the house is located. The Lis Pendance informing the general public that the house is in litigation. Consequentially, the
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owner is not allowed to freely sell the house and refinance it. This is the way to prevent the owner from selling, giving, or transferring the property to any third party. More often than not, the reason why the owner refuses to sell the house to you is that someone else offers a better deal. Second, if not wanting the house any more, you may claim from the owner the losses incurred, including the loss in rent and the price difference either between the new buyer’s offer and your offer or between the house from the owner breaching the contract and another house you bought from someone else. For instance, if the new buyer offers $650,000 and you offer $600,000, the difference is $50,000, or if you pay $640,000 to someone else for another house, costing you extra $40,000, the difference is $40,000.
3. Q: I retained agent Chang, to sell my house and signed a three-month contract with him. He promised me to sell the house in high price within a month. After two months, he is still unable to find a buyer. I was so upset that I retained another agent Lee, who sold my house in two weeks. As I expected, an attorney retained by agent Chang sent me a correspondence claiming for commissions. Do I need to pay him?
A: It depends on what kind of listing agreement you signed with agent Chang. If the agreement is one “Exclusive-right-to-sell listing”, you are required to pay agent Chang commissions whether you or a new agent sells the house. If the agreement is one “Exclusive-agency listing”, agent Chang is still entitled to commission unless you find a buyer on your own. When you sell your house next time, you may choose the option of “Opening-listing”, which has time limit for selling the house. The opening-listing gives you option to use more than one agent to sell the house for you. Whoever sells the house first earns the commissions, others get nothing. So you do not need to worry about commissions of other agents.
4. Q: I have signed an agreement to sell my house and the sale is in escrow. One day the escrow company called me that they will need to take $50,000 from the sale proceeds to pay a collection agency which is totally unbeknownst to me. What is happening? Can I refuse to pay?
A: You should ask the escrow company to check the Preliminary Report to find out whether there is a judgment lien on record. A judgment lien is a court order obtained by your creditor (or a collection agency who purchases the lien from your creditor) from the court for the unpaid debts. Your creditor records with the County Recorder Office the judgment, which became a judgment lien. Before
the escrow can be closed, all the debts have to be paid off, such as a security loan, judgment lien, tax lien and mechanical lien. You may choose to make a full repayment of $50,000. If the judgment lien is not legally binding on you because,
for instance, you were not served with a Complaint and Summons, you may retain a lawyer to vacate the judgment and judgment lien in the Court. Or you
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may hire a lawyer to negotiate with the creditor/collection agency to repay less than you owe. A Motion to Vacate needs to be filed with the court within 180 days from the day you know or you should have known of the judgment.
5. Q: I am thinking about transferring the title of my house to my son. What procedure needs to be followed? Is there any tax issue involved?
A: You need to prepare and file 2 documents called “Grand Deed” and
“Preliminary Report of Change Ownership” with the County Recorders Office
where your house located. Usually any lawyer or Title Company can provide
you with those forms and assist you in filling out the forms and then record them.
Keep in mind that all the contracts and transactions relating to real estates must
be in writing to be valid, and some of the documents are required to be recorded
to become legally binding. For the transfer of title to property between husband
and wife, a “Quit-Claim Deed” is required instead of a “Grand Deed”. No tax is
required for the transfer of title between husband and wife. If the house being
transferred to someone other than your spouse worth more than $10,000, you
might need to pay gift tax. The tax rate is very high. You should consult with a
CPA for detailed information.
6. My husband and I are getting divorced, and we have a dispute over the ownership of the house. I believe the house belong to me because it is under my name, but he claims that the house is his because he works and makes monthly payments for it. Whom on earth the house should belong to?
A: If the house was purchased by you and is under your name before your marriage, both of you have the shared interests of it even though your husband makes payments from his income for it after your marriage. The only difference about ownership between you two is that you own the larger share of interests over the house than your husband does. For instance, the house cost $300,000 the time you purchased 4 years ago. You made a down payment of $60,000, which is 20% of the purchase price, and took out a mortgage for $240,000. In a month that followed, you married your husband. Your husband has been working and you have been raising children and doing the housework since your marriage. The market value of the house now skyrockets to $600,000, that is, you gain $300,000 ($600,000 – $240,000 – $60,000 = $300,000). According to the law of Community Property in the California State, your own property, including any interests earned from the property, before your marriage all belong to you when your marriage is legally dissolved. On the other hand, all the property earned after your marriage, including your husband’s income and any interests earned from his income, is equally divided when your marriage is terminated. Thus, if the house is sold, you can take $240,000 ($60,000 + [$300,000 x 20%] + [$300,000 x 40%] = $240,000), and your husband can take $120,000 ($300,000 x 40%). If your husband transfers his ownership of hours to
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you of his own volition during the marriage by filing a Quit Claim, the house 100%
belongs to you no matter the transfer is conducted before or after the marriage or who pays for the house.
7. My friend and I jointly purchase a house and equally pay for it. How do we record the title to the real property?
Q: There are three types of title registration or to hold title to real property: Joint Tenancy, Tenancy in Common, and Community Property.
1) The “Joint Tenancy” means that all the property owners/joint tenants hold the equal shares of the interests, which is nontransferable to his/her heirs when he/she passes away and is equally distributed to the other owner(s). Most people choose this type without truly understand the legal meaning of it. For example, Brother A and Sister B together bought a house as joint tenancy. When Brother A passes away, his ½ goes to Sister B rather than Brother A’s children or wife.
2) In the “Tenancy in Common”, joint owners hold the shares of interests of the property in a certain proportion, equal or unequal, such as ½-1/2, 1/3-1/3-1/3, etc. When one of the owners dies, his/her share is transferred to his/her heirs instead of the other owners, and the heirs will become new owner as tenancy in common with the other owners. Mostly, friends adopt this type. For example, Brother A, Sister B and Friend C own a property together as tenancy in common, 1/3 each. When Brother A passes away, his 1/3 goes to his children and wife, Sister B and Friend C gets nothing from Brother A.
3) In the “Community Property”, a husband and a wife jointly purchase a property, title to which is under both of their names. The feature of this type is that when one party dies, half of his/her share of ownership (50% of the whole property) goes to the surviving spouse, and the other half will be split among the children (If there is no child, goes to the deceased spouse’s parents).
Be aware of claim of “holding title to a property for the other”. If you and your friend jointly own a house and your friend’s family lives in the house, your friend should pay rents to both of you. Your friend may make mortgage payments in lieu of paying rents if both of you make such an arrangement in a written agreement. The written agreement can avoid a future dispute over the ownership of the property by your friend who might claim that he is the 100% owner of the house because he is the only one making mortgage payments over the years, while you are “only holding the title for him/her” for some reasons (such as to help him/her to qualify a loan).
8. Q: I am currently unemployed and unable to make mortgage payments on my house. What should I do?
A: Act immediately, no delay, or you may lose your house or the equity on the house. You may consider one of the following options:
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1) Contact your mortgage lender, ask it not to impose late payment penalty and to postpone the reporting of delinquency (late payment) to the credit bureaus (Experian, Equifax and Trans-union).
2) Ask your mortgage lender to amend the terms and conditions within the loan agreement, making the late payments in installments or after the last payment period. For example, you are six months behind on payments at $2,500 a month at total of $10,000. Your lender may agree to allow you to clear the $10,000 by making 10 payments at $1,000 a month, or to make 5 extra payments at $2,000 each following the projected last payment under the loan agreement. In any case, your lender wants you to prove to them that you are able to maintain the normal monthly payment of $2,500.
3) If you decide not to keep the house, put it up for sale, then you don’t have to worry about the payments anymore. You may pocket the net sale proceeds if there is enough equity on the house.
4) if there is no equity in the house or the equity is not enough to cover the loans, liens and closing costs (such as commission, tax, escrow fee, title insurance, document fee, notary fee, messenger fee, etc.-runs about 8% of the selling price), you may consider to hire a lawyer to help you to voluntarily offer the lender to take the property back “as is” without pursuing you for the shortage between the highest bid at a foreclosure and the loan and foreclosure costs. For example, the loan amount is $500,000, the best price received at the foreclosure is $400,000 and the costs is $30,000, you will end up owing to the lender $130,000 ($500,000-$400,000 +$30,000), the amount is called the “deficiency” and the process is call “deed-in-lieu of foreclosure”. An experienced lawyer should be able to assist you to grant the title to the house to the lender after the lender agrees in writing accepting the deed-in-lieu arrangement.
5) Similar to option 4) above, you can also have your realtor or lawyer try to convince the lender to let you sell the house under market value, and the lender takes whatever you can sell for without chasing you for the deficiency.
9. Q: After I stop making mortgage payments, about how soon the bank will foreclose on my house?
A: Usually, after two to three months from the day you stopped making payments, the bank will write you to urge you to make the delayed payments, together with late payment fees. If you still make no payment, around 60 days, the bank or an auction company will send you by certified or registered mail a notice called “Notice of Default and Election to Sale under Deed of Trust”. If you still fail to make the payment, 90 days later, the bank or an auction company will mail you another notice called “Notice of Sale under Deed of Trust”, informing you that your house will be foreclosed (auctioned out in public) after 20 days at the entrance of the Superior Court house where your housed is located.
You have the right to reinstate then stop the foreclosure by paying off all the late payments, penalty fees, and auction expenses 5 days before the auction day. For example, your three-month late payments totaled up $6,000, and the
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foreclosure day is set on the 20th of November. You may keep your house by paying off $6,000 plus the foreclosure expenses so far incurred (like say, $1,500) by 15th of November.
If you do not timely reinstate the account as stated above, you still can redeem the property by paying off all the late payments, penalty fees, auction expenses, and the balance of the home loan (like say $300,000) between the 15th and 20th of November. In the above case, you need to pay $307,500 by November 20 in order to redeem (buy back) your house, or it will be auctioned off to the person who makes the highest bid at the foreclosure sale. Of cause, you may also bid for the house and buy it back on the day. If nobody bids more than $307,500, the mortgage lender will take the property back and sell it in the general market.
10. Q: I received from the bank a notice, which states that the bank will foreclose on my house in 3 days. Is there any way to stop the foreclosure?
A: If you are unable to pay off the loan in full within 3 days, you may consider declaring bankruptcy. Declaring bankruptcy can immediately stop the whole foreclosure procedure, but the bank loan cannot be discharged. If you just want to temporarily suspend the foreclosure procedure to gain extra time, so you can obtain money to pay off the late payments and penalty fees, you may consider the Chapter 7 bankruptcy. If the bank does not want to wait 3 to 4 months until the bankruptcy case is closed, the bank may request the court to terminate the Automatic Stay early and proceed with the foreclosure.
In case you are unable to get enough money before the foreclosure process is resumed, you may consider the Chapter 13 bankruptcy. You are granted 3 to 5 years to pay off all the late payments and penalty fees. Meanwhile, you need to make a normal monthly payment. For instance, supposing your late loan payments for 8 months total up $24,000, during the long period of five years for a Chapter 13 bankruptcy, you need to make a monthly payment on the house for $3,400 ($400 + $3,000), plus your monthly disposable income (your total household incomes – your total household expenses).
11. Q: It is said that declaring bankruptcy can keep one house. Is that correct?
A: It is not correct. The California law only allows a bankruptcy petitioner to keep a certain amount of equity of one house. The exemption for a single person is $50,000, for a married person or a single parent with children is $75,000, and for a person equal or over the age of 65 or an invalid is $125,000. For a single person, equal or over the age of 55, whose annual income is below $15,000 or a married person whose annual income is below $20,000, the exempted values of equity is $125,000. Equity = Market value – Loan balance – tax – judgment lien – other liens. For example, supposing the market value of a house is $300,000. The balance of mortgage is $200,000. The judgment lien is $50,000. The equity
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of the house will be $50,000 ($50,000 = $300,000 – $200,000 – $50,000). As long as you or your spouse had lived in the house for more than 3 months in the past 6 months, the $50,000 is exempted from being taken away by your creditor. Although the bankruptcy law does not require that you must hold a Homestead Declaration in order to secure the equity of the house, the California law do requires the declaration. It is in your best interests to retain an attorney to draw up one Homestead Declaration and record it for you.
12. Q: Someone is suing me now. Is it safe for me to transfer the title of the property to my wife or my children? Is there any way to legally protect my property?
A: It is a very common question. Most people make this same mistake. No matter you are being sued by some one else, you predict a lawsuit against your, or you have lost a case, transferring the ownership of your property without gains is a Fraudulent Conveyance or Fraudulent Transfer. Consequently, your creditors may sue you and your relative or friend for an unlawful transfer of the property. Not only does your relative or friend get involved, but the court may also order that the transfer of the ownership is invalid. As a result, the ownership of the property must be transferred back to you to pay off your debts. Of course, if you have other reasonable grounds that can justify your selling your property for a market value to a third party, who is unrelated to you and does not know your current lawsuit, to stop a foreclosure without intent to avoid your creditor, the third-party buyer is considered a Bona Fide Purchaser, so the creditor can revoke the trade and return the property back to you. Of course, the creditor has the legal right to continue to collect the money obtained from the sale of the house. You can record a Homestead Declaration to protect a certain amount of equity (refer to the above-mentioned question 11. Please note that if you are filing a dissolution of marriage when your creditor is also suing you, your creditor may, if the court order that you and your spouse obtain half of the interests of the property, your creditor may collect the half of the interests from your divorced spouse to pay off the debts you and/or your spouse owes before you get divorced.
13. Q: My house was put up for auction by the bank last week. The bank informs me that I have to vacate immediately; otherwise, they will take a legal action. Should I move out of the property right away?
A: The bank must give you’re a 30-day-notice, informing you that you must voluntarily vacate the building within 30 days, or an Eviction will be used to force you to leave the building. Once the house was foreclosed, the bank becomes the legal owner. From now on, you become a tenant from an owner. Because you do not enter into a contract with the bank, the bank can in accord with the law request you to quit the tenant after 30 days. If you remain in the property after 30 days, the bank will retain an attorney to file an Unlawful Detainer/Eviction in a Superior Court. The bank usually will serve on you in person a Summons and Complaint via a sheriff or private messenger. If they fail to serve you 3 times at your home or in the workplace, they may hand over the summons and Complaint to any family member over 18 years old at your home or an adult co-worker in the workplace. You have 5 days only to answer from the day you were served with the Summons and Complaint. Please note that the 5 days are calculated by calendar day but not working day. For instance, if you are served with the Complaint on Wednesday, the deadline for you to answer is the following Monday; if a national holiday falls on the following Monday, the deadline will be extended to Tuesday. An answer must be filed to the court in writing in compliance with the standard legal form required by the law. Either oral response or answer in ordinary writing is invalid. In the event that you fail to file an valid written Answer within 5 days, the bank make request a Default Judgment, which has the legally binding power equivalent to a regular court order. If you file an answer within 5 days, the bank and you can continue for the process of Discovery, or if there is substantial evidence, the bank can request to set a court day around 3 to 5 weeks later. If the court orders you to move out, the bank will deliver the judgment to the sheriff, who will serve you at home with a Notice to Vacate, giving you 5 days to vacate. After you vacate the property, a new lock will be replaced and a court order will be posted. Do not attempt to change the lock and enter into to the house again. You are breaking the law if you do that. If have some important personal belongings left inside the house, you may contact the bank or their attorney to schedule a time to take back your stuffs. Normally, a simple disputable Eviction procedure takes about 6 weeks, and a complicated case may take two to three months.
14. I am importing furniture for my business, and I am interested in leasing an office with a warehouse for my business. The landlord handed me a 30 to 40-page lease agreement and asked me to sign on it. I was told that all the commercial lease agreements adopt this standard form. Shall I sign it?
A: Most landlords now adopt the Standard Industrial/Commercial Lease jointly designed and printed by the American Industrial/Commercial Association of Realtor. It is because that the lease agreement is very detailed, clear, and fair.
Basically, it fairly considers the interests of a landlord and tenant, but it is not required to adopt by the law. If specific needs are requested, the landlord or you may amend the terms and conditions within the agreement, or a retained attorney may draw up a new lease agreement. No matter which lease agreement is adopted, the agreement is effective as long as both of the landlord and the tenant sign it together. Before signing the agreement, you need to understand the following issues: the rent, leasing time, annual raise of the rent, management fees and other miscellaneous fees, security deposit, size of the area, maintenance responsibility, permission to transfer the lease or sublease, restriction on the type of business, purchase of insurance, personal guarantee, and so on. If there are other supplementary terms and conditions, another Addendum needs to be signed too. If you do not understand English, you should find an interpreter to explain the agreement in detail. Otherwise, if there is any dispute to be settled in the court, the judge may not consider it a valid ground for defense. Of course, you are strongly recommended to retain a lawyer, spending one to two hours, to assist you in understanding the agreement before you sign it.
15. Q: I leased a store, and then I am thinking about transfer the lease to my friend to take over the business. The landlord always disagrees. Does the landlord have the right to do so? What if the landlord agrees, am I not held responsible for the rent any more?
A: Whether the landlord can stop you to transfer the lease depends on the terms and conditions within the lease agreement. If the agreement does not specifically stipulate the prohibition on transferring the lease, the tenant may freely transfer the lease or sublease to another tenant. Most lease agreements, including the one adopted by the American Industrial/Commercial Association of Realtor, stipulate that a tenant’s transferring the lease or sublease requires consent from the landlord. Under reasonable circumstances, the landlord should give consent to the transfer of the lease or sublease. The “reasonable circumstances” is always a controversial point in a dispute, for general lease agreements and the laws do not specify what the reasonable circumstances really are. Usually, if the new tenant is doing the same or similar type of business, has a good credit history, is running a stable business, and is willing to pay the same rate of the rent and adhere to all the stipulations within the agreement, the landlord is considered unreasonable to decline the tenant’s request to transfer the lease or sublease. Sometimes without clear consent in writing to the transfer of the lease or sublease, if the landlord accepts the payment of the rent from the new tenant, the landlord do give silent consent to the transfer of the lease or sublease and can not change his/her mind. In transfer of the lease, the whole premises are transferred to a new tenant. The original tenant is no longer a tenant; on the other hand, in sublease, the new tenant lease only part of the premises but not the whole premises and a period of time but not the whole time stipulated in the agreement. The original tenant is still the tenant, who is also a landlord to the new tenant. For instance, if Mr. Lee transfers the lease of the premises, which is two thousands square feet and two more years of lease, to Mr. Cheng, it is a transfer of the lease. If Mr. Lee only subleases one thousand square feet to Mr. Chang, or he sublease the whole premises for the first year only and then keep the lease for the last year, it is a sublease. Usually, no matter in the transfer of the lease or sublease, if the new tenant, who is supposed to make rent payments, fails to pay the rent, the original tenant is held responsible to pay the rent whether using the premises or not.
16. Q: I own a house with four bedrooms. I am living in one bedroom alone. I
rented out the other three bedrooms and a remodeled bedroom from a garage. One of the tenants has stopped making rent payment. I am thinking about changing the lock to stop the tenant from entering my house. Is it legal for me to do so?
A: It is legal to do that. The law strictly forbid the landlord from changing the door lock or forcing the tenant to move our by force without consent from the court (self-help). The eviction of the tenant must follow the legal procedure. You might otherwise be counter-sued by your tenant. Besides, if the remodeled garage does not pass the inspection by the Health Department of the city, you might need to pay the tenant the damages for the actual losses, including the medical costs incurred by insomnia, emotional stress, and moving expenses, along with $100 to $1,000 in the punitive damages. In the event that the dispute goes to the court, the court may decide the amount of the rent.
17. Q: I rented an apartment and pay $1,000 for the security deposit. After three months from the day I moved out, I received a check from the landlord for the amount of only $100. The rest of the deposit, $900, was deducted to pay for the expenses on replacing new carpet and cleaning. How could it happen?
A: It depends on the condition of the apartment at the time you move out. Is it necessary to change the carpet? Is it possible to clean rather than replace? Do you completely clean the place? Sometimes, the landlord will use the deposit to replace the carpet or curtains. To prevent such an unpleasant incident from happening, you had better ask the landlord to inspect the apartment and then give you an inspection checklist when the landlord comes to pick up the keys. If the landlord does not show up, you should take photos or videotape the apartment for evidence to prove that there is no damage on the premises. If the landlord does not return the deposit for no reasonable grounds, you can either write the landlord for the collection or file a complaint against the landlord in the Small Claims Court.
18. Q: I just received from my landlord a letter, notifying me of a rent increase of 50% and asking me to quit the tenancy if I do not agree. Does the landlord has the right to do so?
A: Without the stipulation concerning the rent within the written lease agreement, the landlord may ask for any amount for the rent when the lease becomes mature, if the city you live does not prescribe the law about Rent Control. The landlord has the right to ask for any amount of the rent. You must move out even though you do agree on the rent. You can check with the City Hall in regard with the Rent Control. As to the commercial lease, there is no restriction on the rate of the rent.
19. Q: I signed with my landlord a five-year lease agreement, stipulating that the monthly rent is $1,500. The unit is used for a fashion store. Because the business has not been going well after the first three years, I have been unable to pay the rent for three months, planning to end the business and move out. Unfortunately, the landlord asks me to pay all the rents for the next three years. Are there any grounds for the landlord to make such a demand.
A: If there is a written lease agreement in effect, you breached the contract for not paying the rents unless the landlord seriously breached the contract before you did. The following examples are regarded as a Constructive Eviction: leasing the same premises to a third party, terminating the lease agreement in writing, not allowing you to use the premises, disconnecting the supplies of water and electricity, unsafe conditions, and failure to maintain and repair the premises. But if you unilaterally breach the contract before the landlord does, pursuant to the contract, you are demanded to pay the landlord the unpaid rents for the past three months, which is $4,500, all the rents for the period of time between the date you move out and the date the premises is leased out, and the rent difference if the new rent is different from the old rent. For example, if the landlord finds a new tenant after three months and receives $1,300 for the rent, you should pay the landlord $9,000 ($1,500 x 6 months), together with $6,000 ([$1,500 – $1,300] x 30 months). To avoid such a huge penalty fees, the best way for you is to find a new tenant soon; meanwhile, you should negotiate with the landlord by proposing a lump sum rent payments for 3 to 6 months and forfeiting the security deposit, so you will become free from the legally binding contract, saving you all the troubles in the future.
20. Q: I rent an apartment, the roof of which leaks whenever rain falls. In addition, many parts of the apartment are in need of repair. I notified the landlord of the problems, but the landlord never sends anyone here to fix the house. Can I just stop making rent payment or simply move out?
A: The law clearly prescribes that a residential building must be suitable for residents to live with normal living conditions, in spite of whether the lease agreement stipulates or not. At least, the landlord should guarantee the following: 1) the normal function of the sewage system, 2) the safe operation of the heating system, lighting, and electrical wires, 3) the good condition of the floor, stairway, and corridor, 4) the sanitary conditions of the house and free of termites 5) proper maintenance of the public facilities, and 6) no leak on the roof and no broken windows and doors. Any one of the above-mentioned violations is regarded as an act of Constructive Eviction. The tenant can unilaterally terminate the lease contract and then move out without assuming any legal responsibilities. The tenant may alternately choose to stay. If the landlord still does not send any one to repair the house, the tenant can hire people to do the works. The tenant can deduct the repair and replacement expenses from the monthly rent. As far as the commercial lease agreement is concerned, the above-mentioned residential living conditions do not apply. But if the conditions of the premises are so bad that the tenant cannot normally use the premises, it is also regarded as an act of Constructive Eviction. Please note that if the commercial tenant hires someone to do the repair work, which should have been done by the landlord, the repair and replacement expenses cannot be deducted from the monthly rent, but the tenant can demand the landlord to reimburse the expenses. If the landlord refuses, a complaint may be filed against the landlord in the court of law.