There are many factors landlords need to consider while drafting a lease under Georgia law. One factor that landlords commonly overlook is the unintended consequence of a long-term lease. This is because Georgia differentiates leases based on their length. In Georgia, a lease for less than five (5) years is a usufruct unless otherwise agreed upon by the parties. In contrast, a lease or a lease extension for more than (5) years that does not use language to create a usufruct is presumed to be an estate for years.
A usufruct is what most people consider a standard “lease” for a property. The usufruct creates a landlord-tenant relationship where the property owner grants the tenant a limited right to use and possess the property for a fixed period of time. In contrast, an estate does not create a landlord-tenant relationship because the property owner has granted the tenant a legal interest in the property. This means that so long as the property owner’s rights are not harmed, a tenant with an estate for years interest has the right to use the property in an absolute manner.
Moreover, distinguishing between an estate for years and a usufruct is imperative to determine remedies available when a breach of the lease agreement occurs. Specifically, if a tenant can successfully establish that it holds an estate for years in the real property, a landlord cannot succeed on a dispossessory action because the dispossessory laws do not apply. Thus, it is vital for a landlord to always include a clause in its leases and extensions, regardless of its length, that stipulates that the parties have created a usufruct.
If you have questions regarding the rights and remedies under your lease, including how to overcome the estate for years presumption, contact the attorneys at Briskin, Cross and Sanford, LLC.