Understanding the Act of Waste in Real Estate: Legal Implications

The act of waste is a crucial real estate term that you should be familiar with, as we often see tenants making poor decisions and causing property damage. In real estate, waste involves the intentional or negligent destruction, damage, or deterioration of a property by someone in possession of it. 

It might seem like a simple term, but there’s quite a lot to learn about it. So, keep reading, because as a real estate professional, you need to understand how to address and prevent waste. This is essential for protecting property value, managing client expectations, and effectively handling legal and financial responsibilities.

Why You Should Know About The Act of Waste

To better understand a topic, it is essential that we grasp completely why the topic in itself matters. In the case of waste, there are serious implications. 

• Legal Implications: Dealing with the act of waste includes navigating legal battles and facing serious consequences for perpetrators. They can lose their security deposits, be evicted, or face lawsuits for damages.
• Protecting Property Value: A proper understanding of waste helps both tenants and owners to preserve the property’s market value.
• Real Estate Transactions: As a real estate agent, you’ll know that the condition of the property is essential, so it’s obvious that waste can affect the transaction terms and final price. 

Now you might be reviewing this in preparation for your real estate exam, and that is very important, as the exam requires you to deeply understand each term. 

But remember that this will also help you start your real estate career with the best preparation. 

Types of Waste in Real Property

There are three types of waste commonly recognized in real estate law:

• Voluntary Waste: When the action is deliberated, resulting in harm, alterations, or destruction. 
• Permissive Waste: Rather than an action, this is due to inaction by the tenant or property holder.
• Ameliorative Waste: Not all alterations decrease the property’s value; some even increase it. But if the owner didn’t give their permission, it is still considered waste.
  

Legal Implications of the Act of Waste

As we already learned, the act of waste has legal consequences, not only for the tenant who did what they shouldn’t, but also for the owner who didn’t stop it on time. 

But what are those implications? Here are some real-life examples of what constitutes an act of waste and the consequences that follow. 

Legal Implications of Voluntary Waste 

Let’s imagine there’s a tenant, Leonardo, who decides that he wants more natural light in the kitchen and that an open area would look spectacular. So he knocks down a wall without the owner’s permission, so, a case of voluntary waste. 

The landlord, quite mad about it, does what most landlords might do in a similar case and files a lawsuit for property damage and, depending on the lease agreement, may also evict him.

Legal Implications of Permissive Waste

We now have a different tenant, Michel Angelo, who has a leak in the roof. Instead of fixing it as soon as he sees it, he just let it be. Over time, this leak causes extensive water damage to the ceiling and walls, a very clear example of permissive waste. 

The landlord, when finally notices the damage, can and will sue him for the cost of repairing the house, and will probably evict him for failing to maintain the property.

Legal Implications of Ameliorative Waste

Our final tenant, Rafael, has a great idea to increase the property’s value and have the best summer. So he adds a swimming pool without proper authorization, thereby violating the terms of the lease and committing ameliorative waste.

The owner might agree that the pool increases the market value and that it looks incredible. However, he can still sue Rafael for unauthorized alterations and may even require him to remove the alterations and restore the property to its original state. 

Legal Remedies for the Property Owner

Of course, the owners have multiple methods to both deal with and prevent the act of waste. So, let’s see what they are. 

How to proceed after detecting waste 

After the property owner detects the act of waste, there are three legal remedies that the owner can use. 

• Termination of Lease: A property owner can terminate the lease and remove the tenant after the tenant has committed an act of waste.
  
• Damages: The property owner can file a lawsuit for damages to recover repair costs or the lost value of the property.
  
• Injunctions: If the waste is detected while it is being done, the property owner can seek an injunction to stop the tenant from continuing to damage the property.
  

How to Prevent Waste in Real Property

To maintain the property’s value and ensure legal compliance, there are plenty of strategies to prevent waste. This prevention, of course, will also help you avoid costly repairs later, so here are some examples and best practices to prevent waste in real property:

• Maintain a clear lease agreement and contracts: A well-defined lease agreement is one of the most effective tools for preventing waste. Make sure it specifies the maintenance responsibilities, prohibited activities, and tenant expectations. 
• Make regular property inspections: This allows for early identification of waste or neglect and can prevent further deterioration. Also, keep records of inspections, including photos and written reports, to hold tenants accountable and as evidence in case of disputes.
• Educate your tenants: Make sure they understand the importance of property maintenance. Provide new tenants with an orientation and keep open lines of communication.
• Enforce property maintenance programs: This can involve regular inspections and maintenance of the plumbing, HVAC, and electrical systems to prevent potential issues.
• Get insurance coverage: This applies to both tenants, who can benefit from renters’ insurance that helps cover the damage they might cause, and owners, who can opt for landlord insurance that covers vandalism and accidental damage.

How to Learn More with Lexawise

At Lexawise, we recognize that the act of waste can be a challenging topic on the exam and is worthy knowledge that you’ll use in your real estate career. That’s why our real estate exam prep includes easy-to-understand breakdowns of terms like this. 

While preparing for your Real Estate Exam, you’ll have to deeply learn quite a lot of terms. Lexawise is here to help you out not only with that particular area of the exam, but with so much more. 

Check out all the resources you’ll have at your disposal with our Exam prep courses!

• 4,500+ Practice Questions across every key exam topic
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• 800+ Flashcards to master your exam’s real estate terms
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Lexawise fits every learning style, whether you prefer quick study sessions or long ones. With these tools, you’ll know how to pass your real estate exam on your first try.