Modern Real Estate Practice: Unit 18

Front 1

Lease

Back 1

A lease is a contract between a lessor and lessee. A lease transfers the lesser's rights to exclusive possession and use of the property to the tenant for a specified period of time and establishes the consideration the lessee is to pay rent the use of property.

Front 2

Leasehold estate

Back 2

A tenant's right to possess real estate for the term of the lease is called a leasehold estate. A leasehold is generally considered personal property.

Hint 2

Less than Freehold

Front 3

Leasehold Estates

Back 3

1. Estate for Years.

2. Estate from period to period.

3. Estate at Will.

4. Estates at Severance

Front 4

Estate for years

Back 4

An estate for years is a leasehold estate that continues for definite period. This amount of time maybe years, months, weeks, or even days. Always has a specific starting and ending date which is unaffected by the original lessor's death or sale of property.

Front 5

Estate from period to period

Back 5

Is created when the landlord and tenant into an agreement for an indefinite time. The tenancy is created initially to run for definite amount of time with no expiration date. Tenancy continues indefinitely and is automatically renewable until proper notice of termination is given.

Front 6

Estate at will

Back 6

Gives the tenant the right to possess the property with the landlord's consent for an unspecified or uncertain term and there was no initial period of occupancy specified to begin with.

Front 7

Estate at Severance

Back 7

This arises when a tenant who lawfully took possession of real property continues possession without the landlord's consent after the right of possession has expired. The landlord then can object to the tenant holding over or informing the tenant with a notice to quit.

Front 8

Holdover tenancy

Back 8

The landlord can accept rent offered by the tenant, thereby creating a new tenancy under conditions of the original lease period limited to one year

Front 9

Requirements of a valid lease

Back 9

Capacity to contract

Legal Objective

Offer and acceptance

Consideration

Front 10

Possession of premise

Back 10

Bound by the Covenant of quiet enjoyment, the lessee can occupy the premises without interference from the owner or anyone else except in emergencies, the tenant's permission is usually required to enter the property.

Front 11

Lease contacts may include

Back 11

Possession of premise, use of premise, term of lease, security deposit, improvements, accessibility, maintenance of premise, destruction of premise, assignment and subleasing, recording Elise, non-disturbance clause, and options.

Front 12

Assignment

Back 12

In an assignment of lease, a tenant transfer the entire leasehold interest to another person. The new tenant is legally obligated to comply with all the promises the original tenant made in the lease.

Front 13

Sublease

Back 13

Under a sublease, a tenant transfers less than the entire leasehold interest by subletting the premise to a new tenant. The original tenant remains responsible for rent being paid by the new tenant and for any damage done to the rental during the lease term. The sublessor's interest in the real estate is known as a sandwich lease. Must have consent from the lessor.

Front 14

Non-disturbance clause

Back 14

A non-disturbance clause is included in the financing instrument used to mortgage leased premises. So long as the lessee is current and payment of the required rent, should the mortgagee forclose, the mortgagee agrees not to terminate the tenancy.

Front 15

Options

Back 15

A lease may contain a clause that grants the lessee the privilege of renewing the lease, called a renewal option, or even in some cases the option to purchase the premise, called a purchase option.

Front 16

Types of leases

Back 16

1. Gross lease.

2. Net lease.

3. Percentage lease

Front 17

Gross lease

Back 17

Tenant pays a fixed rent and some or all of the utility expenses, while the landlord pays all taxes, Insurance, repairs, any other utility expenses, and maintenance connected with the property. Residential and Commercial office leases are most often gross leases.

Front 18

Net lease

Back 18

The tenant pays all or most of the property expenses, such as Hazard Insurance, property taxes, and or common area maintenance charges in addition to rent. Leases for entire commercial or industrial buildings, ground leases, and long-term leases are usually net leases.

Front 19

Percentage lease

Back 19

The rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tenant doing business on the leased property.

Front 20

Variable lease

Back 20

Is when a lease may allow for increases in the rental charges during the lease term

Front 21

Ground lease

Back 21

When a landowner leases unimproved land to a tenant who agrees to erect a building on the land, is most often used in commercial and industrial property development. Ground leases typically involve separate ownership of the land and the buildings. Often run for 50 to 99 years. Generally net leases.

Front 22

Oil and gas lease

Back 22

Usually only covers subsurface rights comma except for enough surface space to conduct extraction operations. Usually the landowner receives a cash payment. If oil or gas found the landowner usually receives a percentage of its value as a royalty.

Front 23

Lease purchase

Back 23

Is used when the tenant wants to purchase the property but is not yet able to do so. The down payment is paid and part of the periodic rent may be applied towards the purchase price of the property.

Front 24

Sale and leaseback

Back 24

The property owners sell the property and then lease it back for an agreed period nd rental. Often used by a company that owns its own office building but it needs capital.

Front 25

Breach of lease

Back 25

When a tenant breaches any lease provision, the landlord me Sue the tenant to obtain a judgment to cover past due rent, damage to the property, or other defaults.

Front 26

Suit or possession- Actual eviction

Back 26

When a tenant breaches a lease or improperly retains leased premises, the landlord May regain possession through a legal process known as actual eviction. Most lease terms require a 10-day notice in the case of default.

Front 27

Tenants remedies- constructive eviction

Back 27

If a landlord breaches any Clause of a lease agreement the tenant has the right to sue and recover damages against landlord. The tenant may have the right to abandon the property. Constructive eviction terminates the lease agreement.

Front 28

Uniform residential Landlord and Tenant Act

Back 28

Was created in 1972. The ACT addresses such issues as

•the landlord's right of Entry.

•Maintenance of the premises.

•The tenant protection against retaliation by the landlord for complaints.

•The disclosure of the properties owner's name and address to the tenant.

Front 29

Index lease

Back 29

Allows the rent to be increased or decreased periodically based on the changes in the Consumer Price Index or some other indicator

Front 30

Graduated lease

Back 30

Provides the specified rent increases at set future dates