Ch 4 Section 3 Leases and Property Management

Question 1

5 Essential Elements of a real estate contract

Answer 1

• competent parties who have the legal capacity to contract
• a meeting of the minds manifest in an offer and acceptance
  -consideration usually a rental amount
• a legal description
• an intended use of the property for legal purposes

Question 2

Leases for more than one year ( one year plus day ) must be in what to be enforced ?

Answer 2

Writing

Question 3

Lease agreement

Answer 3

Both a contract outlining the rights and obligations of landlords and tenants and a conveyance creating a leasehold interest in real property

Question 4

4 categories of leasehold estates

Answer 4

• Estate/ tenancy for years
• Estate/ tenancy from year to year
• Estate/ tenancy at will
• Estate/ tenancy at sufferance

Question 5

Covenant of quiet enjoyment

Answer 5

Leases transfer an exclusive right of possession and use for a specified period of time

Question 6

Restrictive covenants

Answer 6

Landlord may restrict the use of the premises

Question 7

Protective covenant

Answer 7

Stating that the landlord will not lease a space to certain store

Question 8

Subordination clause

Answer 8

States that the lease is subordinate to all present and future mortgages affecting the property

Question 9

Option clause

Answer 9

Gives the lessee the right to purchase the leased property at a specific price for a specific period of time under specific terms and conditions

Question 10

Escalator clause

Answer 10

Clause that allows for an up or down adjustment of certain payments

Question 11

Types of leases

Answer 11

• Gross (fixed or flat)
• Net
• Percentage
• Graduated
• Ground or land
  -Proprietary
• Revelation (appraisal)

Question 12

Gross (fixed or flat) lease

Answer 12

Lessee pays a fixed rate rent and the lessor pays tax’s, insurance, and all other expenses

Question 13

Net lease

Answer 13

Lessee pays a base rent and also pays a pro rated share of the taxes, insurance and specified operating expenses

Question 14

Percentage lease

Answer 14

Allows the landlord to participate in the good business fortunes of his tenants

Question 15

Graduated lease

Answer 15

Provides pro predetermined rental increases at specified times

Question 16

Ground (land ) lease

Answer 16

Lease whereby an owner leases vacant land to a tenant who then builds his own building

Question 17

Proprietary lease

Answer 17

Written lease that has no fixed rental amount

Question 18

Revaluation lease

Answer 18

In which rent is adjusted periodically according to the revaluation of the real estate

Question 19

Leases can be terminated by

Answer 19

• expiration of the term
• proper notice
• destruction of the property
• agreement
• abandonment
• breach

Question 20

Property management

Answer 20

Aspect of the real estate business concerned with the leasing management and maintenance of property for others