Chapter 10: Leases

Question 1

What does a sublease consist of?

Answer 1

The original tenant (sublessor) transfers less than the entire remaining leasehold estate to the sublessee

Question 2

What is a sandwich lease?

Answer 2

the original tenant. is the lessee in the main lease and the lessor in the sublease

Question 3

What is an option to renew?

Answer 3

Gives the tenant the right to extend the lease for another term

Question 4

What is an option to buy?

Answer 4

Gives tenant the right to buy at set price within a designated period of time

Question 5

What are the 7 types of leases ?

Answer 5

Gross lease, net lease, net lease, graduate lease, reappraisal lease, percentage lease, ground lease, and sale leaseback

Question 6

What is the right of refusal?

Answer 6

does not obligate landlord to self, but must offer to tenant before anyone else.

Question 7

What is gross lease?

Answer 7

AKA Flat lease, tenant pays rent to landlord, they use it to pay property taxes, insurance premium, repair/maintenance.

Question 8

What is a net lease?

Answer 8

Tenant pays a fixed rental plus all operating expenses.

Question 9

What is an escalator clause in a graduated lease?

Answer 9

The landlord in in a long term lease acquires some necessary protection against rising costs & inflation.

Question 10

What is a step up lease?

Answer 10

Provides rent increases in predetermined amounts

Question 11

What is an index lease?

Answer 11

Periodic rent adjustment based on changes in economic index.

Question 12

What is an escalator lease?

Answer 12

Rent increases are tied to operating cost

Question 13

What is an reappraisal lease?

Answer 13

Provides the rents to be reappraised at certain intervals

Question 14

What is a percentage lease?

Answer 14

Tenant pays a fixed minimum(base rent) plus percentage of gross sales/profits.

Question 15

What is a ground lease?

Answer 15

Rental for unimproved land with permission granted to the tenant to construct building or make improvements at tenant’s expense.

Question 16

what is a sale leaseback

Answer 16

The owner sells property to an investor with an agreement to lease it back on a long term net lease

Question 17

What is the role of officers and directors?

Answer 17

Operating and conducting business affairs of association. of all owners

Question 18

What is the Role of community association manager?

Answer 18

Serves as buffer between directors and the owners

Question 19

What does fidelity insurance cover?

Answer 19

The broke, partners, officers, affiliates, employees and anyone handling funds.

Question 20

What is a leasehold estate?

Answer 20

less than freehold interest, known as tenancy

Question 21

What is a leased fee estate?

Answer 21

entitling the lessor (landlord) to receive rental payments from tenant

Question 22

What are the 4 types of leasehold estates?

Answer 22

estate for years, estate from period to period, estate at will, estate at sufferance

Question 23

What does estate for years (tenancy for years) consist of?

Answer 23

tenant has exclusive possession and use of property

Question 24

What does estate from period to period(periodic tenancy) consist of?

Answer 24

rights are transferred from period covered by rent and automatically renewed every time rent is paid

Question 25

What does estate at will (tenancy at will) consist of?

Answer 25

landlord allows tenant to occupy property for uncertain time

Question 26

What does estate at sufferance (tenancy at sufferance) consist of?

Answer 26

when tenant stays over for longer than lease agreement (holdover tenant)

Question 27

what are the 9 requirements for a valid lease?

Answer 27

legally competent, mutual agreement, genuine assent, consideration, lawful purpose, in writing, description of premises, lease term, signature-delivery-acceptance

Question 28

what sis a subordination clause?

Answer 28

the tenant's rights have no priority over any loan whether arranged before or after lease was signed

Question 29

What is a non-disturbance agreement?

Answer 29

lender promises not to cancel any leases in the event of a foreclosure

Question 30

What does subdivision with no governing homeowner association consist of?

Answer 30

protection of covenants but no obligation to pay assessments. owners take violates of covenants amongst themselves

Question 31

What does subdivision with voluntary homeowner association consist of?

Answer 31

owners can elect not to join association. association has obligation to enforce covenants

Question 32

What does subdivision with mandatory homeowner association consist of?

Answer 32

association can ensure facilities are maintained and covenants enforced. They can levy assessment against owners

Question 33

What is the GA Property owners association act?

Answer 33

provides the option to submit a statutory scheme of development that provides significant collection and enforcement powers