Chapter 4: The Contract of Sales & Leases

Question 1

A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, or at will.

Answer 1

Lease

Question 2

The interest or estate which a lessee of real estate has therein by virtue of the lessee’s lease.

Answer 2

Leasehold Estate

Question 3

Also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent.

Answer 3

Periodic Lease

Question 4

A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, or at will.

Answer 4

Covenant

Question 5

A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction.

Answer 5

Security Deposit

Question 6

The method or manner by which a right or contract is transferred from one person to another.

Answer 6

Assignment

Question 7

An arrangement in which the lessee (tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant.

Answer 7

Sublease

Question 8

A legal proceeding by a lessor landlord to recover possession of real property.

Answer 8

Eviction

Question 9

Where one is either by force or by process of law, actually put out of possession.

Answer 9

Actual Eviction

Question 10

Any disturbance of the tenant’s possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased.

Answer 10

Constructive Eviction

Question 11

The right of an owner or a person legally in possession to the use of property without interference of possession.

Answer 11

Quiet Enjoyment

Question 12

An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.

Answer 12

Ground Lease

Question 13

A lease which provides for a graduated change at stated intervals in the amount of the rent to be paid; used largely in long-term leases.

Answer 13

Graduated Lease

Question 14

A lease of property whereby the lessor is to meet all property charges regularly incurred through ownership.

Answer 14

Gross Lease

Question 15

A tenant who remains in possession of leased property after the expiration of the lease term.

Answer 15

Holdover Tenant

Question 16

A lease tied to an index such as the Consumer Price Index.

Answer 16

Index Lease

Question 17

A land lease–also called a ground lease–is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.

Answer 17

Land Lease

Question 18

A lease that requires the tenant to pay, in addition to rent, some or all of the property expenses that normally would be paid by the property owner. These include expenses such as real estate taxes, insurance, maintenance, repairs, utilities, and other items.

Answer 18

Net Lease

Question 19

A lease in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent.

Answer 19

Triple Net Lease

Question 20

A person to whom property is rented under a lease.

Answer 20

Lessee

Question 21

One who rents property to another under a lease.

Answer 21

Lessor

Question 22

A clause in a lease that outlines the terms for renewing or extending an original lease agreement.

Answer 22

Option to Renew

Question 23

A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.

Answer 23

Percentage Lease

Question 24

A lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building.

Answer 24

Proprietary Lease

Question 25

A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction.

Answer 25

Security Deposit

Question 26

A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an “implied” contract in which the existence of the contract is assumed by the circumstances.

Answer 26

Express Contract

Question 27

A legal substitute for a contract. An implied contract is an agreement created by actions of the parties involved, but it is not written or spoken. This is a contract assumed to have been drawn.

Answer 27

Implied Contract

Question 28

An agreement that has been fully performed.

Answer 28

Executed Contract

Question 29

A contract which has not yet been fully performed (fully executed).

Answer 29

Executory Contract

Question 30

A clause in a contract that states a mortgage must be obtained in order for the contract to be binding.

Answer 30

Mortgage Contingency Clause

Question 31

A legal term used to disclaim some implied warranties for an item being sold. Denotes that the seller is selling, and the buyer is buying a property in whatever condition it presently exists.

Answer 31

“As Is”

Question 32

A Latin term that means “let him beware.”.

*Caveat is usually interpreted as a sort of warning or cautionary expression.

Answer 32

Caveat

Question 33

Let the buyer beware. The buyer must examine the goods or property and buy at the buyer’s own risk.

Answer 33

Caveat Emptor

Question 34

Anything given to induce another to enter into a contract such as money or personal services.

Answer 34

Consideration

Question 35

A provision in a contract that requires the occurrence of a specific event before the contract can be completed.

Answer 35

Contingency

Question 36

A type of offer made in response to another offer, which was seen as unacceptable.

*A counteroffer revises the initial offer, making it more appealing for the person making the new offer.

Answer 36

Counteroffer

Question 37

Down payment made by a purchaser of real estate as evidence of good faith.

Answer 37

Earnest Money Deposit

Question 38

A special agreement between the lender and the borrower to delay a foreclosure.

Answer 38

Forbearance

Question 39

A provision in certain legal contracts that allows for the payment of a specified sum should one of the parties be in breach of contract.

Answer 39

Liquidated Damages

Question 40

The act of either:

1) replacing an obligation to perform with a new obligation; or
2) adding an obligation to perform; or
3) replacing a party to an agreement with a new party.

Answer 40

Notation

Question 41

Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person (the “offeror”) to another person (the “offeree”), and an indication by the offeree of its acceptance of those terms.

Answer 41

Offer & Acceptance

Question 42

A right given for a consideration to purchase or lease a property upon specified terms within a specified time;

if the right is not exercised the option holder is not subject to liability for damages;

if exercised, the grantor of option must perform.

Answer 42

Option

Question 43

A written instrument duly signed and executed by a person which authorizes an agent to act on his/her behalf to the extent indicated in the instrument.

Answer 43

Power of Attorney

Question 44

A remedy whereby a court orders a change in a written document to reflect what it ought to have said in the first place.

Answer 44

Reformation

Question 45

The right of an individual involved in a contract to return to a state identical to that before they entered into the agreement, due to courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a material error in the contract, among other reasons.

Answer 45

Rescission

Question 46

Also known as an addendum, in general, is a writing annexed to an agreement.

Answer 46

Rider

Question 47

A contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before he owner is entitled to enter into the transaction with a third party.

Answer 47

Right of First Refusal

Question 48

An order of a court which requires a party to perform a specific act, usually what is stated in a contract.

Answer 48

Specific Preformance

Question 49

State law which provides that certain contracts must be in writing in order to be enforceable at law.

Answer 49

Statute of Frauds

Question 50

A statute barring all right of action after a certain period of time from the time when a cause of action first arises.

Answer 50

Statute of Limitations

Question 51

A standard set of business laws that regulate financial contracts. The Uniform Commercial Code has been adopted by most states in the U.S. The code itself has nine separate articles. Each article deals with separate aspects of banking and loans. The UCC better enabled lenders to loan money secured by the borrower’s personal property.

Answer 51

Uniform Commercial Code

Question 52

To have no force or effect; that which is unenforceable.

Answer 52

Void

Question 53

That which is capable of being adjudged void, but is not void unless action is taken to make it so.

Answer 53

Voidable

Question 54

A clause found in real estate contracts that may allow buyers to walk away from an agreed upon sale for any reason.

Answer 54

Attorney Review Clause

Question 55

The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount.

*Mortgage insurance is required when a down payment less than 20 percent is made.

Answer 55

Down Payment

Question 56

Setup to protect consumers from dishonest attorneys.

Answer 56

Lawyer’s Fund for Client Protection