Chapter 5 The Contract Of Sales & Leases Flashcards
Actual Eviction
Wrongful use of self-help whereby the landlord, without the aid or control of the court system, physically removes the tenant and his belongings from the premises or takes action to prevent tenant access to the premises.
Assignment
Transfer of a lease from the present tenant to the assignee; the assignee then must make lease payments to the landlord
Constructive Eviction
Occurs when the tenant is prevented from the quiet enjoyment of the premises
Estate at sufferance
Describes a tenant who is originally in lawful possession of another’s property but refuses to leave after his right to possessions terminates
Estate at will
An estate in which the duration of the term is unknown when the estate is created because either party may terminate the lease simply by giving notice to the other party
Estate for years
Exists for a fixes period, which can be as short as one day
Eviction
A legal action for removal of a tenant and his belongings and a return of possessions of the premises to the landlord
Graduated Lease
One in which the rental changes from period to period over the lease term
Gross Lease
Provides for the owner (lessor) to pay all expenses, such as real property taxes, owners insurance, liability insurance, and maintenance
Ground Lease
A long term lease of unimproved land, usually for construction purposes
Holdover tenant
A tenant who remains in possession of a property after a lease teminates
Index Lease
A method of determining rent on long term leases where the rent is tied to an economic indicator such as an index
Landlease
Allows a lessee the right to use land for any purpose for a specified period
Lease
A contract in which, for a consideration (usually rent), a property owner transfers to a tenant a property interest or possession, for a prescribed time
Lessee
The tenant placed in possession of the leased premises.
Lessor
The landlord or owner of the leases property
Net Lease
The tenant (lessee) pays some or all of the expenses
Percentage Lease
A lease with a base rent plus an additional monthly rent based on a percentage of the lessee’s gross sale
Periodic Lease
Automatically renews itself for another period at the end of each period unless one party gives notice to the other at the prescribed time
Periodic tenancy or estate from year-to-year
The period length can be a week, a month, or any other negotiated time period
Security Deposit
Money paid by the tenant at the start of a lease that will be refunded at the end of the lease based upon the condition of the premises; often negotiated
Sublease
A lease under which a tenant leases a property to a third party, the sub lessee; the original tenant is still responsible to the landlord for the lease payments under the original lease contract; the sub lessee pays the rent to the tenant (lessee), and the tenant pays the landlord.
Apportionment
The division of expenses between seller and purchaser
Arm’s length
The relationship between parties to a contract; they are assumes to have equal bargaining power and are not related by business interest or familial relationship
As is
Wording on an offer to purchase contract indication that the premises is sold without warranty as to condition and the purchaser agree to take title in the present condition subject to reasonable use, wear, and tear between the date of the contract and the closing date
Assignment
A new party to a contract agrees to satisfy the former contracting party’s obligation
Breach of contract
Violation of the terms of a contract
Bilateral contract
One in which two parties have made promises of some kind to each other.
Binder
In certain areas of NY, a written document for the purchase and sale of real property used by licensees instead of an offer to purchase contract; does not generally contain all the elements of a valid contract; however, if it does, it may be enforced as a contract
Caveat
Latin for a warning or caution, in NY, properties that lie within an Agricultural District must have a disclosure attached stating that the property lies withing an agricultural district.
Caveat emptor
Latin for “let the buyer beware”
Contingencies
Additions, amendments or agreements annexed to the contract and incorporated into its terms
Contract
An agreement between competent legal parties to do or refrain from doing some legal act in exchange for consideration.
Counteroffer
An acceptance that differs in any way from the offer
Earnest-money deposit
Shows the sincerity of the buyer and expresses a commitment to raise the money called for in the contract.
Executed contract
A contract that has been fully performed
Executory contract
A contract that is not fully performed
Express Contract
A contract in which the parties have agreed on all terms can be written or oral
Forberance
May be granted by a lending institution; the act of refraining from taking legal action for nonpayment of a mortgage despite the fact that it is due.
Implied contract
One inferred from the conduct and actions of another without express agreement
Liquidated damages
The parties to the contract can stipulate in the contract an amount of money to be paid upon certain breached of the contract
Meeting of the minds
When the parties to the contract reach agreement on the terms to be included in the contract
Novation
A form of agreement that terminates a previous contract; the substitution of a new contract for a prior contract of the substitution of a new party for an old party.
Offer to purchase contract
A bilateral, express contract that is the “road map” for the real estate transaction
Option
A contract in which an optionor (owner) sells a right to purchase a property to a prospective buyer, called an optionee, at a particular price for a specialized time period; if no time limit is set, it may contain a clause allowing the optionee the first choice to either purchase or not purchase the property (right of first refusal) if a third party wishes to purchase the property.
Power of attornery
The right given by one party to another to perform certain acts in his behalf
Rescission
To take back, remove, or annul; contract remedy applied when a contract has not been performed by either party and has been breached by a party
Specific performance
An order from the court requiring the contract to be completed as originally agreed
Statute of frauds
In NY is the General Obligation Law; requires that real estate contracts be in writing. Leases and listing contracts for more than one year must be in writing to be enforceable in court
Statue of Limitation
Law stating that, if a party to a contract fails to bring a lawsuit against a defaulting party within a time period set by statute, the injured party loses the right of remedy
Time is of the essence
If written on the contract for purchase and sale, the closing must take place on or before the exact date stipulated in the contract
Unenforceable contract
One that appears to meet the requirements for validity but would not be enforceable in court
Uniform Commercial code
Contains ruling governing the financing of loans to purchase cooperative apartments; provides for the lender to retain a security interest in the personal property until the lender is paid in full
Unilateral Contract
When one party makes a promise in order to induce a second party to do something the party making the promise is not obligated under the contract until the other party does what has been asked
Valid contract
One that is binding enforceable on all parties; contains all the essential elements of a contract
Voidable Contract
May or may not be enforceable between the parties; results from the failure of the contracting parties to meet some legal requirement in negotiating the agreement
Void Contract
Has absolutely no legal force or effect
Attorney Review or approval clause
A condition making a contract subject to approval by each party’s attorney
Down payment
The portion of a property’s purchase price that is paid in cash and is not part of the mortgage loan. In certain upstate areas, the term used is deposit down payment; generally, when the buyer defaults, the down payment is the amount of liquidated damages to which the seller is entitled.
Lawyers’ Fund for Client Protection
One of its purposed is to reimburse client money that is misused in the practice of law.
Mortgage contingency clause
States that the closing is contingent, or dependent upon, the purchaser’s receipt of a mortgage commitment.
