Chapter 5 The Contract Of Sales & Leases

Question 1

Actual Eviction

Answer 1

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.

Question 2

Assignment

Answer 2

Transfer of a lease from the present tenant to the assignee; the assignee then must make lease payments to the landlord

Question 3

Constructive Eviction

Answer 3

Occurs when the tenant is prevented from the quiet enjoyment of the premises

Question 4

Estate at sufferance

Answer 4

Describes a tenant who is originally in lawful possession of another’s property but refuses to leave after his right to possessions terminates

Question 5

Estate at will

Answer 5

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

Question 6

Estate for years

Answer 6

Exists for a fixes period, which can be as short as one day

Question 7

Eviction

Answer 7

A legal action for removal of a tenant and his belongings and a return of possessions of the premises to the landlord

Question 8

Graduated Lease

Answer 8

One in which the rental changes from period to period over the lease term

Question 9

Gross Lease

Answer 9

Provides for the owner (lessor) to pay all expenses, such as real property taxes, owners insurance, liability insurance, and maintenance

Question 10

Ground Lease

Answer 10

A long term lease of unimproved land, usually for construction purposes

Question 11

Holdover tenant

Answer 11

A tenant who remains in possession of a property after a lease teminates

Question 12

Index Lease

Answer 12

A method of determining rent on long term leases where the rent is tied to an economic indicator such as an index

Question 13

Landlease

Answer 13

Allows a lessee the right to use land for any purpose for a specified period

Question 14

Lease

Answer 14

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

Question 15

Lessee

Answer 15

The tenant placed in possession of the leased premises.

Question 16

Lessor

Answer 16

The landlord or owner of the leases property

Question 17

Net Lease

Answer 17

The tenant (lessee) pays some or all of the expenses

Question 18

Percentage Lease

Answer 18

A lease with a base rent plus an additional monthly rent based on a percentage of the lessee’s gross sale

Question 19

Periodic Lease

Answer 19

Automatically renews itself for another period at the end of each period unless one party gives notice to the other at the prescribed time

Question 20

Periodic tenancy or estate from year-to-year

Answer 20

The period length can be a week, a month, or any other negotiated time period

Question 21

Security Deposit

Answer 21

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

Question 22

Sublease

Answer 22

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.

Question 23

Apportionment

Answer 23

The division of expenses between seller and purchaser

Question 24

Arm’s length

Answer 24

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

Question 25

As is

Answer 25

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

Question 26

Assignment

Answer 26

A new party to a contract agrees to satisfy the former contracting party’s obligation

Question 27

Breach of contract

Answer 27

Violation of the terms of a contract

Question 28

Bilateral contract

Answer 28

One in which two parties have made promises of some kind to each other.

Question 29

Binder

Answer 29

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

Question 30

Caveat

Answer 30

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.

Question 31

Caveat emptor

Answer 31

Latin for “let the buyer beware”

Question 32

Contingencies

Answer 32

Additions, amendments or agreements annexed to the contract and incorporated into its terms

Question 33

Contract

Answer 33

An agreement between competent legal parties to do or refrain from doing some legal act in exchange for consideration.

Question 34

Counteroffer

Answer 34

An acceptance that differs in any way from the offer

Question 35

Earnest-money deposit

Answer 35

Shows the sincerity of the buyer and expresses a commitment to raise the money called for in the contract.

Question 36

Executed contract

Answer 36

A contract that has been fully performed

Question 37

Executory contract

Answer 37

A contract that is not fully performed

Question 38

Express Contract

Answer 38

A contract in which the parties have agreed on all terms can be written or oral

Question 39

Forberance

Answer 39

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.

Question 40

Implied contract

Answer 40

One inferred from the conduct and actions of another without express agreement

Question 41

Liquidated damages

Answer 41

The parties to the contract can stipulate in the contract an amount of money to be paid upon certain breached of the contract

Question 42

Meeting of the minds

Answer 42

When the parties to the contract reach agreement on the terms to be included in the contract

Question 43

Novation

Answer 43

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.

Question 44

Offer to purchase contract

Answer 44

A bilateral, express contract that is the “road map” for the real estate transaction

Question 45

Option

Answer 45

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.

Question 46

Power of attornery

Answer 46

The right given by one party to another to perform certain acts in his behalf

Question 47

Rescission

Answer 47

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

Question 48

Specific performance

Answer 48

An order from the court requiring the contract to be completed as originally agreed

Question 49

Statute of frauds

Answer 49

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

Question 50

Statue of Limitation

Answer 50

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

Question 51

Time is of the essence

Answer 51

If written on the contract for purchase and sale, the closing must take place on or before the exact date stipulated in the contract

Question 52

Unenforceable contract

Answer 52

One that appears to meet the requirements for validity but would not be enforceable in court

Question 53

Uniform Commercial code

Answer 53

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

Question 54

Unilateral Contract

Answer 54

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

Question 55

Valid contract

Answer 55

One that is binding enforceable on all parties; contains all the essential elements of a contract

Question 56

Voidable Contract

Answer 56

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

Question 57

Void Contract

Answer 57

Has absolutely no legal force or effect

Question 58

Attorney Review or approval clause

Answer 58

A condition making a contract subject to approval by each party’s attorney

Question 59

Down payment

Answer 59

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.

Question 60

Lawyers’ Fund for Client Protection

Answer 60

One of its purposed is to reimburse client money that is misused in the practice of law.

Question 61

Mortgage contingency clause

Answer 61

States that the closing is contingent, or dependent upon, the purchaser’s receipt of a mortgage commitment.