Chapter 6 - Real Estate Contracts Vocabulary Flashcards
Chap 6 Vocab
action in ejectment
(1) The legal remedy to remove a tenant. (2) Also known as unlawful detainer action.
Aggregate Rent
The total rent for the full term of the lease.
Arbitration
An alternative to a court proceeding where the parties agree to submit facts and evidence to an impartial third party for a decision.
As-Is Clause
A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.
Asset
An item of economic value owned by an individual, especially those that can be converted to cash.
Base Rent
The minimum amount of rent indicated in a lease. Base Year A period for determining a property’s actual operating expenses, typically over the first year of a lease term, that is used as the point of reference against which increases in subsequent years are compared and then passed on to the tenant.
Boilerplate
Standardized language used in contracts for the sake of efficiency and completeness.
Construction Loan
A temporary loan used to finance the construction of improvements and buildings on land. – An interim loan made to finance the actual construction or improvement on land. Funds are usually disbursed in increments as the construction progresses.
Constructive Eviction
Occurs when the tenant’s use of the premises is substantially disturbed or interfered with by the landlord’s actions or failure to act where there is a duty to act. The tenant is effectively forced to move out and terminate the lease without further liability for further rent. – Conduct by a landlord that impairs tenant’s possession of the premises making occupancy hazardous.
Demise
(1) To convey as an estate by will or lease. (2) To transmit by succession or inheritance.
deposit receipt
Contract that acts as the receipt for earnest money given by the buyer to secure an offer, as well as being the basic agreement, between the buyer and seller.
eviction
The legal process of removing a tenant from the premises for some breach of the lease.
eviction notice
Written notice from the landlord to the tenant requesting that he or she move out of the property within three days or meeting the landlord’s requirements.
Eviction, Actual
The legal process of forcing someone off property or preventing someone from re-entering property.
Eviction, Constructive
When a landlord’s act (or failure to act) interferes with the tenant’s quiet enjoyment of the property, or makes the property unfit for its intended use, to such an extent that the tenant is forced to move out.
Eviction, Retaliatory
When a landlord evicts a tenant in retaliation for complaining about code violations or for participating in a tenants’ rights group.
Eviction, Self-help
When a landlord uses physical force, a lockout, or a utility shutoff to remove a tenant, instead of going through the legal process.
Gross Lease
A lease for which the tenant pays a fixed amount to the landlord and the landlord pays all expenses related to ownership. – (1) A gross lease is also called a flat, fixed or straight lease. The tenant pays an agreed-upon sum as rent and the landlord pays any other expenses such as taxes, maintenance, or insurance. (2) The tenant pays an agreed-upon sum as rent, plus certain agreed-upon expenses per month (i.e., taxes, insurance and repairs).
ground lease
A lease for only the land.
Implied Warranty of Habitability
An implied guarantee that the property is safe and fit for human habitation (maintained to meet bare living requirements); treated by law as an implicit provision in every residential lease, regardless of the express terms of the lease. Also called Covenant of Habitability.
L.A.N.D .
The mnemonic for the four elements of a valid lease: Length of time, Amount of rent, Names of parties, and Description of the property.
landlord
(1) Lessor. (2) Property owner.
Lease Purchase
A contract where a tenant pays rent for temporary possession but is obligated to complete the purchase at some point in the future.
Lease with Option to Buy
A contract where a tenant pays rent for temporary possession and has the option to purchase the property at some point in the future.
Leasehold Improvement
A fixture attached to real property by a landlord for the use of a tenant.
Liquidated Damage Clause
A sum of money that the parties to a contract agree to in advance that will serve as compensation in the event of breach. Often, it’s the forfeiture of the earnest money deposit in purchase contracts.
Net Lease
A lease agreement that requires the lessee (tenant) to pay some of the operating expenses and other costs of the property in addition to paying the rent. – The tenant pays an agreed-upon sum as rent, plus certain agreed-upon expenses per month (i.e., taxes, insurance and repairs).
notice to pay rent or quit
(1) A written notice from the landlord to the tenant informing him or her to move out of the property within three days or meet the landlord’s requirements. (2) Also known as an eviction notice.
Occupancy Standard
The establishment of the maximum number of occupants allowable in a given rental dwelling, intended to help promote an adequate and safely occupied inventory of housing.
option
(1) A contract to keep open, for a set period of time. (2) An offer to purchase or lease real property.
Option to Purchase
A contract giving the optionee the right, but not the obligation, to buy property owned by the optionor at an agreed-upon price during a specified period.
Optionee
A person to whom an option is given. – The person who wants to purchase or lease (lessee) the property.
Optionor
A person who gives an option. – The person who owns the property (seller, lessor).
Percentage Lease
A lease for which the tenant’s rent is calculated as a percentage of the tenant’s sales. – The tenant pays a percentage of gross monthly receipts in addition to a base rent.
Porter’s Wage Escalation Formula
Ties the rent escalation to the wages of the building’s cleaning and building maintenance personnel (called “porters”). The formula provides tenants’ rent will increase a specific amount per square foot for a specified increase in the porter’s hourly wages.
Procurement Fee
Compensation arrangement typically paid to a licensee by a tenant representative for finding space for the tenant. Procurement fees are often fixed fees but could be percentage-based.
Proprietary Lease
An exclusive, longer-term lease given to a person who lives in and owns stock in a cooperative. The lease used in co-op apartment buildings.
Purchase Agreement
A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called Purchase and Sale Agreement, Purchase Contract, Sales Contract, or Earnest Money Agreement.
real property sales contract
An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract.
rent
Payment for the use of a property, generally under a lease agreement. The payment made for the use of land.
Rentable Square Feet
The usable square feet plus a pro-rata portion of the common areas shared among all of the tenants, such as corridors, lobbies, and restrooms. This is the number typically used for calculating base rent. Also called Gross Square Feet.
rental agreement
Another name for lease.
residential lease
A lease used for single-family homes and duplexes.
retaliatory eviction
An eviction that occurs in revenge for some complaint made by the tenant.
Reversion
A future interest that becomes possessory when a temporary estate (such as a life estate) terminates, and that the grantor (or grantor’s successors in interest) holds. (1) The right of the landlord to reclaim the property. (2) A future interest. (3) granted estate for length of one life returns to grantor. Also called Reversionary Interest
Reversioner
The person who has a future estate interest in reversion.
right of replevin
The tenant has a legal right to recover personal property unlawfully taken by the landlord.
Risk
The probability that events will not occur as expected.
Risk Management
Identifying, managing, and minimizing the potential risks on the property.
Sales Contract
An agreement in which the buyer and seller agree to the terms and conditions of the sale of property. Also called Purchase Agreement.
sandwich lease
A lease agreement created when a tenant sublets the property to another person, thus creating a sublessor-sublessee relationship. The person in the sandwich is a lessee to the owner and a lessor to the sublessee.
Section 8
Federal program that authorizes the payment of rental housing assistance to private landlords on behalf of low-income households.
Security Deposit
Money a tenant gives a landlord at the beginning of the tenancy to ensure the tenant will comply with lease terms. The landlord may retain all or part of the deposit at the end of the tenancy to cover unpaid rent, repair costs, or other damages other than just normal wear and tear.
sublease
Transfers less than the entire leasehold, with the original lessee being primarily liable for the rental agreement.
Sublessor
The original tenant of a leased property. They are still primarily liable for paying the rent to the owner for the sublease.
Surrender
When a tenant voluntarily gives up a lease before the expiration of its term.
to let, to demise
These phrases mean the same as to rent.
unlawful detainer action
(1) The legal remedy to remove a tenant. (2) Also called an action in ejectment.
Vesting
The way title will be taken.
writ of possession
A legal action granted by the court to the landlord if the tenant does not move out or answer a lawsuit.
