Landlord-Tenant Relationship Flashcards
Estate for Years
Runs for a specific period of time, has a start and end date.
Leasehold Estate
A tenant possesses a leasehold estate and the landlord possesses a reversionary fee estate.
Estate from period to period
Periodic. Runs for an indefinite number of periods. Month to month, week to week. They roll over.
Estate at Will
Forever, as Long as the lessor or lessee will it, which is indefinite time.
Estate at sufferance
Runs until the landlord takes action. Usually involves a tenant in arrears who refuses to leave. This is the weakest type of estate.
Demise
A lease is a demise. A transfer of possessory interest ( transfer the lease hold)
Gross Lease
The landlord pays all taxes, assessments, and operating expenses out of the rent and retains what left. Usually short term.
Net Lease
Tenant pays operating expenses (utilities, taxes, insurance, maintenance) Double Net or Triple Net.
Percentage Lease
Tenants pays a base rent plus percentage of their gross sales. Example: art gallery, restaurant, retail store
Graduated Lease
Start at a fixed low rate and increase at set intervals. Example: strip mall with no anchor store yet.
Index Lease
Uses consumer price index to track inflation and alter rents accordingly.
Reappraisal or reevaluation lease
Payment amount increases in the event of a large unexpected cost to the landlord. Usually after a catastrophic event.
Ground Lease
One person owns the land and the tenants owns the improvements. A 99 year lease maximum. 51 years max for agriculture land.
Security deposit payment amount
1.5 times the monthly rent
Sale and Leaseback
Advantage: frees up cash for seller (lessee). Tax adv. for Investor (Landlord) also can depreciate building.
