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real estate > Lease > Flashcards

Lease Flashcards

1
Q

Lease

A

Leases are a non freehold interest in real estate

interest = your “claim” to real estate

possession & use

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2
Q

What are leases?

A

Written conveyamce of possession and use of real estate for some period of time

period of time = “for years”

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3
Q

Privity of Estate

A

Legal relationship between two parties interested

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4
Q

Essentials of a Lease

A
  • Sufficient description of property (address)
  • Rental amount (how much/when payment is made)
  • Terms of Lease (dates)
    -Intention to Rent (mary tends to rent to joe)
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5
Q

Parties in a lease:

A

Lessor: Landlord
Lessee: Tenant

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6
Q

Leases longer than 7 years must be recorded in MA

A

Leases cant last more than 99 years

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7
Q

Lessor is liable for and insures common areas

(entry lobby, common laundry, parking lot)

A

Lessee is liable for and insures leased premises

(rental unit)

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8
Q

Commercial Leases:

Useable Square Footage:

A

Spcae that the lessee can occupy and is responsible for

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9
Q

Commercial lease:

Retable Square footage:

A

Both the leased premises and a percentage of the common areas used by the lessee, but maintained by the lessor

% = common area factor, load factor, common area load

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10
Q

Lessor retains revisionary interest under the lease

A

*tenants who stay past their lease are tenants at sufferance

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11
Q

Leases run with the land

A

Certificate of no defense/Estoppel Certificate

used to confirm the lease when the property is sold

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12
Q

Why does the Doctrine of Estoppel exist?

A

Goal: prevent tenant from trying to renegotiate or defraud new property owner

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13
Q

Sublet

A

transfer a portion of ones interest in a property to a 3rd party

original lessee is responsible

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14
Q

Assign

A

transfer all remaining interest to a 3rd party

original lessee is liable

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15
Q

Novate

A

cancellation of the lease, 3rd party signs a new lease with the lessor

original lessee not liable

new lessee has a lease with a lessor

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16
Q

Lease Termination 1

A
  • Performance- lease automatically terminates at end of term
    -Surrender- cancellation of leaseprior ot expiration
  • Action of Law- eminent domain taking, tax sale, bankruptcy
17
Q

Lease Termination 2

A
  • Destruction- property is destroyed
  • Foreclosure- Banks have right to cancel the lease
18
Q

Actual Eviction

A

Lease has been breached by the tenant

19
Q

For Non Payment of Rent, Next Stepts for Lessor:

A
  1. 14 day notice to quit in writing
  2. unlawful detainer complaint
  3. Housing court - hearing held
  4. Eviction

*must use constable to remove tenant and their things from property

20
Q

Constructive Eviction

A
  • Permits Lessee to vacate premises and ends obligation to pay rent due to lessor’s violation of the Covenant of Quiet Enjoyment
21
Q

Covenant of Quiet Enjoyment:

A
  • undisturbed enjoyment of leased property
  • property is maintained up to sanitary and build codes
  • lessor doesn’t lease to others
  • lessor doesnt trespass
  • services promised in the lease are provided

landlord has right to reasonable notice to make repairs/inspect property

30 days before tenancy ends

22
Q

Lessor can only collect

A
  • First months rent
  • Last months rent
  • Security deposit of maximum of 1 month’s rent (must deposit in escrow)
  • Reasonable lock and key fee
23
Q

If a security deposit is collected, lease must include:

A

*Statement of Condition Form(tenant returns within 15 days of lease start)
Security Deposit Receipt(form)
Notice of where security deposit is being held (form)

^Receipt of Funds Form

Lessor must pay lessee 5% interest on security deposit and last moths rent each year

24
Q

Lessor must provide housing that is fit and suitable for occupancy per sanitary codes

A
  • units should be inspected prior or occupancy
  • delead all unts where tenants are under age 6
  • Provide kitchen with a sink
  • keep unit pest free
  • maintain buildng up to reuqirements
  • keep exits free from obsticles
25
Q

Gross leases

almost all residential leases

A
  • Lessee pays fixed rent, Lessor pays operating expenses of the building
  • Lessor recieves gross income
26
Q

Sublease/Sandwich Lease

A

Lease between original tenant and subletter

27
Q

Modified Gross Lease

A
  • Tenant pays fixed rent year one (base year)
  • if Lessor expenses increase, Lessee will pay a percentage of this increase

(ex. property taxes go up)

28
Q

Net Lease

A
  • Lessee pays rent and some or all of the property operating expenses -Single net, Double net
  • Lessor recieves net income

1. maintenance 2. property taxes 3. property insurance

29
Q

Percentage Lease

A
  • most of the rent is paid as a percentage of the lessee’s gross receipts or sales
  • Helps align landlord and anchor tenants interest
  • most often seen with department stores (ex. TJ MAXX)
30
Q

Ground Lease

A
  • Lessee rents the land and may buy building
  • When lease expires, any improvements are then owned by the lessor
  • Most commonly used by fast food chains (McDonalds)
31
Q

Graduated Lease

A
  • Rent increases on some pre-agreed upon schedule
  • Escalator clause increases or decreases rent
  • Best for those who need lower expenses at beginning of their lease term
32
Q

Index Lease

A
  • Lease whos rent is tied to some index
  • When index increases, rent will too and vice versa
33
Q

Reappreaisal Lease

A
  • Rent is based on appraiser’s opinion of rent, rather than a negotiated rent
  • Common when there is considerable doubt about future maintenance of values
34
Q

Sale-Leaseback

A
  • When a property owner sells property and rents it back
  • Helps free up equity without giving up enjoyment and use of property
  • Rent is tax deductible for business

real estate (7 decks)

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