LEASES

Question 1

Lease

Answer 1

A written conveyance of possession but not ownership of real estate for a specific period of time

Question 2

estoppel certificate

Answer 2

often used to confirm the lease when the property is sold.

• prevents fraud
• Used when loans are sold, verbal agency agreements created

Question 3

Doctorine of Estoppel

Answer 3

States that once you cause another to rely on your words, you cannot go back on your promises

Question 4

Assigning

Answer 4

The transfer of all the remaining interest to a third party

Question 5

Novation

Answer 5

Cancelation of the lease contract, and a transfer of remaining portion to a third party

Question 6

Subleasing

Answer 6

transferring a portion of one’s rental interest to a third party

Question 7

Performance

Answer 7

way of terminating a lease

leases automatically terminated at the end of term

Question 8

Surrender

Answer 8

way of terminating a lease

Cancelation of the lease prior to expiration

Question 9

Action of Law

Answer 9

way to terminate lease

Eminent domain taking, tax sale, bankruptcy

Question 10

Destruction

Answer 10

way of terminating lease

Property is destroyed

Question 11

Foreclosure

Answer 11

way of terminating lease
Banks have right to terminate a lease in the event of foreclosure, depending on the type of lease, occurs when borrower is unable to make their payments

Question 12

Protecting Tenants at Foreclosure Act

Answer 12

Allows residential leases to survive foreclosure meaning a tenant is allowed to stay until the end of the lease or 90days notice if they are month to month

Question 13

Actual eviction

Answer 13

when tenant breaches lease

Question 14

Constructive evictions

Answer 14

Landlord violates lease called the covenant of quiet enjoyment

Question 15

Covenant of Quiet Enjoyment

Answer 15

A tenants right to undisturbed enjoyment of the leased property

Examples of violations:

• Landlord trespassing on the leased premises
• landlords failure to maintain the premises fit and suitable for occupancy as defined by the sanitary
• landlords failure to provide services promised in the lease
• No legal requirement for there to be 24hours notice

Question 16

Property managers = general managers

Answer 16

obtain a separate property management license (not required)

-don’t need real estate licenses

Question 17

Gross Lease

Answer 17

a lease where tenant pays a fixed amount of rent, and the landlords pays operating expenses of the building

Question 18

sublease (sandwich lease)

Answer 18

a lease between a sub-letter and the original tenant

Question 19

Modified Gross Lease

Answer 19

A lease where the tenant pays a fixed rental amount for year one, and any increases in operating expenses that is paid by landlord is paid for by the tenant

Question 20

Net Lease

Answer 20

Tenant pays some or all of lease operating expenses (taxes, maintenance costs, management fees, etc.) on top of their normal rent - landlord receives net income

Question 21

Percentage lease

Answer 21

most of the rent is paid as a percentage of the tenant’s receipts (sales) or profits. Given to anchor tenants (commercial stores)

Question 22

Ground Lease

Answer 22

tenant rents land, and can build whatever they want on it
when lease expires landlord owns any improvements built by the tenant.

Seen with fast food franchises, cell towers
-Typically a 99-year lease

Question 23

Graduated Lease

Answer 23

A lease whose rent increases on some pre-agreed-upon schedule. An escalator clause increases or decreases the rent

Question 24

Reappraisal Lease

Answer 24

Rent is based on an appraiser’s opinion of the rent, rather than negotation between tenant and landlord

Question 25

Sales-Leaseback

Answer 25

• property owner sells their property to an investor and simultaneously rents it back (usually for long term)
• Provides seller with: favorable tax treatment, capital, relief from debt service

Question 26

Privity of Estate

Answer 26

• A legal relationship between two people with interests in the same property
• Longest lease legally can be 99 yrs
• Leases up to 7 years must be recorder

Question 27

Lessor

Answer 27

Landlord

Question 28

Lessee

Answer 28

Tenant, retains a reversionary interest under the lease

Question 29

Reversionary Interest

Answer 29

the right to regain possession after the lease is over

Question 30

Tenants at Sufferance

Answer 30

Tenants who stay past their lease and must be evicted

Question 31

Rentable Square Footage

Answer 31

Includes the leased premises and any common areas maintained by the lessor and used by the lessee

Question 32

Build out

Answer 32

In commercial leases, landlord or tenant may need to make modifications for a particular business. Part of the lease negotiation vary from lease to lease sometimes paid by tenant, or landlord, or split

Question 33

Usable Square footage

Answer 33

the actual space he lessee can occupy

Question 34

What does “Leases Run With the land” mean?

Answer 34

Meaning if the lessor sells the leased premises before the lease ends the new owner is responsible for the lease and must honor it.

Question 35

Common area load

Answer 35

ranges from 5-15% of usable square fottage

Question 36

Novation

Answer 36

Cancellation of the lease contract

Question 37

What are the was leases can be terminated?

Answer 37

Performance
Surrender
Action of Law
Destruction
Foreclosure
Actual Eviction
Constructive Eviction

Question 38

MA Landlord Regulations

Answer 38

Tenants can amend the lease start date within 15 days - document any damages previously done

Security deposit must be held in a trust or escrow account, must be deposited but if not then 5% is mandatory to be paid by landlord

Question 39

Privity of Estate

Answer 39

A lease establishing a legal relations between two people with interest in the same property