Leases Flashcards
What are leases?
Leases are a non freehold interest in real estate.
Also known as: non-freehold, rental, leasehold, tenancy for years, estate for years, demise, etc.
They are a written conveyance of possession & use of real estate for some specific period of time.
Privity of Estate
Legal relationship between two people w/ interest in the same property.
Leases are subject to the contract essentials, which are…
- offer & acceptance
- consideration
- legal object
- consent
- competence
What are the essentials of a lease?
- Sufficient description of the premises
- Rental amount ($)
- Terms of lease
- Intent to rent
Who are the parties involved in a lease?
The lessor-owner/landlord
The lessee-tenant
How long cant a lease last?
A lease cannot last more than 99 years.
-Leases lasting longer than 7 years, in MA, must be recorded w/ the registry of deeds because it would be considered an encumbrance.
What is the lessor liable for?
The lessor is liable & insures the common areas.
What is the lessee liable for?
The lessee is liable for & insures the lease premises.
What is “useable sq. footage” in terms of commercial leases?
Space that the lessee can occupy & is responsible for (space used exclusively by the tenant).
What is “rentable sq. footage” in terms of commercial leases?
Both the lease premises & a percentage of the common areas used by the lessee, but maintained by the lessor (places like the elevator, lobby, etc.).
What is a build-out?
A big open office space that can be reconfigured easily and quickly. Either party can pay for the reconfiguration.
What type of interest does the lessor hold?
A reversionary interest.
The lessor gets the property back (possession wise) at the end of the lease.
Do leases run w/ the land.
Yes. They are binding on new owners.
Certificate of no defense/estoppel certificate
Used to confirm the lease when the property is sold.
Doctrine of estoppel
Once you cause another to rely on your words, you can’t go back on your promises.
-Prevents the tenant from attempting to renegotiate.
What are the three ways to transfer a lease?
- Sublet
- Assign
- Novate
In MA, how long should someone be living in a place to be able to establish residency?
30 days
What is a sublet?
Transfers a portion of the lease term.
- The original tenant continues to pay full rent to landlord.
- The sub-tenant pays the original tenant.
- Original tenant assumes lease responsibility.
- In MA, subletting can be prevented in lease terms.
What is an assignment?
Transfers the remainder of the lease.
- The original tenant transfers the remainder of the lease term to another tenant. The assignee pays rent directly to landlord.
- If the assignee fails to pay rent, then both the original tenant and the assignee is responsible. (think of co-signing).
- Transfers the rights and responsibilities, but not the obligations.
What is novation?
Cancellation of the lease & creation of a new lease for the remainder of the lease term.
-The original tenant is no longer involved or liable.
How can you terminate a lease?
There are a number of ways to terminate a lease other than novation:
-Performance: Terminates at the end of the lease.
-Surrender: Cancellation prior to expiration (can include a fee).
-Action of law: Eminent domain, tax sale, bankruptcy.
-Destruction: Property is destroyed.
Foreclosure: Banks typically have the right to cancel leases. Residential leases are protected for a time.
Actual eviction
Landlord’s remedy for a lease violation by a tenant (like non payment, violation of lease terms, etc.).
What is the actual eviction process?
- 14 day notice to quit in writing.
- Tenant has the opportunity to cure (fix the issue) during this time. - Unlawful detainer: complaint filed after the 14 period.
- summary process in MA. - Housing hearing court.
- Two possible outcomes:
- Eviction, tenant is removed from the property (by the constable, not the landlord).
- Landlord loses, tenant stays.
What is constructive eviction?
Tenant’s way to remedy for a lease violation by the landlord.
- Usually a violation of the covenant of quiet enjoyment.
- Permits the lessee to vacate premises.
- Ends obligation to rent.
- Always consult an attorney.