Leases and Property Management

Question 1

What is a lease?

Answer 1

A contract that transfers possession of real estate in exchange for rent.

Question 2

Who is the property owner in a lease?

Answer 2

Landlord

Question 3

Who is the user in a lease?

Answer 3

Tenant or lessee

Question 4

What is the landlord’s interest called?

Answer 4

Leased fee or leased fee estate

Question 5

What is the tenant’s interest called?

Answer 5

Leasehold or leasehold estate

Question 6

True or False? All leases must be in writing to be enforceable under the Statute of Frauds.

Answer 6

False! Only leases for one year or longer must be in writing.

Question 7

What is estate for years?

Answer 7

A stated expiration date, which could be any period.

Question 8

What is estate from year to year?

Answer 8

The lease is automatically renewed unless one party gives notice of termination to the other

Question 9

What is tenancy at will?

Answer 9

Either party may terminate the lease agreement

Question 10

What is tenancy at sufferance?

Answer 10

A tenant has remained on the property after lease expiration

Question 11

List the 4 leasehold estates (tenant’s interest):

Answer 11

1) Estate for years
2) Estate from year to year
3) Tenancy at will
4) Tenancy at sufferance

Question 12

What is the term for a lease where the landlord pays operating expenses?

Answer 12

Gross lease

Question 13

In what type of lease do tenants pay operating expenses?

Answer 13

Net lease

Question 14

What do operating expenses include?

Answer 14

Property taxes, maintenance, and insurance

Question 15

What leases are typically used for retail properties?

Answer 15

Percentage leases

Question 16

Explain a percentage lease

Answer 16

The tenant pays a base or basic rent plus a percentage of gross business sales above a certain amount

Question 17

What are escalation provisions?

Answer 17

They allow for increases in expenses to be paid by the lessee. Also called pass-throughs.

Question 18

What lease calls for rent increases at prestet intervals?

Answer 18

Graduated leases

Question 19

What do index or indexed leases allow for?

Answer 19

Increases based on changes in an economic index, such as the Consumer Price Index

Question 20

Define assign

Answer 20

When a lessee gives another all the rights to the lease

Question 21

Define sublet

Answer 21

When a lessee gives part of the lease rights to another by creating a new lease. The original lessee remains liable to fulfill lease obligations unless released by the lessor.

Question 22

Does the sale of property change a lease?

Answer 22

No. The new property owners must continue the tenant’s rights as described in the lease.

Question 23

A lease is typically terminated by _______, which occurs when both parties observe the full term of the lease.

Answer 23

performance

Question 24

True or False: a tenant may remove and keep trade fixtures upon lease expiration

Answer 24

True

Question 25

What are trade fixtures?

Answer 25

Kitchen equipment, signage, barstools

Question 26

When does a breach of lease occur?

Answer 26

When one party violates a lease provision

Question 27

If a tenant vacates without paying rent, they may be liable for….?

Answer 27

Damages, typically to continue paying rent to the end of the lease, enforced by a court. The landlord must make an effort to mitigate damages by seeking a substitute tenant.

Question 28

Can a tenant ever withhold rent?

Answer 28

Yes, upon certain lessor violations.

Question 29

Does death of a tenant or landlord terminate a lease?

Answer 29

No. The estate of the decedent is responsible for honoring the remaining term of the lease.

Question 30

What are rent controls?

Answer 30

Measures adopted by cities to prevent sharp increases in rent from being passed on to residential tenants, especially.

Question 31

True or False: Property managers do not need to have a broker’s license.

Answer 31

False. Law in most states requires a property manager to have a broker’s license. This does NOT apply to an onsite resident manager.