Leases and Property Management Flashcards
What is a lease?
A contract that transfers possession of real estate in exchange for rent.
Who is the property owner in a lease?
Landlord
Who is the user in a lease?
Tenant or lessee
What is the landlord’s interest called?
Leased fee or leased fee estate
What is the tenant’s interest called?
Leasehold or leasehold estate
True or False? All leases must be in writing to be enforceable under the Statute of Frauds.
False! Only leases for one year or longer must be in writing.
What is estate for years?
A stated expiration date, which could be any period.
What is estate from year to year?
The lease is automatically renewed unless one party gives notice of termination to the other
What is tenancy at will?
Either party may terminate the lease agreement
What is tenancy at sufferance?
A tenant has remained on the property after lease expiration
List the 4 leasehold estates (tenant’s interest):
1) Estate for years
2) Estate from year to year
3) Tenancy at will
4) Tenancy at sufferance
What is the term for a lease where the landlord pays operating expenses?
Gross lease
In what type of lease do tenants pay operating expenses?
Net lease
What do operating expenses include?
Property taxes, maintenance, and insurance
What leases are typically used for retail properties?
Percentage leases
Explain a percentage lease
The tenant pays a base or basic rent plus a percentage of gross business sales above a certain amount
What are escalation provisions?
They allow for increases in expenses to be paid by the lessee. Also called pass-throughs.
What lease calls for rent increases at prestet intervals?
Graduated leases
What do index or indexed leases allow for?
Increases based on changes in an economic index, such as the Consumer Price Index
Define assign
When a lessee gives another all the rights to the lease
Define sublet
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.
Does the sale of property change a lease?
No. The new property owners must continue the tenant’s rights as described in the lease.
A lease is typically terminated by _______, which occurs when both parties observe the full term of the lease.
performance
True or False: a tenant may remove and keep trade fixtures upon lease expiration
True
What are trade fixtures?
Kitchen equipment, signage, barstools
When does a breach of lease occur?
When one party violates a lease provision
If a tenant vacates without paying rent, they may be liable for….?
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.
Can a tenant ever withhold rent?
Yes, upon certain lessor violations.
Does death of a tenant or landlord terminate a lease?
No. The estate of the decedent is responsible for honoring the remaining term of the lease.
What are rent controls?
Measures adopted by cities to prevent sharp increases in rent from being passed on to residential tenants, especially.
True or False: Property managers do not need to have a broker’s license.
False. Law in most states requires a property manager to have a broker’s license. This does NOT apply to an onsite resident manager.
