Property Management, Lease Agreements, and Securities

Question 1

actual eviction

Answer 1

The legal process of removing a tenant from possession of the premises for some breach of the lease contract.

Question 2

“as is” condition

Answer 2

Premises accepted by a tenant in its existing condition at the time of the lease, including all physical defects.

Question 3

assignment

Answer 3

The transfer of the right, title, and interest in the property of one person (the assignor) to another (the assignee). In real estate, there are assignments of mortgages, contracts, agreements of sale, leases, and options, among others.

Question 4

attorn

Answer 4

To turn over or transfer to another money or goods. An agreement that recognizes that if the property is sold during the lease period, rents due will be paid to the new owner.

Question 5

blue sky laws

Answer 5

State laws that regulate and supervise the sale of securities to avoid investments in fraudulent companies or high-risk investments. These laws attempt to prevent unsophisticated buyers from buying “blue sky” from deceitful securities agents.

Question 6

buffer

Answer 6

A strip of real estate that transitions distinct land uses. It may be an earth berm, planted shrubs or trees, walls, or even fencing.

Question 7

buildout

Answer 7

The cost of configuring and finishing space to meet the tenant’s needs.

Question 8

CAM

Answer 8

An add-on fee paid by the tenant for common area maintenance.

Question 9

concessions

Answer 9

Rent abatement, build-out allowance, or other payment credits given by landlords to prospective tenants to induce them to sign a lease.

Question 10

constructive eviction

Answer 10

Act done by a landlord that so materially disturb or impair the tenant’s enjoyment of the leased premises that a tenant is effectively forced to move out and terminate the lease without liability for any further rent.

Question 11

demise

Answer 11

To convey, and so used in a lease (i.e., “…to demise and let lease”).

Question 12

depreciation

Answer 12

An accounting procedure used to determine the loss in a property’s value for income tax purposes.

Question 13

equitable title

Answer 13

The equitable right to obtain ownership in a property whose legal title is actually in another person’s name. Simply stated, it is the interest held by a contract purchaser prior to the transfer of title. Sometimes, it is called an insurable interest.

Question 14

equity kicker

Answer 14

This is a participation loan for risky investments. The investor expects normal investment return and further conditions that an opportunity be given to buy part ownership.

Question 15

force majeure

Answer 15

Found in a lease stating that one cannot be liable for forces that cannot be controlled or resisted, like riots, strikes, arson, floods, hurricanes, and tornadoes.

Question 16

forcible entry and detainer (FED) action

Answer 16

A court action by a landlord against a tenant to remove the tenant from a rented dwelling (house, apartment, mobile home, mobile home space, or floating home). A favorable judgement for the landlord, the plaintiff, will result in restitution of the premises by a specified date, as well as court costs. To collect delinquent rent or damages, a separate complaint must be filed. On the day of the hearing, if the defendant appears and files an answer, the case is rescheduled for trial. A trial, the judge will decide based on the evidence presented whether the tenant is required to move out and give restitution of the premises to the landlord.

Question 17

gross lease

Answer 17

A lease of property under which the leasee pays a fixed rent and the lessor pays the taxes, insurance, and other charges regularly incurred through ownership.

Question 18

ground lease

Answer 18

A long-term lease of just the land (land lease) with improvements made by the tenant.

Question 19

holdover tenant

Answer 19

One who stays on the leased premises after his lease has expired The landlord normally has the choice of evicting the holdover tenant or permitting him to remain and continue to pay rent.

Question 20

Institute of Real Estate Management (IREM)

Answer 20

A national organization that concerns itself with professional management of real estate. The professional designation conferred by the institute is accredited resident manager (ARM).

Question 21

landlord

Answer 21

The lessor or the owner of leased premises. The landlord retains a revisionary interest in the property so that when the lease ends, the property will revert to the landlord.

Question 22

lease

Answer 22

A lease is both a contract between a lessor (landlord) and a lessee (tenant) and a conveyance or demise of the premises by the lessor to the lessee. A lease is a contract, in that it embodies the agreement between the parties.

Question 23

leasehold

Answer 23

A-less-than-freehold estate that a tenant possesses in real property.

Question 24

lessee

Answer 24

The person to whom the property is rented or leased; called a tenant in most residential leases.

Question 25

lessor

Answer 25

The person who rents or leases property to another. In residential leasing, the lessor is often called a landlord.

Question 26

net lease

Answer 26

A lease, usually commercial, whereby the lessee pays not only the rent occupancy but also maintenance and operating expenses, such as taxes, insurance, utilities, and repairs. This the rent paid is “net” to the lessor.

Question 27

percentage lease

Answer 27

A lease whose rental is based in a percentage of the monthly or annual gross sales made on the premises.

Question 28

periodic tenancy

Answer 28

A leasehold estate that continues from period to period, such as month to month or year to year. All conditions and terms of the tenancy are carried over a period to period and continue for an uncertain time until proper notice of termination is given.

Question 29

property management

Answer 29

That aspect devoted to leasing, managing, marketing, and overall maintenance of the property of others.

Question 30

right of first refusal

Answer 30

A clause in a lease that gives the tenant the first opportunity to buy should the owner obtain a legitimate offer that the tenant can match or refuse.

Question 31

security deposit

Answer 31

Money deposited by or for the tenant with the landlord, to be held by the landlord for the following purposes: (1) remedy tenant defaults for damage to the premises (be it accidental or incidental), (2) failure to pay rent due, or (3) for failure to return all keys at the end of the tenancy.

Question 32

step-up lease

Answer 32

A lease with fixed rent for an initial term and provision for predetermined rent increases at specified intervals and/or increases based upon periodic appraisals; sometimes called a gradual lease

Question 33

summary possession

Answer 33

A legal process used by a landlord to regain possession of the leased premises if the tenant has breached the lease or is holding over after the termination of tenancy.

Question 34

surrender

Answer 34

A premature conveyance of a possessory estate to a person having a future interest, as when a lessee surrenders the leasehold interest to the owner of the revisionary interest, the lessor, before the normal expiration of the lease.

Question 35

tenancy at sufferance

Answer 35

An estate that exists when a tenant wrongfully remains after the expiration of a lease; this type of tenancy is created without the landlord’s consent. Tenancy at sufferance is the lowest estate in real estate and protects the tenant from being a trespasser while protecting the owner from allowing the tenant to create a claim of adverse possession.

Question 36

tenant

Answer 36

In general, one who holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease.

Question 37

tenant at will

Answer 37

A tenant who holds possession by permission of the landowner without an agreement for any fixed period.

Question 38

trade fixtures

Answer 38

Personal property used in a tenant’s business that is attached or adapted to the landlord’s space but is removable upon termination of the lease.

Question 39

Uniform Residential Landlord and Tenant (URLTA)

Answer 39

Legislation in many states designed to both protect and provide remedies for landlords and tenants.

Question 40

MISTAKEN IDENTITY

security deposit/earnest money

Answer 40

The security deposit is paid by a tenant upfront to cover any default in the lease, including damage, whereas the buyer puts up earnest money at the time of an offer, to be forfeited in the event the buyer does not perform.

Question 41

MISTAKEN IDENTITY

tenancy at will/tenancy for years

Answer 41

The tenancy for years lasts for a fixed period, whereas the tenancy at will may be canceled at any time by either landlord or tenant.

Question 42

MISTAKEN IDENTITY

actual eviction/constructive eviction

Answer 42

In an actual eviction. the landlord evicts the defaulting tenant, whereas in a constructive eviction, the landlord fails to provide the necessary services, so the tenant is legally entitled to cancel the lease.

Question 43

MISTAKEN IDENTITY

leasehold/leased fee

Answer 43

The leasehold is the lessee’s interest, whereas the leased fee is the landlord’s interest represent by the value of the remaining rent plus the reversion.

Question 44

MISTAKEN IDENTITY

gross lease/net lease

Answer 44

In a gross lease, the tenant pays a single amount and the landlord pays the expenses, whereas in a net lease, the tenant pays a net amount to the landlord and the tenant pays the expenses.