Unit 17 Exam

Question 1

Match the following with the correct definitions. Estate For Years, Estate From Period To Period, Estate at Sufferance, Estate at Will:

A)
Does not contain a specific expiration date

B)
Tenant who lawfully possessed real property continues in possession of the premises without the landlord’s consent

C)
Continues for a definite period, which may be years, months, weeks, or even days

D)
Gives tenant right to possess property with landlord’s consent for an unspecified or uncertain term

Answer 1

Estate For Years = C

From Period to Period = A

At Sufferance = B

At Will = D

Question 2

An estate at sufferance arises when a tenant who lawfully took possession of real property continues in possession of the premises without the landlord’s consent after the right of possession has expired.

Answer 2

True

Question 3

A one-year lease is an example of an estate from period to period.

Answer 3

True

Question 4

Match the following with its definition. Nondisturbance Clause, Purchase Option, Renewal Option, Sublease, First right of Refusal:

A)
The mortgagee agrees not to terminate the tenancies of lessees who pay their rent should the mortgagee foreclose on the mortgagor-lessor’s building

B)
A provision in the lease giving the lessee the option to own the leased premises

C)
A provision in the lease giving the tenant the opportunity to buy the property before the owner accepts an offer from another party

D)
A clause that grants the lessee the privilege of occupying the premises for another term

E)
An arrangement in which a tenant transfers possession of the premises for the remainder of the lease term to a new tenant

Answer 4

Nondisturbance Clause = A

Purchase Option = B

Renewal Option = D

Sublease = E

First right of Refusal = C

Question 5

The covenant of quiet enjoyment means that the lessee can occupy the premises without the annoyance of nuisances such as barking dogs or late-night motorcycles.

Answer 5

False

Question 6

A Nondisturbance Clause is a provision in a lease prohibiting the lessor from disturbing or interfering with the lessee’s use of the premises, providing such use is NOT in violation of the terms of the lease. The provision in a lease that prohibits the lessor from disturbing or interfering with the lessee’s use of the premises is the covenant of quiet enjoyment.

Answer 6

False

Question 7

Match the Following with its scenario: Net, Ground, Percentage, Graduated, Index

A)
Bagel shop pays monthly rent plus a percentage of the gross income for the bagel business

B)
Tenant pays rent, property taxes, maintenance fees, and assessments on property

C)
Provides for specified rent increases at set future dates

D)
Tenant pays $1,000 per month for one year; then the monthly rent increases $100 per month each year thereafter

E)
Rent is based on a minimum amount plus a portion of the gross income generated by the business occupying the premises

F)
Yam factory pays monthly rent of $6,000 for six months; then the rent decreases to $5,500 based on an index

G)
Tenant pays all or most of the property charges in addition to the rent

H)
Rent may be increased or decreased periodically based on changes in some financial indicator

I)
Tenant pays monthly rent for a property with the stipulation that tenant will build on the land

J)
Unimproved land leased to a tenant who agrees to erect a building on the land

Answer 7

Net = B,G

Ground = I,J

Percentage = A,E

Graduated = C,D

Index = F,H

Question 8

In a gross lease, the tenant pays a fixed rent and some or all of the utility expenses, and the landlord pays all taxes, insurance, repairs, remaining utility expenses, if any, and maintenance connected with the property.

Answer 8

True

Question 9

In a net lease, the tenant pays most or all of the property charges, including hazard insurance and property taxes, in addition to the rent.

Answer 9

True

Question 10

Does the property manager, acting on behalf of the owner, have the right to enter the apartment when the tenants aren’t there, to check on any possible activity in violation of the lease?

Answer 10

No.

The answer is no. The property manager cannot enter the apartment just to check on the activities of the residents. The tenants are entitled to the quiet enjoyment of the premises, which means that the landlord (or the landlord’s agent, the property manager) may enter the apartment only with the tenants’ permission, in an emergency, or in other cases stipulated in the lease.

Question 11

Match the following with its definition: Constructive Eviction, Break of Lease, Suit for Possession-actual eviction

A)
The landlord may sue the tenant to obtain a judgment to cover past-due rent

B)
The legal process available to the landlord to regain possession of a leased premises

C)
A tenant abandons leased premises that become unusable for the purposes stated

Answer 11

Constructive Eviction = C

Break of Lease = A

Suit for Possession-actual eviction = B

Question 12

The heirs of a deceased landlord are bound by the terms of existing valid leases.

Answer 12

True

Question 13

Federal fair housing and civil right laws affect landlords and tenants just as they do sellers and purchasers.

Answer 13

True

Question 14

When a tenant breaches a lease or improperly retains possession of the premises, the landlord may regain possession through the legal process called

A)
constructive eviction.
B)
actual eviction.
C)
partition suit.
D)
quiet title.

Answer 14

Explanation

The answer is actual eviction. The landlord must serve notice on the tenant before commencing the lawsuit.

Question 15

If leased premises become unusable for the purpose stated in the lease, the tenant may have the right to abandon the property and sue and recover damages against the landlord in a legal action called

A)
actual eviction.
B)
quiet title.
C)
constructive eviction.
D)
warranty of habitability.

Answer 15

Explanation
The answer is constructive eviction. The tenant must prove that the premises have become unusable because of the conscious neglect of the landlord.

Question 16

An arrangement whereby the owner of property sells the property and then leases it back again for an agreed period and rental is called

A)
a sale-buyback.
B)
a sale and leaseback.
C)
a land contract.
D)
an option.

Answer 16

Explanation
The answer is a sale and leaseback. Such an arrangement can provide funds for business expansion while ensuring that the business can remain on the premises.

Question 17

A tenant moves a pet into an apartment community that has a no-pets policy. The landlord wishes to remove the tenant due to the breach. The legal process to remove a tenant is known as

A)
actual eviction.
B)
constructive eviction.
C)
eminent domain.
D)
partial eviction.

Answer 17

Explanation
The answer is actual eviction. A tenant’s breach of a lease can result in actual eviction, whereas landlord negligence can result in a tenant’s being forced to move, and this is known as constructive eviction.

Question 18

For the protection of tenants, a mortgage of leased premises should include in the financing instrument

A)
a nondisturbance clause.
B)
a special warranty.
C)
a quiet title action.
D)
a warranty of habitability.

Answer 18

Explanation
The answer is a nondisturbance clause. By accepting a nondisturbance clause in the financing instrument used to mortgage leased premises, the mortgagee (lender) agrees, in the event the mortgagee forecloses on the mortgagor’s building, not to terminate the tenancy of a lessee, so long as the lessee is current in payment of the required rent and fulfills any other conditions of the lease.

Question 19

A lessee who pays some or all of the property expenses, such as hazard insurance and property tax, has

A)
a net lease.
B)
a percentage lease.
C)
a sublease.
D)
a gross lease.

Answer 19

Explanation
The answer is a net lease. With a net lease, the tenant pays a base rent plus operating costs of the property, such as utilities, insurance, property taxes, and assessments.

Question 20

A tenant’s right to possess real estate for a definite period with a specific starting and ending date is

A)
an estate at will.
B)
an estate from period to period.
C)
an estate at sufferance.
D)
an estate for years.

Answer 20

Explanation
The answer is an estate for years. When this leasehold interest expires, the lessee is required to vacate the premises and surrender possession to the lessor. No notice is necessary as the lease agreement states a specific expiration date; state law may require notice of intent to terminate a residential lease.

Question 21

A prospective tenants wants to rent an apartment. Because of a physical disability, it would be necessary for the tenant to have all the doorknobs replaced with lever-type handles. In this case, which of these statements is TRUE?

A)
Because the proposed modifications would interfere with a future tenant’s use of the premises, the landlord may refuse to permit them.
B)
Because the modifications demanded by the tenant are not reasonable, the landlord is not legally required to permit them.
C)
The landlord is legally obligated to permit the modifications to be made at the tenant’s expense.
D)
The Fair Housing Act requires that the man make the accommodation for the tenant at the landlord’s expense; no additional rent may be charged for the tenant’s modified unit.

Answer 21

Explanation
The answer is the landlord is legally obligated to permit the modifications to be made at the tenant’s expense. These modifications would appear to be within the scope of reasonable modifications. They also would not interfere with a future tenant’s use of the property.

Question 22

The tenancy that gives the tenant the right to possess the property with the landlord’s consent for an unspecified or uncertain term is

A)
the holdover tenancy.
B)
the estate at will.
C)
the estate at sufferance.
D)
the estate from period to period.

Answer 22

Explanation
The answer is the estate at will. An estate at will is a tenancy of indefinite duration. It continues until it is terminated by either party giving proper notice.

Question 23

Generally, an oral lease for five years is

A)
illegal.
B)
renewable only in writing.
C)
unenforceable.
D)
a short-term lease.

Answer 23

Explanation
The answer is unenforceable. The statute of frauds requires that a lease for a term longer than one year must be in writing to be enforceable. In order for an oral lease to be enforceable, it must terminate within one year or less of the date of its execution, and the courts must be satisfied with the evidence of its existence.

Question 24

The covenant implied in a lease that ensures that the landlord will not interfere in the tenant’s possession or use of the property is the covenant

A)
against encumbrances.
B)
of quiet enjoyment.
C)
of warranty forever.
D)
of seisin.

Answer 24

Explanation
The answer is of quiet enjoyment. The covenant of quiet enjoyment is a promise by the lessor that the lessee may take possession of the premises and the landlord will not interfere in the tenant’s possession or use of the property.

Question 25

A security deposit held by a landlord

A)
functions as the last month’s rent on the lease.
B)
acts as an investment option for the tenant.
C)
does all of these.
D)
compensates the landlord in the event of rent default or premises damage.

Answer 25

Explanation
The answer is compensates the landlord in the event of rent default or premises damage. Security deposits are often used if the tenant defaults on payment of rent or destroys the premises; they cannot usually be applied to the final month’s rental. That would be an advance rental, and the landlord must treat it as income for tax purposes.

Question 26

The tenant leases a heated apartment during a bitterly cold winter, but soon after the tenant moves in, the landlord fails to provide heat because of a defective central heating unit. The tenant vacates the premises and refuses to pay any rent. This is an example of

A)
constructive eviction.
B)
lessor negligence.
C)
abandonment.
D)
actual eviction.

Answer 26

Explanation
The answer is constructive eviction. Constructive eviction terminates the lease when the landlord breaches any clause of the lease agreement. The tenant must prove that the premises have become unusable because of the conscious neglect of the landlord.

Question 27

A landlord comes to a tenant’s apartment on a daily basis “to make sure everything is okay” or to “make repairs.” The apartment, however, is not in need of any repairs. The landlord generally enters the apartment using a spare key. Which of these is TRUE?

A)
The landlord may only enter a tenant’s apartment if the tenant is behind on paying rent.
B)
The landlord is violating the covenant of quiet enjoyment.
C)
The landlord is creating a tenancy at sufferance.
D)
The landlord has the right to enter the property.

Answer 27

Explanation
The answer is the landlord is violating the covenant of quiet enjoyment. A lessor is bound by the covenant of quiet enjoyment—the promise that the lessee can occupy the premises without interference from the owner or anyone else. A tenancy at sufferance refers to a tenant’s previously lawful possession that has continued without the landlord’s consent.

Question 28

Rent would BEST be described as

A)
all monies paid by the lessor to the lessee.
B)
contractual consideration to a third party.
C)
the total balance owed under the terms of a lease.
D)
consideration for the use of real property.

Answer 28

Explanation
The answer is consideration for the use of real property. Consideration is the exchange of something of value by the tenant in return for possession of property owned by another person.

Question 29

The lessor and lessee have agreed to a lease term of five years. In order to ensure that the rental income during the term is reflective of market conditions, the lessor could

A)
negotiate a new lease each year.
B)
negotiate an index lease.
C)
negotiate a gross lease.
D)
collect an additional security deposit each year.

Answer 29

Explanation
The answer is negotiate an index lease. An index lease allows rent to be increased or decreased periodically based on changes in the consumer price index or some other economic factor.

Question 30

A contract that conveys the right to the possess the real property of another, but does not convey title, is

A)
a lease.
B)
a quitclaim deed.
C)
a bill of sale.
D)
a dedication.

Answer 30

Explanation
The answer is a lease. The lessor (landlord) grants the right of possession to the lessee (tenant); the lessor retains title.

Question 31

A tenant rented a house. During the lease term, the tenant moved out of the state without telling the landlord. The tenant assigned the lease to a friend, who failed to make any rental payments. In this situation, which of these statements is TRUE?

A)
The tenant is still liable to the landlord for the outstanding rent because the landlord did not release the tenant when the lease was assigned to the friend.
B)
The tenant has no obligation to the landlord because the lease was assigned, not sublet.
C)
The friend has no obligation to the landlord because the friend’s lease agreement is with the tenant.
D)
The tenant is still liable to the landlord because the tenant’s arrangement with the friend, as described, is a sublease, not an assignment.

Answer 31

Explanation
The answer is the tenant is still liable to the landlord for the outstanding rent because the landlord did not release the tenant when the lease was assigned to the friend. While rights to possession may be assigned or sublet, the obligation to pay rent may not be assigned to another party unless the landlord agrees to the plan.

Question 32

The tenancy that arises when a tenant who lawfully took possession of real property continues in possession of the premises without the landlord’s consent after the right of possession has expired is

A)
the estate at will.
B)
the estate for years.
C)
the estate at sufferance.
D)
the estate from period to period.

Answer 32

Explanation
The answer is the estate at sufferance. An estate at sufferance can arise when a tenant for years fails to surrender possession at the expiration of the lease. The tenant still is responsible for the payment of rent at the existing terms and rate.

Question 33

Which of the following would automatically terminate a residential lease?

A)
Failure of the tenant to pay rent
B)
Death of the tenant
C)
Sale of the property
D)
Destruction of the property

Answer 33

Explanation
The answer is total destruction of the property. Death of the tenant, failure to pay rent, or sale of the rented premises would not end a residential lease. Destruction of the property would terminate a lease.

Question 34

The lease that provides for the tenant to pay the LEAST amount of expenses other than rent is

A)
the variable lease.
B)
the percentage lease.
C)
the net lease.
D)
the gross lease.

Answer 34

Explanation
The answer is the gross lease. In a gross lease, the tenant pays a fixed rent and some or all of the utility expenses, while the landlord pays all taxes, insurance, repairs, any other utility expenses, and maintenance connected with the property.

Question 35

A tenant enters into a commercial lease that requires a monthly rent of a minimum fixed amount, plus an additional amount determined by the tenant’s gross receipts exceeding $5,000. This type of lease is called

A)
a standard lease.
B)
a net lease.
C)
a gross lease.
D)
a percentage lease.

Answer 35

Explanation
The answer is a percentage lease. When a business tenant pays rent that varies according to the tenant’s gross business receipts, the arrangement is called a percentage lease. In such a situation, the landlord shares in the tenant’s business risk because of the possibility of receiving no more in rent than the minimum fixed amount.

Question 36

Use restrictions are particularly common in leases for

A)
mobile home park space.
B)
apartment buildings.
C)
single-family homes.
D)
stores or commercial space.

Answer 36

Explanation
The answer is stores or commercial space. Use restrictions for stores or commercial space help keep uses from property to property complementary and compatible.

Question 37

The principal difference between an estate for years and an estate from year to year is that

A)
an estate for years cannot be terminated.
B)
an estate from year to year has no expiration date.
C)
an estate from year to year must be in writing.
D)
an estate for years is a life estate.

Answer 37

Explanation
The answer is an estate from year to year has no expiration date. An estate from period to period, or periodic tenancy, does not have a specific expiration date. An estate (tenancy) for years has specific beginning and ending dates.

Question 38

In the absence of a notice to terminate, a lease that continues automatically would be

A)
a periodic tenancy.
B)
a ground lease.
C)
a gross lease.
D)
a tenancy for years.

Answer 38

Explanation
The answer is a periodic tenancy. Periodic tenancy is automatically renewed for the time covered by the periodic tenancy (e.g., month to month), unless proper notice to terminate has been given by one party to the other.

Question 39

In the absence of clear limitations in the lease as to the use of the premises,

A)
a lessee may use the premises for any lawful purpose.
B)
the landlord should notify the tenant of any undesirable use.
C)
a lessee should comply with the reasonable requests of the landlord.
D)
the landlord must file a “notice of lease restrictions.”

Answer 39

Explanation
The answer is a lessee may use the premises for any lawful purpose. The lessee still must comply with local zoning and/or subdivision restrictions.

Question 40

In August, a tenant signs a one-year lease in an apartment complex. Rent payments are due on the 15th of each month. On December 12, the apartment complex is sold to a new owner. On March 14, the building is destroyed in a fire. Which of these statements accurately describes the tenant’s obligations?

A)
The tenant is not required to continue paying rent after March 14 because the premises have been destroyed.
B)
The tenant is not required to continue paying rent after December 12 because the sale voids the preexisting lease.
C)
The tenant is required to continue paying rent, but the residential lease is converted by law into a ground lease.
D)
The tenant is required to continue paying rent for the full lease term because a tenancy for years cannot be terminated by the destruction of the premises.

Answer 40

Explanation
The answer is the tenant is not required to continue paying rent after March 14 because the premises have been destroyed. Typically, if a residential rental unit is destroyed, the lease is terminated. This is not the case with agricultural land or ground leases.

Question 41

The lessor, as the owner of the real estate, is usually required to allow the lessee to occupy the premises without interference from the owner or anyone else under the covenant of

A)
peaceful occupancy.
B)
quiet enjoyment.
C)
peaceful enjoyment.
D)
quiet occupancy.

Answer 41

Explanation
The answer is quiet enjoyment. The lessor, as the owner of the real estate, is usually required to allow the lessee to occupy the premises without interference from the owner or anyone else under the covenant of quiet enjoyment.