Unit 17 - Leases

Question 1

Leasehold Estates are

Answer 1

A tenant’s right to possess real estate for the term of the lease is a leasehold estate (less than freehold estate)

Question 2

What is a Estate for Years

Answer 2

Has a definite time.
Specific starting and ending date
No Notice Required
Has right to use the premises for the entire lease term even if the lessor dies or the property is sold unless the lease states otherwise

Question 3

Estate from Period to period…

What is required in Estate from Period to period in Colorado?

Answer 3

Also called a periodic tenancy
is created when a lessor and lessee enter into an agreement for a period of time.
The month to month continues under the original lease terms until one of the parties gives notice to terminate.

In Colorado:
for Lessee and Lessor must give a notice (one month notice) in writing

Question 4

Periodic tenancy is also called

Answer 4

Estate from Period to Period

Question 5

Estate from Period to Period is also called

Answer 5

Periodic Tenancy

Question 6

What is an Estate at Will?

Answer 6

No period of time until terminated by either party with a proper notice

Question 7

What is an Estate at Sufferance:

Answer 7

Occurs when a tenant continues with possession of real property without the landlord’s consent.

Can also be created by operation of law when a borrower continues in possession after a foreclosure sale.

A landlord can treat a tenant as a trespasser and proceed with an eviction and damages action.

The landlord can accept rent offered by the tenant which creates a new tenancy under conditions of the original lease – a holdover tenancy.

The landlord can treat the tenant as a tenant in sufferance by either objecting to the tenant holding over creating a month to month tenancy

Question 8

A lease is a contract and therefore requires:

Answer 8

Capacity to contract
Legal Objectives
Offer and acceptance
Consideration

(studying on the unit about Contracts may help)

Question 9

Possession of Premises:

Answer 9

Lessee may take possession of the premises and the landlord guarantees that he or she will not interfere in the tenant’s possession or use of the property – Right of Quiet Enjoyment.

Question 10

Use of Premises:

Answer 10

A lessor may restrict the lessee’s use of the premises through provisions in the lease.

Question 11

Term of Lease:

Answer 11

The period for which the lease will run stated precisely with an beginning and ending date.

Question 12

Security Deposit:

Answer 12

Money held by the lessor during the term of the lease in case the tenant defaults on payment of rent or destroys the premises.

Question 13

Improvements:

Answer 13

Neither the landlord nor the tenant is required to make improvements to the leased property.

The tenant, with the lessor’s permission, may make improvements to the property which become the landlords property.

Question 14

Maintenance of Premises:

Answer 14

Lesssor is required to maintain the dwelling unit in a habitable condition. The tenant is not required to make repairs and is required to return the property in the same condition as when received, normal wear and tear accepted.

Question 15

Destruction of Premises:

Answer 15

A tenant is not required to continue rent payments for apartment, office or commercial space if the leased premises are destroyed.

If the property is destroyed through the tenant’s negligence, the landlord can recover damages.

Question 16

Assignment and Subleasing:

Answer 16

A lease is assigned when a tenant transfers all of their leasehold interests to another person who is legally oblgated for all of the promises in the original lease.

When a tenant transfers less than all of the leasehold interests by leasing them to a new tenant. The new tenant is only responsible to the original tenant to pay rent due and the original tenant remains responsible for rent and any damages to the property.

An assignment or sublease do not relieve the original lessee of the obligations to pay rent. Most leases prohibit assignment or subleasing without the landlord’s consent but the lessor generally cannot withhold consent unreasonably.

Question 17

Recording a Lease:

Answer 17

Possession of the leased premises is considered constructive notice of the lessee’s leasehold interest and therefore recording a lease is generally considered unnecessary.

Question 18

Non-disturbance Clause:

Answer 18

A mortgage clause that states the mortgagee agrees not to terminate the tenancies of lessees who pay their rent in the event the mortgagee forecloses on the property.

This is often used with commercial leases.

Question 19

What are the 2 Options:

Answer 19

Renewal Option

Lease Option

Question 20

Renewal Option:

Answer 20

a lease containing a clause that grants the lessee the privilege of renewing the lease.

The lessee must give notice that they are exercising this option.

Question 21

Lease Option:

Answer 21

A lease granting th lessee the option to purchase the leased premises at a predetermined price within a certain period of time

A tenant may be given a right of first refusal to purchase the property over another party if such right is granted in the lease agreement.

Question 22

Types of Leases

Answer 22

Gross Lease:
Net Lease:
Percentage Lease:
Other types of Leases:
Notes:

Question 23

Gross Lease:

Answer 23

The tenant pays a fixed rental amount and the landlord pays the taxes, insurance, repairs and some/all utilities.

Typically the lease found in residential property

Question 24

Net Lease:

Answer 24

The tenant pays all or some of the property charges in addition to the rent.

The monthly rental is net income for the landlord after operating expenses.

A triple net or net-net-net lease required the tenant to pay all operating and other expenses in addition to periodic rent.

Question 25

Percentage Lease:

Answer 25

A gross or net lease where the rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tenant doing business on the leased property.

Typically the lease found in retail property

Question 26

Other types of Leases: 2 types:

Answer 26

Variable lease:

Sale and Leaseback:

Question 27

Variable lease:

Answer 27

A graduated lease provides for increases in he rent at set future dates

Question 28

Sale and Leaseback:

Answer 28

Property owner sells the property and leases from the buyer for a set period of time.

Question 29

Notes:

Answer 29

A property is sold subject to the lease. The lease is not terminated if the property is sold unless there is a stipulation to such in the lease ( a sale clause).

A lease does not terminate if the lessor dies.

The lease made by the lessor of a life estate will end when the lessor dies.

The death of either party terminates a tenancy at will.

A tenancy may also be terminated by operation of law, as in a bankruptcy or condemnation proceeding.

Question 30

Suit for Possession (Actual Eviction):

Answer 30

The lessor may regain possession of a property through a process called actual eviction.

The lessor must serve notice on the tenant before commencing the lawsuit.

Lease requirement is 5 or 10 days depending on state law for notice of default in the payment of rent.

If the court issues a judgment for possession, the tenant must vacate otherwise the lessor can request that the judgment be enforced by a court officer who forcibly removes the tenant from the property.

Question 31

Right to Distrain –

Answer 31

The right of a lessor to seize property belonging to a tenant by changing the locks and giving notice for the non payment of rent.

Most states require a court order of distraint to all the right of distrain by a lessor.

Question 32

Tenant’s Remedies (Constructive Eviction):

Answer 32

If the landlord breaches any clause of the lease agreement, the tenant has the right to sue and recover damages against the landlord.

If the leased remises become unusable for the purpose states in the lease, the tenant may have the right to abandon them (constructive eviction), which terminates the lease.

The tenant must prove that the premises have become unusable because of the conscious neglect of the landlord.

To claim constructive eviction, the tenant must vacate while the conditions exist that make the property unusable.

Question 33

Can an assignment or sublease relieve the original lessee of the obligations ot pay rent?

Answer 33

An assignment or sublease do not relieve the original lessee of the obligations to pay rent. Most leases prohibit assignment or subleasing without the landlord’s consent but the lessor generally cannot withhold consent unreasonably.