Unit 17 Quiz Questions

Question 1

A business tenant pays for its own utilities and makes one payment each month to the
landlord, who pays the taxes, insurance on the building, and maintenance. What type of lease arrangement is this?

a. Net
b. Gross
c. Percentage
d. Graduated

Answer 1

Gross

The one-lump sum every month to the landlord is a gross lease. In a net lease, the tenant is
responsible for paying all or most of the property charges. Percentage leases are generally used by retail establishments and are based on gross sales.

Question 2

Some tenants want to buy the house they are renting, but they do not have enough money for the down payment. The landlord agreed to put part of the tenants’ rent toward the purchase price. The landlord and tenants have agreed to

a. a lease purchase.
b. a sale leaseback.
c. a ground lease.
d. an option.

Answer 2

A lease purchase

The tenant typically pays a higher rent with a portion being applied to the subsequent purchase of the property. It differs from a sale leaseback, whereby the owner of the property wants to obtain equity from the building. The owner sells the building and agrees to rent it
back.

Question 3

The expiration date of a one-year lease is September 30. On July 1, the house is sold to a family that wants to live in the property. Assuming the lease does not include a sale clause, how soon can the family move in?

a. July 1, present year
b. July 1, next year
c. October 1, present year
d. December 31, present year

Answer 3

October 1, present year.

The tenants have the right to possess the property until the end of the lease. The new owners will have to wait to move in.

Question 4

A tenant rents an apartment under a one-year written lease. The expiration date of the lease is May 1. How much notice must the landlord give the tenant to recover possession when the lease expires?

a. One week
b. 30 days
c. 60 days
d. None

Answer 4

None

This lease will be terminated May 1—an estate for years. By definition, no notice is required. Unless required otherwise by state law, if the tenant or landlord wants notice, a paragraph requiring that notice of intention to terminate be given must be added to the lease.

Question 5

Two years ago, a landlord rented a parcel of property to a tenant. The agreement stated only that the tenant agreed to pay the landlord $500 per month. What type of tenancy does the tenant have?

a. Holdover
b. At sufferance
c. For years
d. Periodic

Answer 5

Periodic

Any lease that automatically renews itself is a periodic tenancy. It will continue until either party gives proper notice requesting a change.

Question 6

A tenant rents an apartment under a two-year written lease. Three months after signing the lease, the tenant is transferred to another country for a year. During this period, the tenant leases the apartment to a friend. The friend mails monthly rent checks to the tenant, who continues to make monthly rental payments to the landlord. In this situation, the friend has a

a. lease.
b. tenancy at will.
c. sublease.
d. periodic tenancy

Answer 6

Sublease

The friend holds a sublease because the tenant has given up possession for some of the portions of the lease. Giving up all of the remaining rights under the lease would be an
assignment. In either situation, the original tenant is still responsible for the rental obligation

Question 7

Vandals break into an apartment building and destroy the central air-conditioning system. A tenant’s apartment becomes uncomfortably warm. The next day, the tenant sues the landlord for constructive eviction. In this situation, will the tenant win?

a. Yes, if the tenant’s lease promises that the apartment will be air conditioned.
b. Yes, to claim constructive eviction, it is not necessary that the condition be the result of the landlord’s personal actions.
c. No, to claim constructive eviction, the tenant must prove that the premises are uninhabitable.
d. No, the premises are not unusable, the condition was not due to the landlord’s conscious neglect, and the tenant has not abandoned the apartment.

Answer 7

No, the premises are not unusable the condition was not due to the landlord’s conscious neglect, and the tenant has not abandoned the apartment.

Constructive eviction is a result of the landlord not providing essential services that render the premises unsafe or uninhabitable, conditions that probably are not met in this situation.

Question 8

In August, a tenant signs a one-year lease in an apartment complex and moves in. 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 burns. 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 for the full lease term because a tenancy for years cannot be terminated by the destruction of the premises.
d. The tenant is required to continue paying rent, but the residential lease is converted by law into a ground lease.

Answer 8

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 9

Tenant C signs a lease to rent an apartment. The lease runs from October 1 until November 1 of the following year. Tenant E signs a two-year lease to rent an apartment in a different, new building that will be ready for occupancy in 15 months. Which of these leases must be in
writing to satisfy the statute of frauds?

a. Tenant C’s only
b. Tenant E’s only
c. Both C’s and E’s
d. Neither C’s nor E’s

Answer 9

Both C’s and E’s

Both leases are covered by the statute of frauds because they will both terminate more than one year from the date they are executed.

Question 10

A tenant signed a one-year lease with a landlord on April 10. On the following March 1, the landlord asked the tenant whether the lease would be renewed. The tenant did not respond but was still in the apartment on April 11. What can the landlord do?

a. The landlord must initiate eviction proceedings within the first one-month rental period.
b. The landlord cannot evict the tenant; because the tenant remained in possession of the premises, the lease has been automatically renewed for an additional year.
c. If the tenant offers a rent check, the landlord must accept it and the tenant is entitled to a renewal of the one-year lease.
d. The landlord may either evict the holdover tenant or accept a rent check, creating a holdover or periodic tenancy.

Answer 10

The landlord may either evict the holdover tenant or accept a rent check, creating a holdover or periodic tenancy.

The original lease was an estate for years and no notice was required to terminate. If the tenant does not pay rent, it will become a tenancy at sufferance. If the tenant pays rent and the landlord accepts it, it will be a holdover or periodic tenancy, which could be changed into an estate for years if they enter into yet another year-long lease.

Question 11

If a tenant remains in possession of leased property after the expiration of the lease term, without paying rent and without the landlord’s consent, what is the tenant’s status?

a. Tenant at will
b. Trespasser
c. Periodic tenant
d. Freehold tenant

Answer 11

Trespasser

The landlord can treat the tenant as a trespasser and proceed with eviction and a suit for damages; however, the landlord must comply with notice to quit requirements.

Question 12

Because of a physical disability, it would be necessary for a prospective tenant to have all the doorknobs in a rental unit replaced with lever-type handles. In this case, which of these statements is TRUE?

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

Answer 12

The landlord is legally obligated to permit the modifications to e made at the tenants 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 13

A small business rents space in a shopping center. Under the terms of the lease, the landlord pays all operating expenses. The business pays a base rent of $1,000 per month, plus 15% of monthly gross profits over $10,000. The business has a

a. gross lease.
b. percentage lease.
c. net lease.
d. variable lease.

Answer 13

Percentage lease.

Many retail shopping centers use percentage leases. Part of the tenant’s success is due to location. Landlords will help with promotional events to draw in customers knowing that the more successful the tenant, the more rent for the landlord.

Question 14

When a landowner leases unimproved land to a tenant, who agrees to erect a building on the land, the lease is usually called

a. a lease purchase.
b. a gross lease.
c. a ground lease.
d. an improvement lease.

Answer 14

A ground lease.

A tenant who intends to construct a building on leased land generally does so under a ground lease, often for up to 50 years. The tenant may record the lease to serve constructive notice of their long-term interest.

Question 15

A tenant rented a house, but 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 has no obligation to the landlord because the lease was assigned, not sublet.
b. The friend has no obligation to the landlord because the friend’s lease agreement is with the original tenant.
c. 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.
d. The tenant is still liable to the landlord because the tenant’s arrangement with the friend is a sublease, not an assignment.

Answer 15

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 16

A security deposit held by a landlord

a. compensates the landlord in the event of rent default or premises damage.
b. functions as the last month’s rent on the lease.
c. acts as an investment option for the tenant.
d. does all of these.

Answer 16

Compensates the landlord in the event of rent default or premises damage

Security deposits are often required to be used if the tenant defaults on payment of rent or destroys the premises. A security deposit cannot usually be applied to the final month’s rental, as that would make it an advance rental payment, and the landlord would be required to treat it as income for tax purposes.

Question 17

Who owns the building that is erected on land that has a ground lease?

a. Testator
b. Lessor
c. Lessee
d. Trustee

Answer 17

Lessee

Ground leases typically involve separate ownership of the land and the buildings, so the lessor owns the land and the lessee owns the building.

Question 18

What must a landlord do before commencing a lawsuit for actual eviction?

a. Notify the sheriff
b. Contract with a company to forcibly remove the tenant and possessions
c. Obtain a judgment from the court
d. Serve notice on the tenant

Answer 18

Serve notice on the tenant

To regain possession through a legal process called actual eviction, the landlord must serve notice on the tenant before commencing the lawsuit.

Question 19

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 with a spare key. Which of these is TRUE?

a. The landlord has the right to enter property that the landlord owns.
b. The landlord may only enter a tenant’s apartment if the tenant is behind on paying rent.
c. The landlord is violating the covenant of quiet enjoyment.
d. The landlord is creating a tenancy at sufferance.

Answer 19

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 20

A lease that provides for specified rent increases at set future dates is called

a. an adjustable lease.
b. a graduated lease.
c. a percentage lease.
d. an interval lease.

Answer 20

A graduated lease.

A form of variable lease is the graduated lease that provides for specified rent increases at set future dates.

Question 21

Which transaction is BEST described as involving a ground lease?

A. A landowner agrees to let a tenant drill for oil on a property for 75 years.
B. The tenant agrees to pay a proportionate, increased rental based on annual appraisals of the rented property.
C. A landlord charges a commercial tenant separate amounts for the land and the leased building.
D. The tenant pays a base amount for the property plus a percentage of business-generated income.

Answer 21

a landlord charges a commercial tenant separate amounts for the land and the leased building.

The answer is a landlord charges a commercial tenant separate amounts for the rented land and for the leased building. When a tenant has separate leases and pays separate rents on the building and the ground under it, the second agreement is a ground lease. The consideration paid for it is ground rent.

Question 22

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 gross lease.
C. a percentage lease.
D. a net lease.

Answer 22

A percentage lease.

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 23

If a tenant moved out of a rented store building because access to the building was blocked as a result of the landlord’s negligence,

A. the tenant would have no legal recourse against the landlord.
B. the landlord may be liable for the rent until the expiration date of the lease.
C. the landlord may have to provide substitute space.
D. the tenant may be entitled to recover damages from the landlord.

Answer 23

The tenant may be entitled to recover damages from the landlord.

The answer is the tenant may be entitled to recover damages from the landlord. The tenant suffering financial losses (damages) because of the landlord’s negligence could enter an action against (sue) the landlord for those damages

Question 24

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

Answer 24

Actual eviction

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 25

A tenant still has five months remaining on a one-year apartment lease. When the tenant moves to another city, the tenant transfers possession of the apartment to a friend for the entire remaining term of the lease. The friend pays rent directly to the tenant. In this situation, the tenant has become

A. an assignor.
B. a sublessor.
C. a sublessee.
D. a lessor.

Answer 25

A sublessor

The answer is a sublessor. The tenant is the tenant of the landlord (lessor) and, in turn, is the landlord of the friend. In this sandwich position, the tenant is a sublessor.

Question 26

A tenancy is which the tenant continues in possession after the lease has expired, without the landlord’s permission is

A. a tenancy for years.
B. a periodic tenancy.
C. a tenancy at will.
D. an estate at sufferance.

Answer 26

An estate at sufferance

The answer is an estate at sufferance. An estate at sufferance is created when a tenant who lawfully occupied the property continues to stay on after the expiration date of the lease without the permission of the landlord. If the lease does not have a “holdover” clause that governs the rights of both landlord and tenant, state law will govern.

Question 27

A tenant’s tenancy for years will expire in two weeks. The tenant plans to move to a larger apartment across town when the current tenancy expires. In order to terminate this agreement, the tenant must

A. give the landlord immediate notice or the lease will automatically renew.
B. give the landlord one week’s prior notice or the lease will automatically renew.
C. do nothing because the agreement will terminate automatically at the end of the current term.
D. sign a lease for the new apartment, which will automatically terminate the existing lease.

Answer 27

Do nothing because the agreement will terminate automatically at the end of the current term.

The answer is do nothing because the agreement will terminate automatically at the end of the current term. In common law, a tenant for a specified period (one who holds a lease for years) does not have to give notice because the lease ends by contractual agreement. Nor does the landlord have to give the tenant notice in such a case, unless required to do so by state law.

Question 28

When a tenant holds possession of a landlord’s property without a current lease agreement and without the landlord’s approval,

A. the tenant is maintaining a gross lease.
B. the landlord can file suit for possession.
C. the tenant has no obligation to pay rent.
D. the landlord may be subject to a constructive eviction.

Answer 28

The landlord can file suit for possession.

The answer is the landlord can file suit for possession. The tenant is a tenant at sufferance. The landlord may regain possession through a legal process known as an actual eviction.

Question 29

Under the negotiated terms of a commercial lease, the landlord is required to maintain the water heater used in a health club. If the tenant is unable to get hot water because of a faulty water heater that the landlord has failed to repair after repeated notification, the tenant’s best recourse for staying in business would be to

A. stop paying rent.
B. order a new water heater and deduct the payment from the rent.
C. file a criminal complaint against the landlord.
D. seek a refund of all lease payments.

Answer 29

Order a new water heater and deduct the payment from the rent.

The answer is order a new water heater and deductthe payment from the rent. The landlord’s behavior
provides a basis for ordering a new water heater andhaving the bill sent to the landlord.

Question 30

A lessee has a one-year leasehold interest in a house. The lease automatically renews itself at the end of each year. The lessee’s interest is referred to as a tenancy

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

Answer 30

From period to period.

The answer is from period to period. When a lease renews itself periodically, the arrangement is known as a leasehold from period to period, or a periodic tenancy.

Question 31

Rent would BEST be described as

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

Answer 31

Consideration for the use of real property.

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 32

Under the terms of a net lease, a commercial landlord would usually be responsible for paying which of the following property expenses?

A. mortgage debt service.
B. maintenance expenses.
C. fire and extended coverage insurance.
D. real estate taxes.

Answer 32

Mortgage debt service.

The answer is mortgage debt service. Under anet lease, the tenant pays all property expenses,including taxes, insurance, utilities, maintenance,and so on, but not debt service (the landlord’smortgage payment).

Question 33

Which of the following describes a net lease?

A. An agreement in which the tenant pays a fixed rent and the landlord pays all taxes, insurance, and expenses related to the property
B. A lease in which the tenant pays rent, plus some—or most—of the operating expenses related to the property
C. A lease in which the tenant pays the landlord a percentage of the monthly income derived from the property
D. An agreement granting an individual a leasehold interest in fishing rights for a shoreline property

Answer 33

a lease in which the tenant pays rent, plus all - or most - of the operating expenses related to the property.

The answer is a lease in which the tenant pays rent, plus all—or most—of the operating expenses related to the property.

Question 34

A tenancy in which the tenant continues in possession after the lease has expired, without the landlord’s permission, is

A. a tenancy for years.
B. a periodic tenancy.
C. a tenancy at will.
D. a tenancy at sufferance.

Answer 34

a Tenancy at sufferance

The answer is a tenancy at sufferance. A tenant who stays after the end of the lease without the landlord’s permission holds a tenancy at sufferance.

Question 35

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

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

Answer 35

An estate for years.

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 36

Which of the following describes a gross lease?

A. An agreement in which the tenant pays a fixed rent and some or all of the utilities and the landlord pays all taxes, insurance, and expenses related to the property
B. A lease in which the tenant pays rent plus some of the operating expenses related to the property
C. A lease in which the tenant pays the landlord a percentage of the monthly income derived from the property
D. An agreement allowing the tenant to terminate the lease if certain conditions near the premises become unbearable

Answer 36

An agreement in which the tenant pays a fixed rent and some or all of the utilities and the landlord pays all taxes, insurance, and expenses related to the property.

The answer is an agreement in which the tenant pays a fixed rent and some or all of the utilities and the landlord pays all taxes, insurance, and other expenses related to the property. In a gross lease, the tenant pays no part of the property’s operating expenses other than utilities.

Question 37

A tenant signs a lease that includes a schedule of rent increases on specific dates over the course of the lease term. What kind of lease has this tenant signed?

A. Percentage
B. Net
C. Graduated
D. Index

Answer 37

Graduated

The answer is graduated. An agreement in which tenant agrees to pay predicted, regular increases during its term is called a graduated lease.

Question 38

A tenant signs a lease that includes the following clause: “The stated rent under this agreement will be increased or decreased every three months based on the percentage change in the consumer price index (CPI) for that period.” What kind of lease has this tenant signed?

A. Percentage
B. Net
C. Graduated
D. Index

Answer 38

Index

The answer is index. When the rental varies with an outside index, such as the consumer price index, the agreement is called an index lease.

Question 39

The death of either the landlord or the tenant will terminate the lease and the parties’ heirs will NOT be bound by its terms under which of the following tenancies?

A. Tenancy for years
B. Periodic tenancy
C. Tenancy at will
D. Tenancy at sufferance

Answer 39

Tenancy at will

The answer is tenancy at will. The only lease that is terminated by death, of either the landlord or the tenant, is a tenancy at will. A relationship at will continues only so long as both parties continue to mutually agree. If one party dies, a mutual agreement no longer exists.

Question 40

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

Answer 40

Constructive eviction

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.