Unit 19

Question 1

Learning Objective: Discuss the requirements of laws related to leasing residential real estate.

Answer 1

Answer: Leasing residential real estate requires compliance with the Texas Property Code, including fair housing laws, disclosure of lead-based paint hazards for older properties, and adherence to occupancy standards. Laws also dictate the proper handling of security deposits, maintenance of premises, and provisions for smoke alarms and security devices. Additionally, leases for more than one year must be in writing under the statute of frauds.

Question 2

Learning Objective: Identify the characteristics of the four types of leasehold estates and the various types of leases.

Answer 2

Answer: The four types of leasehold estates include:

Estate for Years: Has a specific beginning and end date; does not renew automatically.

Periodic Estate: Indefinite term that automatically renews, such as month-to-month leases.

Tenancy at Will: Continues until terminated by either party or upon death of either.

Tenancy at Sufferance: Occurs when a tenant remains after the lease ends without the landlord’s consent.

Lease types include gross leases (fixed rent), net leases (tenant pays rent plus expenses), and percentage leases (base rent plus a percentage of business income).

Question 3

Learning Objective: Describe the requirements and general provisions of a valid lease.

Answer 3

Answer: A valid lease must include offer and acceptance, consideration, capacity to contract, legal objectives, and a legal description of the property. It must comply with the Texas statute of frauds for leases over one year and include clauses defining the rights and obligations of both landlord and tenant, such as maintenance, improvements, and use restrictions.

Question 4

Learning Objective: Explain the key points of the Texas Landlord and Tenant Act: occupancy limits, rental applications, security deposits, maintenance of premises, smoke alarms, security devices, and breach of lease.

Answer 4

Answer:

Occupancy Limits: A maximum of three adults per bedroom unless local ordinances dictate otherwise.

Rental Applications: Landlords must provide selection criteria and refund deposits if an application is denied.

Security Deposits: Must be refunded or itemized within 30 days after tenant surrender.

Maintenance of Premises: Landlords must keep properties habitable and repair significant safety issues.

Smoke Alarms: Required in bedrooms and corridors; landlords must repair upon tenant request.

Security Devices: Must include locks, latches, and keyless deadbolts.

Breach of Lease: Landlords can pursue eviction or monetary damages; tenants can claim constructive eviction if conditions are uninhabitable.

Question 5

Key Term: Actual Eviction

Answer 5

Definition: The legal process by which a landlord regains possession of a property when a tenant breaches a lease or unlawfully occupies the premises.

Question 6

Key Term: Constructive Eviction

Answer 6

Definition: When a landlord’s failure to maintain the property makes it uninhabitable, allowing the tenant to abandon the lease.

Question 7

Key Term: Estate for Years

Answer 7

Definition: A leasehold estate with a definite start and end date, not requiring notice to terminate.

Question 8

Key Term: Estate from Period to Period

Answer 8

Definition: A lease that automatically renews for successive periods until notice is given.

Question 9

Key Term: Forcible Detainer Suit

Answer 9

Definition: A legal action to evict a tenant for unlawful possession of the property.

Question 10

Key Term: Gross Lease

Answer 10

Definition: A lease where the tenant pays a fixed rent and the landlord covers all property expenses.

Question 11

Key Term: Ground Lease

Answer 11

Definition: A long-term lease of land, usually requiring the tenant to construct a building.

Question 12

Key Term: Holdover Tenancy

Answer 12

Definition: When a tenant remains in possession after the lease expires without the landlord’s consent.

Question 12

Key Term: Habitability Statute

Answer 12

Definition: Requires landlords to maintain properties in a condition suitable for living.

Question 13

Key Term: Leasehold Estate

Answer 13

Definition: The tenant’s right to occupy real property under a lease agreement.

Question 14

Key Term: Mitigate Damages

Answer 14

Definition: The landlord’s obligation to minimize losses by seeking a replacement tenant after a breach.

Question 15

Key Term: Percentage Lease

Answer 15

Definition: A lease that includes a base rent plus a percentage of the tenant’s business income.

Question 16

Key Term: Net Lease

Answer 16

Definition: A lease where the tenant pays rent plus property expenses such as taxes and insurance.

Question 17

Key Term: Periodic Estate

Answer 17

Definition: A lease with indefinite duration that renews automatically, such as a month-to-month lease.

Question 18

Key Term: Reversionary Right

Answer 18

Definition: The landlord’s right to regain possession after the lease term expires.

Question 19

Key Term: Security Deposit

Answer 19

Definition: Money held by the landlord to cover potential damages or unpaid rent.

Question 20

Key Term: Sublease

Answer 20

Definition: When a tenant leases all or part of their rented space to another party.

Question 20

Key Term: Suit for Possession

Answer 20

Definition: A legal action to regain possession of a property from a tenant.

Question 21

Key Term: Tenancy at Sufferance

Answer 21

Definition: A situation where a tenant stays without consent after the lease ends.

Question 22

Key Term: Tenancy at Will

Answer 22

Definition: A lease that can be terminated at any time by either party.

Question 23

Key Term: Writ of Possession

Answer 23

Definition: A court order authorizing the landlord to take possession of a property after an eviction.

Question 24

Key Point Question: What is the purpose of a lease?

Answer 24

Answer: A lease grants a tenant the right to use the property of another for a specified period in return for consideration.

Question 25

Key Point Question: What are the characteristics of the main leasehold estates?

Answer 25

Answer: An estate for years runs for a specific time; a periodic tenancy automatically renews; a tenancy at will is indefinite; a tenancy at sufferance occurs when a tenant stays without consent after the lease expires.

Question 26

Key Point Question: What are the requirements of a valid lease?

Answer 26

Answer: A valid lease must include offer and acceptance, consideration, legal capacity, legal objectives, and a legal description.

Question 27

Question 1: Paul’s estate for years lease will expire in two weeks. At that time, he will move to a larger apartment across town. What must Paul do to terminate this lease agreement?
A. Paul must give the landlord one month’s prior notice.
B. Paul must give the landlord two weeks’ prior notice.
C. Paul needs to do nothing; the agreement will terminate automatically.
D. The agreement will terminate only after Paul signs a lease for the new apartment.

Answer 27

Answer: C – Paul needs to do nothing; the agreement will terminate automatically.
Reasoning for the answer: An estate for years ends automatically on the specified expiration date without requiring any notice from the tenant or landlord.

Question 28

Question 2: A tenant’s right to occupy, or take possession of, leased premises is
A. a reversionary interest.
B. an equitable title interest.
C. a leasehold interest.
D. a freehold estate.

Answer 28

Answer: C – a leasehold interest.
Reasoning for the answer: A leasehold interest grants tenants the legal right to occupy and use a property for a specified time, distinct from ownership interests like freehold or reversionary rights.

Question 29

Question 3: A ground lease is usually
A. short term.
B. for 100 years or longer.
C. long term.
D. a gross lease.

Answer 29

Answer: C – long term.
Reasoning for the answer: Ground leases are typically long-term agreements, often exceeding 50 years, to allow the tenant sufficient time to develop and benefit from the leased land.

Question 30

Question 4: A percentage lease is a lease that provides for
A. rental of a percentage of a building’s value.
B. definite periodic rent not exceeding a stated percentage.
C. definite monthly rent plus a percentage of the tenant’s gross or net receipts in excess of a certain amount.
D. a graduated amount due monthly and not exceeding a stated percentage.

Answer 30

Answer: C – definite monthly rent plus a percentage of the tenant’s gross or net receipts in excess of a certain amount.
Reasoning for the answer: A percentage lease includes a base rent and an additional charge based on the tenant’s business income above a threshold, often used for retail properties.

Question 31

Question 5: If a store building collapsed because of conscious landlord neglect and the tenants moved out,
A. the tenants would be liable for the rent until the expiration date of their leases.
B. the landlord would not be responsible for any refund of rent.
C. this would be an actual eviction.
D. this would be a constructive eviction.

Answer 31

Answer: D – this would be a constructive eviction.
Reasoning for the answer: Constructive eviction occurs when a landlord’s neglect renders the property uninhabitable, allowing tenants to vacate and terminate their lease obligations.

Question 32

Question 6: Which describes a net lease?
A. An agreement in which the tenant pays a fixed rent and the landlord pays all taxes, insurance, and related expenses on the property.
B. A lease in which the tenant pays rent plus maintenance and property charges.
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 shoreline properties.

Answer 32

Answer: B – A lease in which the tenant pays rent plus maintenance and property charges.
Reasoning for the answer: A net lease requires tenants to pay rent and some or all property expenses, such as taxes, insurance, and maintenance.

Question 33

Question 7: A lease for more than one year must be in writing to be enforceable because
A. the landlord or tenant may forget the terms.
B. the tenant must sign the agreement to pay rent.
C. the statute of frauds requires it.
D. it is the customary procedure to protect the tenant.

Answer 33

Answer: C – the statute of frauds requires it.
Reasoning for the answer: The statute of frauds mandates that leases over one year be in writing to ensure enforceability and reduce disputes.

Question 34

Question 8: A lease calls for a minimum rent of $1,200 per month plus 4% of the annual gross business over $150,000. If the total rent paid at the end of the year was $19,200, how much business did the tenant do during the year?

Answer 34

. $159,800
B. $250,200
C. $270,000
D. $279,200

Answer: C – $270,000.
Reasoning for the answer: To calculate, the excess gross sales above $150,000 were $120,000 ($270,000 - $150,000). 4% of $120,000 is $4,800, and adding the base rent ($1,200 × 12 = $14,400) totals $19,200.

Question 35

Question 9: Pablo occupies a building under a written lease for a five-year term with monthly rental payments. The lease expired last month, but Pablo has remained in possession and the landlord has accepted his most recent rent payment without comment. At this point,
A. Pablo’s lease has been renewed for one year.
B. Pablo’s lease has been renewed for another five years.
C. Pablo’s lease has been renewed for one-half the original lease period—2½ years.
D. There is no extension of the lease.

Answer 35

Answer: A – Pablo’s lease has been renewed for one year.
Reasoning for the answer: Acceptance of rent payments without objection typically establishes a new periodic tenancy equal to the original term, capped at one year.

Question 36

Question 10: The leasehold interest that automatically renews itself at each expiration is the tenancy
A. for years.
B. from period to period.
C. at will.
D. at sufferance.

Answer 36

Answer: B – from period to period.
Reasoning for the answer: Periodic tenancy renews automatically upon each expiration unless notice to terminate is given by either party.

Question 37

Question 11: Which term refers to a tenant’s legal right to occupy leased property against the ownership claims of third parties?
A. Tenancy at will
B. Cognovit
C. Covenant of quiet possession
D. Constructive eviction

Answer 37

Answer: C – Covenant of quiet possession.
Reasoning for the answer: The covenant of quiet possession ensures that a tenant can occupy the leased premises without interference from the landlord or claims by third parties during the lease term.

Question 38

Question 12: A tenant’s lease has expired, the tenant has neither vacated nor negotiated a renewal lease, and the landlord has declared that she does not want the tenant to remain in the building. The form of possession is called
A. an estate for years.
B. a periodic estate.
C. a tenancy at will.
D. a tenancy at sufferance.

Answer 38

Answer: D – a tenancy at sufferance.
Reasoning for the answer: Tenancy at sufferance occurs when a tenant remains in possession without the landlord’s consent after the lease has expired.

Question 39

Question 13: The requirements of a valid lease include all EXCEPT
A. offer and acceptance.
B. valuable consideration.
C. capacity to contract.
D. recordation in the county clerk’s office.

Answer 39

Answer: D – recordation in the county clerk’s office.
Reasoning for the answer: A valid lease does not require recording in the county clerk’s office unless specified by law or certain circumstances (e.g., long-term leases requiring public notice).

Question 40

Question 14: If no special provision is included in the lease regarding permanent improvements made by a tenant, such improvements
A. are fixtures.
B. remain the property of the tenant after the lease expires.
C. are adaptations of space to suit tenants’ needs.
D. are reimbursed to the tenant by the landlord.

Answer 40

Answer: A – are fixtures.
Reasoning for the answer: Permanent improvements made by the tenant typically become part of the property (fixtures) and belong to the landlord after the lease ends unless otherwise specified.

Question 41

Question 15: Adams leased space in her new shopping center to Baker for his dress store. However, Baker’s business fails and Baker sublets the space to Davis. If Davis fails to make rental payments when due,
A. Adams would have recourse against Baker only.
B. Adams would have recourse against Davis only.
C. Adams would have recourse against both Baker and Davis.
D. Davis would have recourse against Baker.

Answer 41

Answer: A – Adams would have recourse against Baker only.
Reasoning for the answer: In a sublease, the original tenant (Baker) remains primarily responsible for rent payments unless released by the landlord.

Question 42

Question 16: In June, Sharisse signed a TR lease for one year and moved into an apartment. She deposited the required security deposit with the landlord. Six months later, she paid the January rent and mysteriously moved out. Sharisse did not arrange for a sublease or an assignment and made no further rent payments. She left the apartment in good condition. What is Sharisse’s liability to the landlord under these circumstances?
A. Because half the rental amount has been paid and the apartment is in good condition, she has no further liability.
B. She is liable for one month’s additional rent only.
C. She is liable for the balance of the rent only.
D. She is liable for the balance of the rent plus forfeiture of the security deposit.

Answer 42

Answer: D – She is liable for the balance of the rent plus forfeiture of the security deposit.
Reasoning for the answer: Sharisse remains liable for the remainder of the lease term unless the landlord secures a new tenant. Additionally, the landlord may retain her security deposit for non-compliance with lease terms.