Chapter 17: Leases and Property Management

Question 1

What’s the difference between a lessor and lessee?

Answer 1

1. Lessor is the owner who provides the lease

2. Lessee is the tenant who resides in the property

Question 2

The Lessor contains ___________________ interest

Answer 2

reversionary

Question 3

What does demise mean?

Answer 3

To convey by lease

Question 4

What are the qualifications for a valid lease?

Answer 4

1. Competent parties
2. Offer and acceptance
3. Consideration
4. Legal objetive

Question 5

Statue of Frauds say lease must be?

Answer 5

In writing if less than 1 year

Question 6

Who’s signature must be in writing on a lease?

Answer 6

The lessor

Question 7

What is a restrictive covenant?

Answer 7

Covenant within lease that restricts the lessee’s use of the premises

Question 8

What is protective covenant?

Answer 8

Covenant within lease that protects the tenant

Ex. Not allowing lessor to lease to other company competitors?

Question 9

Leases should have a definite

Answer 9

Term (start and end time)

Question 10

Where are security deposits from leasee placed?

Answer 10

In escow

Question 11

To get rid of a holdover tenant, one must seek an

Answer 11

ejectment

Question 12

What is caveat emptor

Answer 12

1. Buyer Beware

2. Buyer gets what they get, even if it has major flaws

Question 13

According to caveat emptor, is the landlord required to make repairs on leasee’s property?

Answer 13

No, but states are requiring a residential lessor to maintain units and make repairs

The tenant also does not have to make repairs, but must restore it back to its original condition

Question 14

What’s the difference between a lessee assigning a lease versus a leasee being a sublease?

Answer 14

Assign: A tenant transfers all of his leasehold interest

Sublease: a contract under which a tenant rents out their apartment to another individual while .

Question 15

What is a sandwich lease?

Answer 15

a lease agreement in which a party leases a property from an agent who is, in turn, leasing the property from the owner.

Question 16

Residential leases can be terminated by destruction or property when?

Answer 16

Residential leases are terminated by the destruction of land or land improvements.

Leases involving agriculture do not release tenant from responsibility to pay rent

Question 17

How can a lease be terminated?

Answer 17

1. There is a breach
2. Mutually agree

Lease agreements do not terminate by death of the owner.

If lease is in an estate of years or periodic, it does not terminate by death of tenants

Question 18

What is a suit of possession?

Answer 18

When owner needs to regain possession of property. Also called an eviction.

Question 19

How long does owner have to request a suit by partition?

Answer 19

5 days or 10 days depending on location

Question 20

What is constructive eviction?

Answer 20

Lease can be terminated if tenant can prove the place is uninhabitable.

Question 21

What are the 7 different types of leases?

Answer 21

1. Gross:
   - Tenant pays fixed rental or flat fee
   - Owner pays taxes, insurance, mortg. pymts, & repairs
2. Graduated (Step up): Allows rental increases for specific periods of time
3. Index Lease: Rent is adjusted based on changes in a designated index such as the CPI (Consumer Price Index)

Question 22

What is an escalator clause or participation clause?

Answer 22

Allows lessor to apply taxes or insurance to tenants rent

Question 23

What is a reappraisal lease?

Answer 23

Rent is varied based off of changes in the market

Property must be reappraised at specific times/intervals.

Question 24

What is a net lease?

Answer 24

a type of lease where the tenant pays a portion or all of the taxes, insurance fees, and maintenance costs for a property

Question 25

What is a percentage lease?

Answer 25

a lease that says rentals are based on the percentage of the gross or net income received by the tenant

Question 26

What is a ground lease?

Answer 26

A long-term lease of undeveloped land (usually 50 years or more)