CH 3 Flashcards
(23 cards)
Name 4 things that are required for every lease
- Mutuality
- Capacity to contract
- Legal Purpose
- Consideration
A lease that automatically renews itself, in the absence of notification by either party is what kind of lease?
A periodic tenancy
A tenant pays taxes and insurance and all maintenance expenses. What kind of a lease do they have?
Net lease
What kind of lease would a Jewelry store be most likely to have?
Percentage lease
A transfer by a lessee of all interest in a lease to a third party, who agrees to accept the lease obligations would be a:
Assignment
When the value of the premises has increased significantly above the rent specified in the lease an economic tenant would be better off to:
Sublease the premises
In qualifying a prospective tenant, you should be interested in tenants (3)
- Income
- Credit History
- Rental History
If you believe that rents will increase significantly in the near future, the leases you negotiate for the owners, should:
Be for short periods of time
Rent incentives are most likely to be given when?
There is a high vacancy factor
When is a lessor most likely to be successfully obtain an above market rent?
When negotiating a lease renewal and when giving rent incentives.
Explain Gross Lease?
A level payment lease. The owner pays taxes, insurance, etc.
Explain Percentage Lease?
A lease where the rent is set at a percentage of income.
Explain periodic tenancy?
A tenancy from period to period that renews itself unless notice is given to terminate.
Explain an estate for years?
A lease having a definite termination date.
Explain Flat Lease?
Similar to a gross lease.
Explain Net Lease?
A lease where tenant pays a set rent plus taxes, insurance, and maintenance.
What is a contract of adhesion?
A take-it-or-leave-it contract or lease offered by one who has great bargaining power
What is a sublease?
Is a new lease by the lessee to the sublessee. The sublease is the tenant of the original lessee.
Explain a letter of intent
While not a lease, it is an agreement to negotiate for a lease.
What are options to renew?
A right given to a tenant to renew a lease.
What are the Statue of Frauds?
The requirement that certain agreements must be in writing to be enforceable. Applies to leases over one year.
Assignment?
A transfer of all the lessee’s interest. Although the lessee remains secondarily liable on the lease.
When should a lease be written to expire?
During prime rental periods.
