The Contract of Sales and Leases

Essentials of a valid Contract

-competent parties -mutual agreement -consideration -lawful objective -in writing

Mortgage contingency clause

A clause in a contract that states a mortgage must be obtained in order for the contract to be binding.

Express contract

A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an "implied" contract in which the existence of the contract is assumed by the circumstances. A lease for a term of a year. Both parties sign and everyone knows the terms

Lease

A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, or at will.

Executory contract

A contract which has not yet been fully performed (fully executed).

Land lease

A land lease--also called a ground lease--is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.

Proprietary lease

A lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building.

Triple net lease

A lease in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent.

Percentage lease

A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.

Gross lease

A lease of property whereby the lessor is to meet all property charges regularly incurred through ownership.

Net lease

A lease that requires the tenant to pay, in addition to rent, some or all of the property expenses that normally would be paid by the property owner. These include expenses such as real estate taxes, insurance, maintenance, repairs, utilities, and other items.

Index lease

A lease tied to an index such as the Consumer Price Index.

Graduated lease

A lease which provides for a graduated change at stated intervals in the amount of the rent to be paid; used largely in long-term leases.

Eviction

A legal proceeding by a lessor landlord to recover possession of real property.

Implied contract

A legal substitute for a contract. An implied contract is an agreement created by actions of the parties involved, but it is not written or spoken. This is a contract assumed to have been drawn.

Security deposit

A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction. Must be in a separate bank account

Holdover tenant

A tenant who remains in possession of leased property after the expiration of the lease term.

Covenants

Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property.

Ground lease

An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.

Executed contract

An agreement that has been fully performed. Signed by both parties.

Sublease

An arrangement in which the lessee (tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant.

Constructive eviction

Any disturbance of the tenant's possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased. Allows the tenant to change the term of the lease and leave.

Bilateral contract

Both parties are coming to the table to perform and this is happening more concurrently. A lot of express contracts are bilateral contracts.

Demising clause

Deals with when the property is going to be handed over. Must specifically state when the lease begins and when possession happens

Estate for years

For a specified period of time

Rend control and rent stabilization laws

Govern additional covenants in the lease

Statute of frauds

Governs all contracts. Leases must be in writing to be recognized in a court of law if the lease is extended for over a year.

Termination of a lease

Landlords can not do self help eviction. They have to petition the court. This is actionable in criminal court if they do so

Capacity of contract

Must be 18 years of age and must have sane mind

Unilateral contract

One person does this unilaterally and the other person is required to perform because of those services. (similar to an implied contract)

Estate at will

People can cancel this at any time. The tenant or landlord can cancel it with notice. Notice is typically 30 days

Use provisions

Provide that property should be used for any lawful purpose. Violations are criminal activity on the property, etc.

Periodic estate

Renews on it's own. Both parties either choose to renew it or it can renew naturally. Popular in NY and leaseholds

Signature

Says that you have read and understand the terms of the lease. Shows that you meet the conduct of capacity

Plain language requirement

Shows that people understand what they are signing

Description of the premisise

The address of the property and unit #. Clear statement of the term of the lease.

Apartment sharing

The landlord is not allowed to say that you can not share the unit. One person will typically enter into the covenant themselves and share with a spouse or family member. This benefits the tenant

Assignment

The method or manner by which a right or contract is transferred from one person to another.

Quit enjoyment

The right of an owner or a person legally in possession to the use of property without interference of possession.

Estate/ tenancy at sufferance

The tenant holds over. There is a disagreement and the landlord is trying to evict the tenant but the tenant decides to stay. The landlords only option is to bring this into a court order

Sublet

The tenant is subletting for a period of time the property out from under them. The tenant has to get the consent/approval from the landlord. (similar to an assignment)

Possession and habitability

Warrantee of habitability insures that the place is habitable

Actual eviction

Where one is either by force or by process of law, actually put out of possession.