RE: Leases

Quiz Q #5: A tenant is considering a 1000 sqft office. The unit is 10% of the total building, which has common areas spanning 5000 sqft. The usable square footage of the office will be: -100 sq ft -1000 sq ft -1500 sq ft -6000 sq ft

-1000 sq ft Usable square footage is the amount of space the tenant will actually occupy (as opposed to rentable square footage, which is all of the space the tenant will pay for). In this example, the usable square footage is 1000 sqft.

What other things are required of MA landlords to provide? in the kitchen

-a kitchen with a sink and electricity for a fridge (no fridge is required)

Quiz Q #3 If leased premises become unusable for the purpose stated in the lease, the tenant may abandon the premises under: -constructive eviction -escheat -tenancy at sufferance -the statute of frauds

-constructive eviction

What are examples of a lessor breaking covenant of quiet enjoyment?

-landlord trespassing on the leased premises for reasons other than reasonable -landlords failure to maintain the premises fit and suitable for occupancy as defined by the sanitary and building codes -landlords failure to provide any services promised in the lease for an unreasonable period of time (no running water, etc)

How long does MA require you give eviction notice to tenants for non payment

14 days notice to quit in writing.

Protecting tenants at foreclosure act (what, when)

2009, residential leases survive foreclosure, they can stay until end of lease or are entitled to 90 days notice if they are month to month during a foreclosure.

How long does MA require you to evict for reasons other than non payment?

7 days usually, aside from criminal activity

When is heat required and at what temps?

9/16 through 6/14, temps between 68-78 from 7AM to 11PM and at least 64 all other hours

How long can a lease legally last? at what point does it need to become public record?

99 years limit 7 years must be posted publicly (applies in mA)

Ground lease

A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default. (usually big chain stores)

Net lease

A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs. Landlord thus receives net income

Percentage lease

A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

How are property managers usually paid?

A percentage of gross rents COLLECTED

Sale leaseback

A technique used by owners of property as a means of raising capital. The process involves the simultaneous selling and leasing back of the property usually through a net lease.

Reappraisal lease

One which bases the rental amount on the market rent of the property . At set intervals the property is reappraised to establish its current rent, at which time the contract rent is adjusted accordingly.

Gross lease

Tenant pays rents, landlord pays all expenses of property; most common form of residential lease

Index lease

The rental is tied to some commonly agreed to price index such as the Consumer Price Index or the Wholesale Price Index.

What happens in commercial business if foreclosure occurs?

They can be evicted, do not need notice, can break lease

What are landlords responsibilities in MA regarding water?

They must pay water unless there are separate meters, water between 110-130

When a tenant is evicted, who can kick them out, physically?

a constable needs to come and remove the tenant, the landlord cannot lock them out

Graduated lease

a lease whose rent increases on some pre-agreed upon schedule

Leases establish a privity of state... definition

a legal relationship between two people with interests in the same property.

Lease

a written conveyance of possession, but not ownership, of real estate for some specific period of time.

Subletting

act of transferring a portion of one's interest to a third party (ex: 1 month of a 12 month lease)

Sublease

agreement giving tenancy to another; original tenant still responsible

How is commercial tenants charged?

annual price per square foot. For example: business renting 1,000 sq ft with a common area load 10% would pay total of 1100 sq ft.

In MA... which apartments need to be de-leaded?

any with children under 6 or pregnant woman

Foreclosure

banks may have the right to terminate the lease in the event of foreclosure, depending on the type of lease.

Novation (lease)

cancellation of a lease and a new third party gets a new contract

Surrender (lease)

cancellation of the lease prior to expiration

What are other words for rentable square footage? what percent is this usually?

common area load, common area factor, load factor. usually 5-15%

Leases are subject to the essentials of a ....

contract

Action of law (lease)

eminent domain taking, tax sale, bankruptcy, etc

In MA, how much can landlords ask up front when renting a unit to a new tenant?

first, last, and security deposit (max of one month rent) and a reasonable lock and key fee.

Escalator clause in a lease

increase or decrease in rent

In a commercial lease, who pays for the build out? (fit up or fit out- what needs to be done to the space to fix it for what its purpose is, example a restaurant)

it is apart of the lease, sometimes lessor pays, sometimes lessee, sometimes they split

Quiz Q #4 Property managers represent:

landlord

In MA, snow removal?

landlord responsibility

When are percentage leases usually used?

large department stores

anchor tenants

large department stores

Performance (lease)

leases automatically terminate at the end of their term

In MA, what must landlords do with security deposit?

must pay 5% interest or current bank rates (whichever is less) on the security deposit and last months rent. The interest must be paid every year within 30 days of the annual tenancy anniversary. Alternatively, it can be taken off last months rent of the current lease. Security deposits must be help in a trust or escrow account. Last months rent does not need to be deposited, but if it is not, the 5% interest is mandatory

Are licenses required for property management in MA?

no

Do landlords need to give 24 hour notice before going into rented apartment?

no

What type of interest are leases? Freehold or non-freehold?

non-freehold

What transfer relieves the lessee of their obligations under the lease?

novation

Constructive eviction

occurs when the landlord has violated the covenant of quiet enjoyment which renders the leased property unfit for occupancy by tenant. This permits the tenant to vacate the premises and ends their obligation to pay rent

Quiz Q #1: A shopping center most likely uses which of the following for its tenants: -gross lease -percentage lease -ground lease -sale leaseback

percentage lease

Quiz Q #2 Two persons sharing a right to the same piece of real estate, that is together one legal interest, is called: -doctrine of laches -privity of estate -interest in severalty -tenancy in totality

privity of estate

What are reasonable reasons for landlord to come into lessees unit?

show property to renters, make repairs, upgrades.

Lease, aka (4)

tenancy for years estate for years interest for years demise

Covenant of quiet enjoyment

tenants right to undisturbed enjoyment of the leased property. Landlords may not interfere with the tenants use and enjoyment of the leased space.

Tenants at sufferance

tenants who stay past their lease, and must be evicted

Doctrine of estoppel states...

that ice you cause another to rely on your words, you cannot go back on your promises. this is preventing the tenant from attempting to renegotiate or defraud the new property owner. Also used when loans are sold (verbal agency agreements are created, promises are made)

Destruction

the property is destroyed

Revisionary interest under a lease

the right to regain possession after the lease is over

Assigning (lease)

transfer the remainder of lease to another person

If they do not vacate after your notice, what is next (what do you need to file)

unlawful detainer complaint, this goes to housing court for hearing.

In a commercial lease, difference between usable square footage and rentable square footage?

usable: the actual space the lessee can occupy within the walls of the leased premise and is responsible for. rentable: includes both the leased premise and a percentage of any common areas maintained by the lessor and used by the lessee (lobby, etc)

A certificate of no defense or estoppel certificate

used to confirm the lease when the property is sold. If lessor dies or sells, any leases remain in tact for next owner. they cannot be broken

Actual eviction

when the tenant breached the lease by non-payment of rent, violation of the lease, holding over (staying in the property past the end of your lease without landlord permission) or unlawful use of property.

Modified gross lease

when there is a fixed rental amount for the first year but then it goes up due to operating expenses