Unit 17 - Leases

estate at will

(also called a tenancy at will) gives the tenant the right to possess property with the landlord's consent for an indefinite term; it continues until it is terminated by either party giving proper notice. may be created by express agreement or by operation of law

estate from period to period

(periodic tenancy) landlord and the tenant enter into an agreement for an indefinite time lease does not contain a specific expiration date. specific payment period (month to month, week to week)—but continues indefinitely until proper notice of termination is given

estate at sufferance

(tenancy at sufferance) arises when a tenant who lawfully possessed real property continues in possession of the premises without the landlord's consent after the rights expire (a holdover)

estate for years

(tenancy for years or fixed-term tenancy) is a leasehold estate that continues for a definite period of time. Always has specific beginning and ending dates.

leasehold estate

A tenant's right to possess real estate for the term of the lease

Agricultural Lease

Agricultural landowners lease their land to tenant farmers can be paid in two ways: as an agreed-on rental amount in cash in advance (cash rent), or as a percentage of the profits or losses from the sale of the crop when it is sold (sharecropping).

Fair housing

All persons must have access to housing of their choice without any differentiation in the terms and conditions because of their race, color, religion, familial status, disability, or gender.

Requirements of a Valid Lease

Capacity to contract Legal objectives. Offer and acceptance. Consideration.

proper lead disclosures for rentals

Once an offer for lease is received, the licensee representing the lessor (landlord) must ensure that the landlord provides the following to the tenant: The EPA-approved pamphlet Protect Your Family From Lead In Your Home Any known information concerning the presence of lead-based paint or related hazards in the property (landlords of multiunit buildings must include information about common areas and other units when the information was obtained via a building-wide evaluation) A "Lead Warning Statement" in or attached to the contract

sandwich lease

The sublessor's (original lessee's) interest in the real estate

ground lease

When a landowner leases unimproved land to a tenant who agrees to erect a building on the land Net leases 50-99 yrs

lease

a contract between an owner of real estate (lessor) and a tenant (lessee) to transfer the lessor's rights to exclusive possession and use of the property to the tenant for a specified period.

nondisturbance clause

a mortgage clause stating that in the event that the mortgagee forecloses on the mortgagor-lessor's building, the mortgagee agrees not to terminate the tenancies of lessees who pay their rent.

index lease

a type of variable lease, which allows rent to be increased or decreased periodically, based on changes in the consumer price index or some other economic indicator.

graduated lease

a type of variable lease, which provides for specified rent increases at set future dates.

Before entering into a service relationship with a prospective tenant, a rental-finding service must provide the prospective tenant with a written contract that discloses what information? a. A statement that information about rental units may be up to two days old b. The total amount to be paid over the lease term c. A statement that the contract will be invalid if information about a rental unit is provided when the unit has been unavailable for more than five days d. A copy of the brokerage agreement between the owner and the rental-finding service

a. A statement that information about rental units may be up to two days old

In Illinois, a landlord must give a tenant at least 60 days' written notice to terminate which of these tenancies? a. Tenancy from year to year b. Tenancy at will c. Tenancy for years d. Tenancy at sufferance

a. Tenancy from year to year

A tenant's tenancy for years will expire in two weeks. The tenant plans to move to a larger apartment across town when the current tenancy expires. What must the tenant do to terminate this agreement? a.The tenant needs to do nothing; the agreement will terminate automatically. b.The tenant must give the landlord two weeks' prior notice. c.The tenant must give the landlord one week's prior notice. d.The agreement will terminate only after the tenant signs a lease for the new apartment.

a.The tenant needs to do nothing; the agreement will terminate automatically.

A ground lease is usually a.long term. b.short term. c.for 100 years or longer. d.a gross lease.

a.long term.

constructive eviction

action of tenants leaving the premises after its become unusable for the purpose stated in the lease. terminates the lease agreement. must prove that the premises have become unusable because of the conscious neglect of the landlord. must leave the premises while the conditions that made the premises uninhabitable exist.

right of first refusal clause

allows the tenant the opportunity to buy the property before the owner accepts an offer from another party

rental-finding service

any business that finds, attempts to find, or offers to find for any person for consideration a unit of rental real estate or a lessee for a unit of rental real estate not owned or leased by the business.

A tenant has a one-year lease on an apartment. If the tenant fails to pay his rent when it is due, the landlord may a. terminate the tenant's lease without notice when the rent is more than 10 days past due. b. serve notice on the tenant to pay the delinquent rent within five days. c. hire a moving company to remove the tenant's furniture and personal property from the premises. d. serve notice on the tenant to pay the rent within five days and proceed with a suit for possession regardless of whether or not the tenant pays the past-due rent.

b. serve notice on the tenant to pay the delinquent rent within five days.

When a tenant holds possession of a landlord's property without a current lease agreement and without the landlord's approval, the a.tenant is maintaining a gross lease. b.landlord can file suit for possession. c.tenant has no obligation to pay rent. d.landlord may be subject to a constructive eviction.

b.landlord can file suit for possession.

If a tenant moved out of a rented store building because access to the building was blocked as a result of the landlord's negligence, the a.tenant would have no legal recourse against the landlord. b.tenant would be entitled to recover damages from the landlord. c.landlord would be liable for the rent until the expiration date of the lease. d.landlord would have to provide substitute space.

b.tenant would be entitled to recover damages from the landlord.

A commercial lease calls for a minimum rent of $1,200 per month plus 4% of the annual gross business exceeding $150,000. If the total rent paid at the end of one year was $19,200, how much business did the tenant do during the year? a. $159,800 b. $250,200 c. $270,000 d. $279,200

c. $270,000

A tenant rents an apartment in a 100-unit highrise in a Chicago suburb for $900 per month. The tenant decides to move when she learns that her rent will be raised by 25% at the expiration of her one-year lease. When she moved in, the tenant deposited $1,200 as a security deposit. How will the interest paid on the tenant's deposit be determined? a. The interest paid should be based on the prime rate as of December 31 of the calendar year preceding the rental agreement. b. The interest paid should be 5% per year, from the date of deposit. c. The interest rate should be computed at a rate equal to that paid on a minimum deposit passbook savings account at the state's largest commercial bank. d. Under these facts, the tenant is not entitled to receive interest on her security deposit.

c. The interest rate should be computed at a rate equal to that paid on a minimum deposit passbook savings account at the state's largest commercial bank.

Under the negotiated terms of a particular residential lease, the landlord is required to maintain the water heater. If a tenant is unable to get hot water because of a faulty water heater that the landlord has failed to repair after repeated notification, which remedy would be available to the tenant? a.Suing the landlord for damages b.Being refunded back rent by the landlord c.Abandoning the premises under constructive eviction d.Assigning the lease agreement

c.Abandoning the premises under constructive eviction

A tenant signs a lease that includes a schedule of rent increases on specific dates over the course of the lease term. What type of lease has the tenant signed? a.Percentage b.Net c.Graduated d.Index

c.Graduated

A landlord who owns a 20-unit apartment building in Decatur, Illinois, has held a tenant's security deposit for three months. The tenant, who is on a month-to-month lease, informs the landlord that he will be vacating the apartment in 30 days. Based on these facts, which of these statements is TRUE? a.The landlord must pay the tenant four months' interest on the security deposit. b.The tenant is entitled to three months' interest on the security deposit. c.The landlord owes the tenant no interest on the security deposit. d. If the tenant vacates the premises in these circumstances, the landlord is entitled to retain the security deposit as statutory damages.

c.The landlord owes the tenant no interest on the security deposit.

A net lease is a.an agreement in which the tenant pays a fixed rent and the landlord pays all taxes, insurance, and other charges on the property. b.a lease in which the tenant pays the landlord a percentage of the monthly profits derived from the tenant's commercial use of the property. c.a lease in which the tenant pays rent plus maintenance and property charges. d.a lease-purchase agreement in which the landlord agrees to apply part of the monthly rent toward the ultimate purchase price of the property.

c.a lease in which the tenant pays rent plus maintenance and property charges.

A person has a one-year leasehold interest in a house. The interest automatically renews itself at the end of each year. The person's interest is called a tenancy a.for years. b.at will. c.from period to period. d.at sufferance.

c.from period to period.

In Illinois, which of these statements is TRUE regarding a lease for more than one year? a. The lease must include a provision for interest to be paid on all security deposits. b. The lease must be recorded to give actual notice of the resident tenant's right of possession. c. The lease may be terminated only by written notice to the tenant, even if it contains a definite expiration date. d. The lease must be in writing and signed to be enforceable in court.

d. The lease must be in writing and signed to be enforceable in court.

How many days' advance notice is required to terminate a month-to-month tenancy in Illinois? a. 5 b. 15 c.60 d.30

d.30

What is rent? a.Contractual consideration to a third party b.All monies paid by the lessor to the lessee c.Total balance owed under the terms of a lease d.Consideration for the use of real property

d.Consideration for the use of real property

A tenant still has five months remaining on a one-year apartment lease. When the tenant moves to another city, she transfers possession of the apartment to a friend for the entire remaining term of the lease. The friend pays rent directly to the tenant. In this situation, the tenant has become a.an assignor. b.a sublessee. c.a lessor. d.a sublessor.

d.a sublessor.

A tenant's lease has expired. The tenant has neither vacated the premises nor negotiated a renewal lease, and the landlord has declared that she does not want the tenant to remain in the building. This form of possession is called a.an estate for years. b.a periodic estate. c.an estate at will. d.an estate at sufferance.

d.an estate at sufferance.

A tenant enters into a commercial lease that requires a monthly rent based on a minimum set amount plus an additional amount determined by the tenant's gross receipts exceeding $5,000. This type of lease is called a a.standard lease. b.gross lease. c.net lease. d.percentage lease.

d.percentage lease.

Residential Lead-Based Paint Hazard Reduction Act

focused more strongly on disclosure and REALTOR® liability supersedes any state laws that are not as strong. Real estate licensees leasing properties built before 1978 must ensure that landlords disclose any possible lead-based paint or related hazards.

memorandum of lease

gives notice of the interest but does not disclose the terms of the lease. Only the names of the parties and a description of the property are included.

purchase option

grant the lessee the option to purchase the leased premises normally at a predetermined price within a certain period, possibly the lease term

renewal option

grants the lessee the privilege of renewing the lease Lessee must give notice of his intention to exercise the option.

three basic types of leases

gross lease, net lease, and percentage lease.

Security Deposit

held by the landlord during the lease term. If the tenant defaults on payment of rent or damages the premises, the lessor may keep all or part of the deposit to compensate for the loss.

tenant breaches any lease provision

landlord may sue the tenant to obtain a judgment to cover past-due rent, damages to the premises, or other defaults.

actual eviction in IL

landlord must file/enter action of forcible entry and detainer landlords have no right to self help

lessor's interest

leased fee estate plus reversionary right

leasing agent

limited-scope license for individuals who wish to engage solely in activities related to the leasing of residential real property.

If a tenant defaults on the payment of rent, the landlord

may elect to serve the tenant with five days' written notice, demanding payment of the delinquent rent within five days after the notice is received. or may terminate the tenancy by serving the tenant with 10 days' written notice, including a demand for possession.

sale clause

part of a lease that permits a new landlord to terminate existing leases must give notice to tenants before termination

Tenant who abandons leased property

remains liable for compliance with terms of lease can be sued for unpaid rent

Radon Awareness Act

requires landlords to disclose any knowledge of Radon gas on the premises. Disclosure is only required for dwelling units below the third story above ground level.

The Lead Poisoning Prevention Act

requires that the owner of any residential building cited by the state as a lead-paint hazard give prospective tenants written notice of the danger unless the owners have a certificate of compliance.

implied warranty of habitability

started in 1972, since then Illinois courts have repeatedly confirmed and amplified the warranty. A landlord must deliver and maintain throughout the duration of the lease any residential leasehold free from defects that would render the use of the dwelling "unsafe or unsanitary" and unfit for human occupancy. Nothing may be present on the premises that could seriously endanger the life, health, or safety of the tenant.

landlord breaches any lease provision

tenant is entitled to certain remedies.

actual eviction

the legal process through which a landlord may regain possession when a tenant breaches a lease or improperly retains leased premises

sale-and-leaseback arrangement

the owners of property sell the property and then lease it back again for an agreed period. often used when extra capital is needed on a construction project.

percentage lease

the rent is based on a minimum fixed rental fee plus a percentage of the gross income generated by the tenant doing business on the leased property.

gross lease

the tenant pays a fixed/basic rent landlord pays all taxes, assessments, insurance, maintenance and utilities connected with the property

triple-net lease

the tenant pays all operating and other expenses in addition to rent.

net lease

the tenant pays all or some of the operating expenses in addition to the rent.

lease purchase

used when a tenant wants to purchase the property but is unable to do so. purchase agreement is the primary consideration, and the lease is secondary. Part of the periodic rent is applied toward the purchase price of the property until price is reduced to an amount for which the tenant can obtain financing or purchase the property outright

Lease assignment

when a tenant transfers all of his leasehold interests to another person. The new tenant is legally obligated for all the promises the original tenant made in the lease.

sublease

when a tenant transfers less than all the leasehold interests by leasing them to a new tenant

holdover tenancy

when a tenant with an estate for years remains in possession (estate at sufferance) after the lease term expires and the landlord accepts the rent but no new lease agreement is made

lease is discharged

when the contract terminates; when all parties have fully performed their obligations under the agreement, or when the parties agree to cancel the lease.