Unit 18: Leases

Which of the following describes a gross lease?

A) A lease in which the tenant pays rent plus some of the operating expenses related to the property B) An agreement in which the tenant pays a fixed rent and some or all of the utilities and the landlord pays all taxes, insurance, and expenses related to the property C) A lease in which the tenant pays the landlord a percentage of the monthly income derived from the property D) An agreement allowing the tenant to terminate the lease if certain conditions near the premises become unbearable Explanation The answer is an agreement in which the tenant pays a fixed rent and some or all of the utilities and the landlord pays all taxes, insurance, and other expenses related to the property. In a gross lease, the tenant pays no part of the property's operating expenses other than utilities.

Which of the following would automatically terminate a residential lease?

A) Death of the tenant B) Failure of the tenant to pay rent C) Sale of the property D) Total destruction of the property Explanation The answer is total destruction of the property. Death of the tenant, failure to pay rent, or sale of the rented premises would not end a residential lease. Destruction of the property would terminate a lease.

Which of the following is TRUE about a holdover tenant?

A) The tenant may continue to occupy the premises without permission of the landlord. B) The landlord may evict the tenant. C) The tenant must give the landlord a 30-day notice to vacate. D) The landlord must accept additional rent if the tenant remains on the premises. Explanation The answer is the landlord may evict the tenant. A tenant who remains in possession of the premises after an estate for years has expired is called a holdover tenant. If the landlord accepts rental payment, this action will usually create a periodic tenancy. However, a landlord can evict the holdover tenant and not accept any additional payments.

A lease should contain all of the following provisions EXCEPT

A) a sale-and-leaseback clause. B) the term of the lease. C) use of the premises. D) possession of the premises. Explanation The answer is a sale-and-leaseback clause. Sale and leaseback is an arrangement whereby an owner sells the property and then leases it back.

Use restrictions are particularly common in leases for

A) apartment buildings. B) stores or commercial space. C) single-family homes. D) mobile home park space. Explanation The answer is stores or commercial space. Use restrictions are particularly common in leases for stores or commercial space.

A tenant moves a pet into an apartment community that has a no-pets policy. The landlord wishes to remove the tenant due to the breach. The legal process to remove a tenant is known as

A) constructive eviction. B) eminent domain. C) partial eviction. D) actual eviction. Explanation The answer is actual eviction. A tenant's breach of a lease can result in actual eviction, whereas landlord negligence can result in a tenant's being forced to move, and this is known as constructive eviction.

The principal difference between an estate for years and an estate from year to year is that an

A) estate for years cannot be terminated. B) estate from year to year must be in writing. C) estate from year to year has no expiration date. D) estate for years is a life estate. Explanation The answer is estate from year to year has no expiration date. An estate from period to period, or periodic tenancy, does not have a specific expiration date. An estate (tenancy) for years has specific beginning and ending dates.

A tenant still has five months remaining on a one-year apartment lease. When the tenant moves to another city, he 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(n)

A) lessor. B) sublessee. C) assignor. D) sublessor. Explanation The answer is sublessor. The tenant is the tenant of his landlord (lessor) and, in turn, is the landlord of his friend. In this sandwich position, he is a sublessor.

The lessor and lessee have agreed to a lease term of five years. In order to ensure that the rental income during the term is reflective of market conditions, the lessor could

A) negotiate a gross lease. B) collect an additional security deposit each year. C) negotiate an index lease. D) negotiate a new lease each year. Explanation The answer is negotiate an index lease. An index lease allows rent to be increased or decreased periodically based on changes in the consumer price index or some other economic factor.

The covenant implied in a lease that ensures that the landlord will not interfere in the tenant's possession or use of the property is the covenant

A) of quiet enjoyment. B) against encumbrances. C) of seisin. D) of warranty forever. Explanation The answer is of quiet enjoyment. The covenant of quiet enjoyment is a promise by the lessor that the lessee may take possession of the premises and the landlord will not interfere in the tenant's possession or use of the property.

A lessee who pays some or all of the property expenses, such as hazard insurance and property tax, has a

A) percentage lease. B) gross lease. C) sublease. D) net lease. Explanation The answer is net lease. With a net lease, the tenant pays a base rent plus operating costs of the property, such as utilities, insurance, property taxes, and assessments.

Under the negotiated terms of a certain residential lease, the landlord is required to maintain the water heater. If the tenant is unable to get hot water because of a faulty water heater that the landlord has failed to repair after repeated notification, the tenant could do all of the following EXCEPT

A) sue the landlord for damages. B) order a new water heater and send the bill to the landlord. C) abandon the premises claiming constructive eviction. D) terminate the lease agreement. Explanation The answer is order a new water heater and send the bill to the landlord. The landlord's behavior provides a basis for any of the actions except ordering a new water heater and having the bill sent to the landlord. A lease typically does not provide for the tenant to replace a water heater or other appliance. State law may require that a residence meet identified minimum standards of habitability, which may or may not include the provision of hot water.

A tenancy in which the tenant continues in possession after the lease has expired, without the landlord's permission, is a

A) tenancy for years. B) periodic tenancy. C) tenancy at will. D) tenancy at sufferance. Explanation The answer is tenancy at sufferance. A tenant who stays after the end of the lease without the landlord's permission holds a tenancy at sufferance.