Chapter 3 - 4

In the usual property management agreement, the property manager can do all of the following EXCEPT: a. Enter into a 2 year lease, verbally b. Hire and fire employees c. Collect rents every month d. Furnish the owner with a monthly statement of income and expenditures

a. Enter into a 2 year lease, verbally

An agreement in which rent is increased at specified intervals is known as: a. Graduated rental lease. b. Participation lease. c. Acceleration lease. d. Net lease.

a. Graduated rental lease.

What tax benefits does a business owner gain if she sells the building the business operates from and leases it back from the buyer? a. It may convert a low-deductible mortgage payment into an entirely deductible lease payment. b. The gain on sale will be tax-deferred. c. The business owner will be able to take depreciation deductions. d. All of these are benefits to the business owner.

a. It may convert a low-deductible mortgage payment into an entirely deductible lease payment.

The type of lease where the tenant pays all the maintenance and taxes is called a: a. Net lease. b. Percentage lease. c. Ground lease. d. Gross lease.

a. Net lease.

The owner of a sporting goods store rents some space in a shopping mall. In the lease, the owner insists that the lessor must include a clause in all future leases stating that future tenants cannot sell sporting goods. This is an example of a(n): a. Protective covenant. b. Restrictive covenant. c. Subordination clause. d. Escalator clause.

a. Protective covenant.

A commercial tenant's rent is increased because a property is shown to have increased in value by a recent appraisal of the property. This lease is most likely a(n): a. Revaluation lease. b. Index lease. c. Percentage lease. d. Net lease.

a. Revaluation lease.

A percentage lease allows the landlord to participate in some of the tenant's business income. a. True b. False

a. True

Leases are bilateral contracts that survive the sale of the property. a. True b. False

a. True

Periodic leases that renew at set intervals require proper notice in order for one party to terminate. a. True b. False

a. True

A lease that allows for annual rent to increase on each anniversary is a a. graduated lease. b. gross lease. c. percentage lease. d. net lease.

a. graduated lease.

When a property is sold with an existing lease... a. the entire lease interest is transferred. b. the original lessor remains primarily liable on the lease. c. the original lessee has no liability under the lease. d. the assignee would pay the rent to the assignor.

a. the entire lease interest is transferred.

Jones leases a building and an earthquake destroys it. Usually... a. the lease is no longer enforceable. b. the tenant must pay rent when the building is rebuilt. c. the landlord must rebuild the building. d. the tenant may rebuild the building and the landlord will have to reimburse the tenant.

a. the lease is no longer enforceable.

Mary owns a retail store which is a lessee in a small shopping mall. The store pays a base rent of $1,000 per month plus 3% of annual sales in excess of $240,000. If the store was charged $28,800 in rent for the year, what were its sales for that year? a. $750,000. b. $800,000. c. $960,000. d. $1,000,000.

b. $800,000.

What is a silent lease? a. A lease that is not in writing. b. A lease that states nothing about a particular issue or circumstance. c. A lease that is not recorded. d. A sublease where the landlord has not been notified.

b. A lease that states nothing about a particular issue or circumstance.

An action to oust someone who is not legally in possession of real property is called: a. execution. b. ejectment. c. deposition. d. egress.

b. ejectment.

The clause in a lease that allows the rent to increase is: a. An acceleration clause. b. A percentage clause. c. An escalator clause. d. A contingency clause.

c. An escalator clause.

When leased property is sold, the tenants... a. must record the lease. b. must obtain an assignment from the purchaser. c. are not affected. d. must move out within 30 days.

c. are not affected.

A valid written lease generally requires... a. legal capacity of both parties. b. a meeting of the minds. c. consideration. d. all of these options.

d. all of these options.

Generally, a property manager may NOT be compensated by receiving... a. a percentage of the gross lease. b. a fee for leasing. c. a fee for supervising repairs. d. rebates from suppliers unless disclosed to the owner.

d. rebates from suppliers unless disclosed to the owner.

A proprietary tenant usually has an interest in a cooperative apartment. a. True b. False

a. True

In a revaluation lease, the rent is adjusted automatically according to the reappraisal of the real estate. a. True b. False

a. True

Most leases do not allow assignment without the consent of the landlord. a. True b. False

a. True

Peter rents a ground floor apartment. A major water line supplying most of the upper floors burst and left his unit uninhabitable. Peter immediately moves out of the apartment and so notifies the landlord. Peter would consider this to be: a. Actual eviction. b. Constructive eviction. c. Casualty eviction. d. Abandonment.

b. Constructive eviction.

A tenancy for years is created by adverse possession. a. True b. False

b. False

Leases are unilateral contracts that survive the death of the parties. a. True b. False

b. False

The legal process by which a landlord removes a tenant from leased premises when there has been a breach of the lease terms is known as an ejectment. a. True b. False

b. False

A lease that contains no mention of rental period is generally considered to be: a. Invalid. b. Month to month. c. Included in the statute of frauds. d. A tenancy at sufferance.

b. Month to month.

A restaurant owner leases some space in a shopping mall for a restaurant. The lease requires that the restaurant serve only Portuguese menu items. This is an example of a(n): a. Protective covenant. b. Restrictive covenant. c. Subordination clause. d. Escalator clause.

b. Restrictive covenant.

The right of a landlord to reenter or regain possession of the premises upon expiration of a lease is known as: a. Redemption. b. Reversion. c. Remainder. d. Recovery.

b. Reversion.

A property management contract is between the property manager and: a. His or her employees. b. The property owner. c. The tenants. d. The broker.

b. The property owner.

A lease provision that prohibits using certain premises for a drugstore is called a a. protective covenant. b. use covenant. c. restrictive covenant. d. condemnation covenant.

b. use covenant.

Don owns a store in a shopping mall. He pays base rent of $1,500 per month plus 2.5% of sales in excess of $300,000. If his total sales were $1,200,000 for the year, what was the total rent for the year? a. $30,000. b. $37,500. c. $40,500. d. $48,000.

c. $40,500.

Nate rents a vacant lot from Zach for 50 years. Nate plans to erect a building on the land at his own expense. This type of lease is a: a. Net lease. b. Gross lease. c. Ground lease. d. Sale and lease back.

c. Ground lease.

A graduated lease is defined as one: a. That includes an option to purchase. b. In which all expenses are paid by the lessor. c. In which there may be an increase or decrease in rent at a stated future time. d. Whereby rent increases with each new tenant.

c. In which there may be an increase or decrease in rent at a stated future time.

Which legal instrument is used to convey a tenancy for years from one person to another? a. Deed. b. Land contract. c. Lease. d. Purchase contract.

c. Lease.

A clause in a lease which gives future mortgages priority over the lessees' interests is called a(n): a. Protective covenant. b. Restrictive covenant. c. Subordination clause. d. Escalator clause.

c. Subordination clause.

A tenant and landlord enter into a six-month lease on July 1, 20xx to expire on Dec. 31, 20xx. Which of the following statements is correct? a. The landlord must serve notice to quit at least 30 days prior to the expiration of the lease. b. The tenant must give the landlord 30 days notice of his intent to vacate the property on December 31, 2001. c. The tenant must vacate the property on December 31, without notice. d. None of these choices is correct.

c. The tenant must vacate the property on December 31, without notice.

What is the primary difference between a gross lease and a net lease? a. The method of determining rent increases. b. The length of the lease. c. Who pays the property taxes, insurance and maintenance costs. d. The size of the space rented.

c. Who pays the property taxes, insurance and maintenance costs.

A landlord and tenant's mutual agreement to cancel a lease is best described as a a. release and surrender. b. rescission and acceptance. c. surrender and acceptance. d. release and acceptance

c. surrender and acceptance.

On the last day of a valid one year lease, the tenant gave the landlord a check for the next month's rent, which the owner accepted. What is created by the actions of the two parties? a. An estate for years. b. An estate at sufferance. c. An estate at will. d. A periodic estate.

d. A periodic estate.

Leases generally contain a quiet enjoyment clause. The meaning of this clause is that: a. The lessor (owner) will not disturb the lessee during the period of the lease. b. The lessee will not be evicted by a person having a superior title to the lessor. c. The tenant may quietly enjoy the property while he is in possession, provided his enjoyment does not violate the terms of the lease. d. All of these choices.

d. All of these choices.

A clause in a lease which enables the lessor to raise the rent in the future is called a(n): a. Protective covenant. b. Restrictive covenant. c. Subordination clause. d. Escalator clause.

d. Escalator clause.

If the landlord (owner) of property dies during the period of a valid lease, what effect would it have on the lease and the tenant? a. The lease is void, by operation of law. b. The lease would be voidable, at the option of the tenant. c. The right of possession would revert to the estate of the deceased. d. It has no effect.

d. It has no effect.

With which of the following are rental payments guaranteed to increase during the term of the lease? a. Escalator clause b. Percentage lease c. Index lease d. None of these options

d. None of these options

As a property manager, your duties would most likely include all of the following except: a. Rent collection. b. Hiring and firing of maintenance personnel. c. Showing units to prospective renters. d. Providing legal advice to the property owner.

d. Providing legal advice to the property owner.