Chapter 7

Repairs and Maintenance Clause

Repairs and maintenance provisions define the landlord's and tenant's respective responsibilities for property repairs and maintenance. Generally, the tenant is responsible for routine maintenance of the premises while the landlord is responsible for general repairs. In residential leases, the landlord is responsible for major repairs and capital improvements. Payment of repairs and maintenance costs, however, is entirely negotiable between landlord and tenant.

Leasing of Rights

The practice of leasing property rights other than the rights to exclusive occupancy and possession occurs most commonly in the leasing of water rights, air rights, and mineral rights. leasehold transfer of rights for limited use; examples: air, mineral, water rights

Which of the following happens when a leased property is sold? a. The buyer acquires title subject to the lease. b. The lease is cancelled. c. The lease expires within thirty days unless renewed. d. A new lease is automatically executed.

a. The buyer acquires title subject to the lease.

Three college friends rent a house together, and all three sign the lease. After a month, the friends argue and two of them move out. Which of the following is true of the rent obligation? a. The remaining tenant is responsible for the full rent obligation. b. The remaining tenant is responsible for one third of the rent obligation. c. No one is responsible for the rent obligation. d. The landlord loses the departing tenants have no further rent obligation.

a. The remaining tenant is responsible for the full rent obligation.

The Uniform Residential Landlord and Tenant Act generally does not apply to a. a residence that is under a contract for deed. b. a single-family residence. c. a unit in an apartment building that has fewer than ten units. d. a duplex in which the owner occupies one of the units.

a. a residence that is under a contract for deed.

Which of the following lease types conveys rights other than the rights to exclusive use and occupancy of the entire property? a. a rights lease b. a percentage lease c. a gross lease d. a net lease

a. a rights lease

Which of the following circumstances is the most likely scenario for a ground lease? a. A PUD developer wants to acquire a necessary parcel that separates two parcels she already owns. b. A farmer wants to expand his productive acreage without buying more land. c. A fast-food company wants to place a restaurant in an existing building without buying either land or improvement. d. A railroad wants to build a bridge over a privately owned access road.

b. A farmer wants to expand his productive acreage without buying more land.

What is the difference between a tenant's vacating leased premises and abandoning the premises? a. Vacating the premises terminates the tenant's lease obligations. b. Abandonment implies that the tenant shows no intention of fulfilling the lease obligations. c. Vacating the premises terminates the landlord's lease obligations. d. Vacating the premises is automatically a tenant default.

b. Abandonment implies that the tenant shows no intention of fulfilling the lease obligations

Under the Uniform Residential Landlord and Tenant Act, if a lease does not state a clear expiration date, the lease is regarded as a. invalid. b. a tenancy from period-to-period. c. a tenancy at will. d. a tenancy for years.

b. a tenancy from period-to-period.

A landlord generally has the right to enter the leased premises a. at any time without notice. b. for specified reasonable purposes. c. only at the time rent is due. d. only thirty days prior to lease expiration.

b. for specified reasonable purposes

What is one important difference between a sublease and a lease assignment? a. in an assignment, responsibility for the original lease is transferred completely to the assignee b. in a sublease, the original tenant retains primary responsibility for the performance of the original lease contract c. a sublease does not convey any of the leasehold interest d. a sublease conveys the entire leasehold interest

b. in a sublease, the original tenant retains primary responsibility for the performance of the original lease contract

A tenant transfers a portion of the leasehold interest to another party. The document that accomplishes this transfer is a(n) a. deed. b. assignment. c. sublease. d. reconveyance.

c. sublease.

Default by tenant

cancellation; damages; suit for possession; must give proper notice most common is from failure to pay rent or maintain the premises

When a tenant acquires a leasehold estate through a lease, what does the property owner acquire? a. a freehold estate b. a reduced leasehold estate c. a leasehold estate d. a leased fee estate

d. a leased fee estate

An owner leases a property to a business in exchange for rent. The tenant is required to pay all operating expenses as well. This is an example of a a. proprietary lease b. percentage lease c. gross lease d. net lease

d. net lease

The type of lease in which the tenant pays all of the operating expenses of the property is a(n) a. gross lease. b. commercial lease. c. index lease. d. net lease.

d. net lease.

The basic feature that distinguishes a rights lease from other types of leases is a. the long lease period that is typical. b. the reversion of all rights to the owner at the end of the lease term. c. the assignability of the leasehold. d. the absence of exclusive occupancy and possession from the rights leased.

d. the absence of exclusive occupancy and possession from the rights leased.

Which of the following summarizes the general terms of a ground lease? a. the landlord sells the ground to another, then leases it back b. a tenant buys the landlords ground, then leases the improvements c. the landlord leases the ground floor of the building to a commercial tenant d. the tenant leases the ground from the landlord and owns the improvements

d. the tenant leases the ground from the landlord and owns the improvements

While a one-year lease is in effect, the tenant dies of a sudden illness. In this situation, a. the lease automatically terminates. b. the tenant's estate has the option of canceling the contract. c. the landlord can record a lien against the leased fee interest. d. the tenant's estate is still obligated under the lease.

d. the tenant's estate is still obligated under the lease.

Contract Requirements

parties; legal description; exclusive possession; legal use; lease term; consideration; offer and acceptance; signatures; written if over one year in term

Lease Clauses

rent; deposit; term; repairs and maintenance; subletting and assignment; rules and regulations; improvements; alterations; options; damage; destruction

Percentage Lease

A lease, commonly used for commercial/retail 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. landlord receives rent minimum plus percentage of retailer's sales

Rent Clause

A rent clause stipulates the time, place, manner and amount of rent payment. It defines any grace period that is allowed, and states the penalties for delinquency.

Subletting and Assignment Clause

Subletting: transfer by a tenant (sublessor) of a portion of the leasehold interests to another party (sublessee). The sublessor remains primarily liable for the original lease with the landlord. The subtenant is liable only to the sublessor. Sublessee pays sublease rent to sublessor, who in turn pays lease rent to landlord. Assignment: transfer of entire leasehold interest by tenant (assignor) to 3rd part (assignee). Assignee becomes primarily responsible for the lease and rent, and the assignor (original tenant) remains secondarily responsible/liable. Assignee pays rent directly to landlord.

Deposit Clause

The lease may also call for a security deposit to protect the landlord against losses from property damage or the tenant's default. State law regulates the handling of the security deposit: where it is deposited, and whether the tenant receives interest on the deposit.

Among a tenant's primary obligations in a lease is a. compliance with the rules and regulations of the building. b. payment for any alterations to the leased space. c. recording the lease in title records. d. satisfying the municipality's requirements for an occupancy permit

a. compliance with the rules and regulations of the building.

A periodic leasehold or a tenancy at will can usually be terminated by a. either party giving proper notice. b. either party without notice. c. a sublease, with the lessor's approval. d. an assignment by the lessor.

a. either party giving proper notice.

By suing for specific performance, a leasehold tenant might a. force a landlord to provide improvements that were promised but not delivered. b. change the obligation to pay rent as it is stated in the lease. c. invalidate the lease. d. cancel the lease and receive damages for the landlord's default.

a. force a landlord to provide improvements that were promised but not delivered

The type of lease in which the landlord pays all of the operating expenses of the property is a(n) a. gross lease. b. proprietary lease. c. index lease. d. net lease.

a. gross lease

Uniform Residential Landlord and Tenant Act (URLTA)

aims to balance landlord and tenant rights; to standardize leases and eviction procedures; to protect tenants; serve as model for state-level legislation Areas of regulation: contract language; waiver of rights; deposit; obligations of landlord and tenant; default and eviction

Among a landlord's primary obligations in a lease is a. insuring the tenant against loss of personal property. b. providing required building support and services. c. guaranteeing that a fair rent is being charged. d. insuring the property for the value of the leasehold.

b. providing required building support and services.

The percentage lease is most often used by a. industrial landlords b. retail landlords c. residential landlords d. office landlords

b. retail landlords

A landlord and tenant complete a one year lease. The following week, the landlord dies. Which of the following is true? a. the lease is cancelled and must be re-written b. the tenant must continue to abide by all lease terms c. the tenant may annul the lease at his or her option d. the landlord's heirs may cancel the lease at their option

b. the tenant must continue to abide by all lease terms

Which of the following situations describes constructive eviction? a. A court order expels a tenant because of tenant default. b. A tenant is forced out of the premises because the landlord has declared bankruptcy. c. A tenant vacates the premises and declares the lease canceled because the landlord has made the premises uninhabitable. d. A tenant changes the locks overnight and does not allow the landlord access to the premises.

c. A tenant vacates the premises and declares the lease canceled because the landlord has made the premises uninhabitable.

Which of the following types of leasehold estate lacks a specific term? a. Estate for years. b. Estate from period-to-period. c. Estate at will. d. Estate at sufferance.

c. Estate at will

A lease contract is best described as a. a temporary transfer of legal title b. an instrument of conveyance of limited time c. a conveyance of a possessory interest d. a title conveyance in exchange for rent

c. a conveyance of a possessory interest

In accordance with the Statue of Frauds, a. leases in excess of one year must be recorded to be enforceable b. oral leases are not enforceable c. a five-year lease must be in writing to be enforceable d. an unwritten lease is fraudulent

c. a five-year lease must be in writing to be enforceable

If a tenant is seeking a remedy for an alleged landlord default and the landlord disputes the claim, the Uniform Residential Landlord and Tenant Act allows the tenant to a. terminate the lease. b. abate the rental payments while the dispute is settled. c. make the rental payments to a court impound pending resolution. d. deny the landlord access to the premises.

c. make the rental payments to a court impound pending resolution

When an owner leases her property, she temporarily relinquishes the right to a. transfer the property b. encumber the property c. occupy the property d. maintain the property

c. occupy the property

The type of lease in which the tenant pays rent based on income generated at the leased premises is a(n) a. commercial lease. b. index lease. c. percentage lease. d. overage lease.

c. percentage lease

Causes for lease termination

default; term expiration; notice; voluntary agreement; property destruction; condemnation; death, in some cases; abandonment

Proprietary Lease

for cooperative unit owners; indefinite term; assigned to new unit owner on sale

Residential Lease

gross lease hybrid (landlord pays most of expenses); short term (often not more than one year); uniform terms reflect landlord-tenant standards/must comply with landlord tenant relation laws

Ground Lease

landlord owns and leases ground (land) but does not own improvements (buildings)

Gross Lease

landlord pays expenses; tenant pays more rent

Net Lease

tenant pays some or all expenses; rent is less

Lease Term Clause

In the absence of an explicit term with beginning and ending date, a court will generally construe the lease to be a tenancy at will, cancelable upon proper notice.

Commercial Lease

longer term (typically 5-10 years); entails tenant improvements; complex, negotiable lease terms uses net leases, gross leases, or percentage leases

Remedies for default

sue for damages, lease cancellation, and/or specific performance

Default by landlord

suit for constructive eviction; must vacate premises to uphold Most common form of landlord default is failure to provide services and maintain property conditions Tenants may sue for damages