Unit 16

right of first refusal

a clause allowing the tenant the opportunity to buy the property before the owner accepts an offer from another property.

renewal option

a clause in a lease that grants the lessee the privilege of renewing the lease.

lessor

a landlord.

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.

gross lease

a lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are gross leases.

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.

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.

nondisturbance clause

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

security deposit

a payment by a tenant, held by the landlord during the lease term, and kept (wholly or partially) on default, or on destruction of the premises by the tenant.

month-to-month tenancy

a periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month.

holdover tenancy

a tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law.

leasehold estate

a tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.

lessee

a tenant.

lease

a written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.

constructive eviction

actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.

estate (tenancy) at will

an estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite. Also called tenancy at will.

estate (tenancy) for years

an interest for a certain, exact period of time in property leased for a specified consideration. Also called tenancy for years.

estate from period to period

an interest in leased property that continues for period to period- week to week, month to month, or year to year. Also called tenancy from period to period.

purchase option

some leases grant the lessee the option to purchase the leased premises. This option normally gives the tenant the right to purchase the property at a predetermined price within a certain period, possibly the lease term.

sublease

the leasing of premises by a lessee to a third party for part of the lessee's remaining term.

actual eviction

the legal process that results in the tenant's being physically removed from the leased premises.

lease purchase

the purchase of real property, the consummation of which is preceded by a lease, usually long-term, that is typically done for tax or financing purposes.

reversionary right

the return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.

estate (tenancy) at sufferance

the tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after the lease rights have expired. Also called tenancy at sufferance.