Ch. 9 - Section 7: Leases

***Conveyance

A conveyance is the act of transferring an ownership interest in a property from one party to another

A tenant who doesn't leave when the lease expires is called what?

A holdover tenant

***Lease

A lease is both an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations. As a conveyance, a lease conveys an interest, called the leasehold estate, but does not convey legal title to the property.

Breach of Contract

A lease may also terminate due to a breach of contract or default. Tenant default occurs most commonly from failure to pay rent or maintain the premises. The landlord may not physically remove a tenant from the unit, permanently lock a tenant out, turn off utilities or remove an apartment door without a court order.

*Percentage Lease

A lease whose rental is based on a percentage of the monthly or annual gross sales made on the site. There is usually a minimum rent required in addition to the percentage of the gross sales May also include a recapture clause, which indicates that if the tenant does not obtain the desired gross sales, the owner has the right to terminate the lease. This type of lease is common with large retail stores, particularly in shopping centers

Condemnation

A taking by eminent domain proceedings generally terminates a lease.

holdover tenant.

A tenant who doesn't leave when the lease expires

***Voluntary agreement

Both parties can agree to terminate a lease at any time.

***The covenants (agreements or promises) in the lease are very important. The following eight covenants are common in many leases.

Capacity to contract Demising clause Description of the premises Clear statement of term Specification of rent and how it is to be paid In writing Signatures Delivery

What transfers ownership interest in a property from one party to another?

Conveyance

What covenant (agreement or promise) should be included in a lease agreement?

Description of the premises screen

***Property destruction

Destruction of the property is grounds for terminating lease obligations.

Which type of leasehold estate requires proper notice to terminate and has no definite end date?

Estate from period to period

What is the designation of the lease which requires the landlord to pay the property's operating expenses, including utilities, repairs, and maintenance, while the tenant pays only rent?

Gross Lease

Sale

If the landlord sells the property, the lease remains in effect and the new landlord is bound by its terms. If the landlord dies, the landlord's estate remains bound to provide occupancy despite the landlord's death.

Death

If the tenant dies, the lease does not terminate. It becomes part of the tenant's estate, which is bound by the terms of the lease.

***Term expiration

In a tenancy for years, the lease automatically terminates at the end of the lease term.

What is not true about a lease?

It conveys legal title

***Foreclosure

Per the "Protecting Tenants at Foreclosure Act" (PTFA), if the new owner intends to occupy the home, they are still required to give a 90 DAY NOTICE to the tenant prior to eviction. If the tenant does not have a lease (they are month to month), there is still a 90-day notice requirement prior to eviction. If the new owner does not intend to occupy, the renters are allowed to remain in their homes for at least 90 days or for the term of their lease, whichever is greater.

Which lease type bases rental amount off the percentage of sales made on the site?

Percentage lease

***Notice

Proper notice by either party may terminate a periodic leasehold, or a tenancy at will.

***Estate from period to period is more commonly referred to as a periodic tenancy, periodic lease or month-to-month lease. The lease can be from year to year, month to month, or week to week with no definite end date. Month to month is the most common periodic tenancy.

Requires proper notice to terminate - 30 days, 60 days, or whatever is agreed to in the lease. No definite ending date. This type of lease renews itself for whatever period of time that was called for in the original lease.

What is one major difference between residential and commercial leases?

Residential leases are typically shorter.

What law requires a lease to be in writing to be enforceable?

Statute of Frauds

What code authorizes the process for a suit for possession?

Texas Property Code

What is not a valid reason for a lease termination?

The tenant dies

In a net lease, in addition to the rent, what does the tenant pay?

The tenant pays a fixed rent plus all maintenance and taxes

***Net lease

The tenant pays not only the rent for occupancy, but also pays maintenance and operating expenses, such as taxes, insurance, utilities, and repairs

What is the purpose of a security deposit?

To pay for damages beyond normal wear and tear that occurs during a lease

What is the aim of the URLTA?

To protect tenants from unethical practices

What is the lease called in which the tenant agrees to pay all taxes, insurance, maintenance and repairs?

Triple net lease (Net-net-net)

Model law enacted as a blueprint for state laws to regulate leasing and management practices of landlords with residential properties is called what?

URLTA

What does the acronym URLTA stand for?

Uniform Residential Landlord and Tenant Act

In what situation would a lease automatically be terminated?

Voluntary AgreementProperty DestructionCondemnation

***The Uniform Residential Landlord and Tenant Act (URLTA)

is a model law enacted as a blueprint for state laws to regulate leasing and management practices of landlords with residential properties. Numerous states have enacted tenant-landlord regulations in response to the law.

An assignment of the lease

is a transfer of the entire leasehold interest by a tenant, the assignor, to a third party, the assignee. Remember these important conditions: There is no second lease, and the assignor retains no residual rights of occupancy or other leasehold rights unless expressly stated in the assignment agreement. The assignee becomes primarily liable for the lease and rent, and the original tenant remains secondarily liable. The assignee pays rent directly to the landlord.

Estate at sufferance

is a type of leasehold estate in which a tenant stays in possession of a property without the consent of the owner/landlord after the lease has expired or has been legally terminated.

***A security deposit

is money that a tenant deposits with the owner of the property to pay for damages beyond normal wear and tear that occurs during a lease.

An estate for years

is one that continues for a definite fixed period of time. The lease can be for any specified length of time measured in days, weeks, or months. has a definite beginning and ending date. not necessary to give notice to the landlord to terminate. no automatic renewal - when this type of lease is over, it's over. commonly used with commercial leases and some apartment leases.

Subletting (subleasing)

is the transfer by a tenant, the sublessor, of a portion of the leasehold interest to another party, the sublessee, through the execution of a sublease.

Which of the following doesn't refer to the important features of commercial leases?

long term, ranging up to 40 years

The deductions for repairs for any month may not exceed... How much?

one month's rent or $500 whichever is greater

The estate at will

usually occurs when there is no lease or where the tenancy is not a consideration. The possession is given with permission but there is no agreement about the rent. This estate can be terminated by either party at any time, with proper notice.

***Gross Lease

-Or full service lease. -Requires the landlord to pay the property's operating expenses, including utilities, repairs, and maintenance, while the tenant pays only rent

***The Uniform Residential Landlord and Tenant Act (URLTA) act aims to:

-equalize and standardize rights of landlord and tenant -protect tenants from unethical practices -prevent unfair, complex leases and their enforceability

***Residential leases differ from commercial and other types of lease in that:

-lease terms are shorter, typically one or two years -lease clauses are fairly standard from one property to the next, in order to reflect compliance with local landlord-tenant laws in accordance with the Property Code. -lease clauses are generally not negotiable, particularly in larger apartment complexes where owners want uniform leases for all residents.

According to the Texas Property Code, a landlord has a right to set the maximum number of adults over what age for their property?

18