Chapter 8 Leasing and Property Management

Property Management

A branch of the real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties.

Lease

A contract between an owner and tenant, setting forth conditions upon which the tenant may occupy and use the property and the term of the occupancy.

Management Agreement

A contract between the owner of a property and someone who agrees to manage it.

Management Proposal

A document that sets forth the duties of the manager when employed by the owner.

Sublease - A lease given by a lessee.

A lease given by a lessee.

Gross Lease

A lease in which the lessor pays all costs of operating and maintaining the property and real estate taxes.

Net Lease

A lease requiring a lessee to pay charges against the property such as taxes, insurance and maintenance costs in addition to rental payments.

Graduated Lease

A lease which provides for a varying rental rate, often based upon a future determination; sometimes rent is based upon the result of periodic appraisals; used largely in long-term leases.

Corrective Maintenance

A maintenance task performed to identify, isolate, and rectify a problem with a property so that the property can be restored to an acceptable condition.

Property Manager

A person who manages properties for an owner as the owner's agent.

Property Management Report

An accounting report issued periodically by the property manager to the owner outlining all income and expenditures for that accounting period.

Ground Lease

An agreement for the use of land only, sometimes secured by improvements placed on the land by the user.

Operating Budget

An amount of money set aside by the owner for a specific period for the property manager to manage the property effectively.

Constructive Eviction

Any disturbance of the tenant's possession of the lease premises by the landlord whereby the premises are rendered unfit or unsuitable for the purpose for which they were leased.

Capital Expense

Expenditures creating future value. Incurred when a property owner spends money to upgrade a building in an effort to add value and/or extend the useful life of the building.

Preventive Maintenance

Keeping property and equipment in a good state of repair so as to minimize the need for more costly repair work or replacement.

Percentage Lease

Lease on the property, the rental for which is determined by the amount of business done by the lessee; usually a percentage of gross receipts from the business with provisions for a minimum rent.

Capital Reserve Budget

Money set aside by a property owner for long-term capital expenditures to a property.

Variable Expense

Property expenditures that vary depending on the operations of the property.

Actual Eviction

The removal of a tenant by the landlord because the tenant breached a condition of a lease or another rental contract.