Types of Estates & Leases

Percentage Lease

the tenant pays either a base amount and a percentage of gross income, or, depending on which is higher, a base amount or a percentage of the gross income.

Types of Leases

1. Cost of Living Lease 2. Flat or Fixed Lease 3. Gross Lease 4. Index Lease 5. Land Leasee 6. Net Lease 7. Net-Net Lease 8. Net-Net-Net Lease 9. Percentage Lease 10. Sale-Leaseback 11. Sandwich Lease 12. Step Lease

Types of Freehold Estates

1. Life estate 2. Fee simple absolute 3. Fee simple defeasible 4. Fee tail estate* (NOT LEGAL IN US)

Types of Leasehold Estates

1. Tenancy/Estate at sufferance 2. Tenancy/Estate at will 3. Tenancy/Estate for years 4. Tenancy/Estate in severalty

Life Estate

A freehold interest (in real property) that expires upon the death of the owner or some other specified person.

Cost of Living Lease

A lease that allows the rent to adjust in proportion to general inflation. This is based on the lessor's cost of living versus a national standard.

Step Lease

A lease that allows the rent to be increased at a set amount on an annual basis during the life of the agreement. The increase is based on estimated rather than actual costs.

Sandwich Lease

A leasehold estate in which the lessor has acquired a leasehold interest from an owner or another lessee, and has in turn subleased the premises to a subtenant. All leases that lie between the original lessor and the ultimate subtenant are sandwich leases. Think "Sublease"

Leasehold/ Leasehold Estate

A leasehold or leasehold estate is an ownership interest in which a lessee or a tenant holds real property by some form of title like a lease from a lessor or landlord. There are 4 types of leasehold estates: 1. Tenancy at sufferance 2. Tenancy at will 3. Tenancy for years 4. Tenancy in severalty Aka "Renting"

Land Lease

A long term lease of land for the purpose of erecting buildings or making land improvements. At the end of the lease, everything reverts back to the owner of the land, including the buildings and improvements.

Freehold Estate

A right of title to land that is characterized by two essential elements: immobility, meaning that the property involved is either land or an interest that is attached to or has been derived from land, and indeterminate duration, which means there is no fixed duration of ownership. Types of freehold estates: 1. Life estate 2. Fee simple absolute 3. Fee simple defeasible Aka "Owning"

Flat or Fixed Lease

A single rent is set for a definite period of time.

Tenancy at Sufferance

A tenancy at sufferance exists when a tenant remains in possession of property after the expiration of his lease, and until the landlord acts to eject the tenant from the property. Think a "holdover resident at Stadium View" Also known as "Estate at Sufferance"

Tenancy for Years

A tenancy for years (aka fixed-term tenancy) lasts for some fixed period of time. Also known as "Estate for years"

Fee Simple Defeasible

A type of property ownership in which the grant of title or duration of ownership is dependent on a specified condition. Also known as fee simple determinable or determinable fee. - An estate that dictates, "on the condition that..." - An estate that provides the "right to re-enter" Example: "I will sell my property to you with the condition that alcohol is never served on the premises. If you have a wine and cheese party, then I have the right to take back the property."

Tenancy in Severalty

An individual owns the property. Think the exact opposite of "several" Also known as "Estate in severalty"

Sale-Leaseback

Conveyance of interest in a property by a seller, who simultaneously leases back the property in order to maintain uninterrupted occupancy. The seller would be able to recognize a capital gain or loss on the sale of the real estate.

Tenancy at Will

Describes any leasehold where either the landlord or the tenant may terminate at any time on reasonable notice. It usually occurs in the absence of a lease, or where the tenancy is not for consideration. Also known as "Estate at will"

Fee Tail Estate*

Property is only inheritable by a monarch - by the "heirs of the body." !! This is always the wrong answer on the test, because it is not legal in the United States !!

Fee Simple Absolute

The owner is entitled to the entire property with unconditional power of disposition during the owner's life: - If intestate (without a will), the property descends to the owner's heirs and legal representatives. - The most common type of value sought. - Owns the bundle of rights - Highest degree of ownership - Has unlimited duration - Is inheritable - Is subject to only the government powers (PETE)

Net Lease

The tenant pays a base monthly rent plus some of the expenses. The increases are based on actual costs rather than on estimates. The rent increases at the time that the landlord incurs an increase in costs.

Gross Lease

The tenant pays a flat monthly amount and the landlord pays for all operating costs for the building. This type of lease often contains an escalation clause that allows the landlord to increase the rent annually to offset increased expenses.

Gross Lease

The tenant pays a flat monthly amount and the landlord pays for all operating costs for the building. This type of lease often contains an escalation clause that allows the landlord to increase the rent annually to offset increased expenses. Think "Churchill and renewal rates increasing"

Net-Net Lease

The tenant pays the base rental amount PLUS real estate taxes, and insurance premiums.

Net-Net-Net Lease

The tenant pays the base rental amount plus the landlord's operating costs. Included in this amount are real estate taxes, insurance, maintenance, and repairs.