Lease
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8 terms
Terms | Definitions |
|---|---|
 Lease | conveys the right to possess. |
| Parties | a . Lessor - landlord owner, freehold interest, revisionary interest, implies ownership b. Lessee - has leasehold interest implied a possession interest |
| Duties of the Lessor | a. quiet enjoyment b. habitable conditions if lessor is not fufilling these duties, the tenant can get out of the contract and it is called a constructive contract. |
| Essentials Elements of a Lease | must have (6) essentials of a contract to be valid (CCLOMP) C - consideration C - competent parties L - legal objective O - offer, acceptance and delivery M - mutual consent P - proper form |
| Proper Legal Form (Lease) | 1. identify the parties - lessee, lessor 2. accurate description 3. beginning date and ending date 4. specific terms and conditions 5. definite rights and terms 6. signature of the lessor. |
| Clauses of a Lease | A. First Right of Refusal 1. someone is given the first right to buy or lease a property if they can meet a bonafide purchasers offer. 2. No consideration (fee) required like in an option B. Escalation Clause 2. a lessorcan raise the rent due to cost of operation on a property during the terms of the lease. |
| Types of Leases | A. Gross Lease (Flat Lease) the lessor (landlord) is paying all cost of operation B. Net Lease the lessee (tenant) is paying some or all operating expenses, such as taxes, insurance and maintenance C. Percentage Lease - where the tenant pays a base rent plus a percentage of their gross sales D. Variable Lease - the rent can go up or down during the leases a. Graduated Lease (Step-up Rental) the rent will go up a specific amount at a specific time. b. Index Lease - the rent can go up or down but must be ties to some know indes. (ex. CPI - consumer price index or any other index) Graduated Lease (step-lease and Index lease are variable leases) E. Ground Lease paying rent to occupy the land. this is very common for farmer's and retail F. Sublease conveys paritial rights and interest. it creates a sandwich lease (if asked who owns the sandwich lease it is the sublessor and lessee.) G. Assignment of a Lease 1. conveying all of your rights and interest in a congtract however you cannot assign liability. 2. assignor remains liable for performance of the contract unless there is a novation. 3. novations means substitution of a new contract or new party for a old one making the one null and void. H. Lease/Option is two agreements in one contract. Lease conveys the right to occupy and the option conveys and additional right to do something at a later date. I. Lease/Purchase two agreements in one contract. Lease conveys the right to occupy. the purchase agreement obligates the sale. J. Sale and Lease Back sell a property and lease some or all back again in the same contract. there are tax benefits (write off lease payments) |
| Termination of a Lease | because the lease binds the estate; death of owner or sale of property typically does not affect the lease. |
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