contracts lesson five. learning objectives review meaning of leasehold estate. learn and...
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Contracts
Lesson Five
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Learning Objectives
Review meaning of leasehold estate. Learn and understand lease rights. Become familiar with the various types of leases. Explain how leases can be terminated. Know the difference between actual and
constructive eviction. Statute of Frauds and Oral leases in relationship
to lease enforcement.
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Leases
Non-Freehold EstateLandlord/LessorTenant/Lessee
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Categories of Lease Rights
Estate for YearsFor a Definite Period of Time
Example: 6 months, One Year, Five Years
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Period to PeriodSix Months + One Day = Six
MonthsOne Year + One Day = One YearFive Years + One Day = Five
YearsMust give written Notice to
Terminate Listing
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Tenancy at Will
Must give Notice to Terminate Lease
May Live in Home until it is Torn Down
At will of Owner
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Tenancy at Sufferance
A Tenant has Overstayed the Lease Period
In LA this is known as a Holdover Tenant
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Non-Farm LeasesUsually for One Month Plus One
Week, Gives Another Month
Farm LeaseUsually for One Year Plus One
Month, Gives Another Year
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Types of Leases
Gross Lease (Owner pays Expenses)
Net Lease (Tenant pays Expenses)
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$ 2,000 base rentPlus $ 2,500 5% of the
$50,000 in sales$ 4,500 rent for the
month
Percentage Lease
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Ground Lease“Separate Immovable”
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Step-Up Lease
325
300
275
250
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Graduated LeaseEscalator Clause
$400
Increase Taxes & Ins.
$250
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Sale & Leaseback
Sale To Obtain CashLease Property from New
Owner
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Re-Appraisal Lease
$100,000 x 10% = $10,000$200,000 x 10% = $20,000
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Index Lease
Lease $10,000 GNP 8% New Rent $10,800
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AssignmentTransfer of Rights to Third
PartyOriginal Lessee is still
Responsible for LeaseOne Lease
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Sub-Lease
Transfer of Rights to Third Party
Two LeasesOriginal Lessee is still
Responsible
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Termination of LeasesExpiration of TimeMutual AgreementBreach of ContractDeath10 Days Notice
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Eviction
Actual EvictionTenants Fault
Constructive EvictionOwners Fault
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Security Deposit
In LA Deposit must be returned within 30 days less itemized list of damages.
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Statute of Fraud
Requires all Contracts be in writing to be enforceable.
Oral Lease in LA are good for any length.
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Note: In both cases it is still wiser to write all leases and long term leases should probably be recorded.