Chapter 17—Real Estate Leases
MULTIPLE CHOICE
1. Upon termination of a rental contract,
a.
ownership reverts to the lessor.
b.
possession is returned to the lessor.
c.
possession is returned to the lessee.
d.
ownership reverts to the lessee.
2. If a lease must be acknowledged for recording, whose signature should be acknowledged?
a.
Property manager
b.
Lessor
c.
Lessee
d.
Notary public
3. If a lease were signed by a lessee who is a minor, the lease is
a.
void.
b.
voidable by the landlord.
c.
voidable by the tenant.
d.
unenforceable.
4. Who holds a less than freehold estate under a valid lease?
a.
Lessor
b.
Lessee
c.
Landlord
d.
Owner
5. A couple’s one year lease has expired, but they continued living on the premises. If they now pay rent
on a monthly basis, this type of tenancy is
a.
by the entireties.
b.
at will.
c.
periodic.
d.
at sufferance.
6. A lease for six months is classified as
a.
a periodic estate.
b.
an estate at sufferance.
c.
an estate at will.
d.
an estate for years.
7. Lonnie and Connie had a one-year lease that ended November 30. They were still living in the
apartment as of December 12 without a new lease and without the landlord’s permission. They have
become
a.
tenants at sufferance.
b.
tenants in common.
c.
tenants at will.
d.
tenants for years.
8. A valid lease must contain
a.
an option.
b.
the signatures of at least three parties.
c.
a clean-up deposit.
d.
a property description.
9. A rental contract gives the tenant
a.
the right of possession.
b.
temporary ownership.
c.
a freehold estate.
d.
the right to encumber.
10. Current legal thinking with regard to owner’s obligations under a residential rental contract is that
a.
if a service is not promised in writing, it will not be forthcoming.
b.
the owner is obligated to keep the premises repaired.
c.
the owner has an obligation only to collect the rent and pay the utilities.
d.
only expressed agreements may be pursued in court.
11. In any valid lease, the lessor by law gives an implied covenant of
a.
quiet enjoyment.
b.
satisfaction.
c.
reconveyance.
d.
undue duress.
12. Residential landlord tenant laws recently enacted in many states have modified the reliance on
common law and contract tenancy right. These changes include all of the following EXCEPT
a.
the landlord must supply a fit and habitable premise.
b.
limits on the amount of security deposit that can be required.
c.
statutory procedures required for collecting back rent and evicting a tenant.
d.
defining a leasehold as a recordable real property belonging to the tenant.
13. A lease which requires a fixed constant amount of rent for each payment period of the term is called a
a.
gross lease.
b.
net lease.
c.
percentage lease.
d.
raw lease.
14. A tenant will know in advance how much his rent will be at any time during the lease under a
a.
gross lease.
b.
percentage lease.
c.
pass through lease.
d.
participation.
15. Under the terms of a normal net lease, the lessee is responsible for all of the following EXCEPT
a.
mortgage payments.
b.
repairs.
c.
water bills.
d.
taxes.
16. A contract that contains predetermined rent increases to take effect during the life of the lease is
a.
a step-up lease.
b.
one with a participation clause.
c.
a percentage lease.
d.
a net lease.
17. If a lease on a commercial building contains an escalation clause, the
a.
tenant must maintain the elevators.
b.
rent could change.
c.
rent must go up and down regularly.
d.
rent stays the same but the term may change.
18. A lease under which the amount of rent is based upon the tenant’s sales volume is known as
a.
a percentage lease.
b.
a gratuity lease.
c.
an escalation lease.
d.
usury.
19. The tenant has signed a percentage lease. The terms of the lease are $500 per month plus an annual
payment equal to 9% of gross sales over $250,000. If, at the end of the year, the tenant is celebrating a
million dollars in gross sales, how much additional rent does he still owe?
a.
$6,000
b.
$61,500
c.
$67,500
d.
$73,500
20. A tenant seeking both flexibility for himself and commitment from the landlord would request a
a.
participation clause.
b.
month-to-month lease.
c.
long-term lease.
d.
lease with options to renew.
21. The total transfer of a tenant’s rights to another person is called
a.
an option.
b.
a sublet.
c.
a waiver.
d.
an assignment.
22. A lease takes on value when
a.
economic rent exceeds contract rent.
b.
contract rent exceeds economic rent.
c.
contract rent equals economic rent.
d.
contract rent is less than economic rent.
23. When a valid, enforceable lease is terminated before expiration by means of a mutual agreement, but
no penalties are required between the lessor and the lessee, the situation would be referred to as
a.
surrender.
b.
rescission.
c.
release.
d.
satisfaction.
24. A lessee is in possession of a valid lease when a buyer agrees to assume a veteran’s loan and close a
sale subject to the lease. The earnest money contract is signed before the lease is due to expire. The
lease can
a.
be terminated immediately.
b.
be changed by the new buyer.
c.
not be terminated by the buyer.
d.
be terminated at close of escrow.
25. A valid, written lease will automatically be terminated by
a.
death of the lessor.
b.
sale of the leased premises.
c.
court eviction of the tenant.
d.
imprisonment of tenant.
26. A tenant who operates a coffee shop rented a property under a lease which stated there would be no
alcohol served. The tenant subsequently began serving liquor. The landlord would most likely seek
a.
artistic license.
b.
eviction.
c.
condemnation.
d.
injunctive relief.
27. If a shopping center building collapsed and several of the tenants’ stores could not be reopened, the
effect on the tenants’ leases would be
a.
actual eviction.
b.
an act of God eviction.
c.
a sandwich lease.
d.
constructive eviction.
28. A residential apartment tenant would be expected to pay the landlord for
a.
normal wear and tear.
b.
damage to the apartment caused by the tenant.
c.
any change in the apartment.
d.
sun-faded carpet.
29. A 100-unit apartment building would typically require how many full-time management personnel?
a.
1
b.
2
c.
4
d.
6
30. With regard to renting one vacant apartment, advertising money is usually most effectively spent on
a.
radio ads.
b.
television ads.
c.
newspaper.
d.
billboards.
TRUE/FALSE
1. A lease conveys the right of possession and use to the landlord.
2. A right of possession for a fixed term that allows for automatic renewals for additional terms is called
a periodic tenancy.
3. A tenant is living in a house that is for sale. The owner has told the tenant that he can stay there until
the house sells. Most likely, they have entered into an estate at will.
4. A current leasehold is an encumbrance on real property and must be honored by the buyer of the
leased property.
5. The lessee’s right to quiet enjoyment allows the landlord no right of entry.
6. If commercial space is rented out for $.07 per square foot per month the annual rent on a space
80’ 150’ would be $9,400.
7. Under a net lease, the tenant pays a rate based on the net mortgage payment.
8. A lease contract that calls for rent increases that keep abreast with changes in property taxes and utility
costs contains a participation clause.
9. The rent of a small store includes a flat amount per month plus a portion of the gross sales each month.
The lease is a percentage lease.
10. A lease cannot be assigned.
11. Upon termination of a rental contract, ownership reverts to the lessor.
12. When a tenant is behind on his rent, the law permits the landlord to remove the tenant’s belongings
until the rent is paid.
13. The owner has rented a home to a tenant for many years. Lately, however, the owner has failed to
keep the premises in decent repair. The tenant has left in dismay and sued for damages. The tenant
would most probably claim that the owner’s failure constituted constructive eviction.
14. If a renter complains to public health officials about conditions on the premises which violate codes,
the landlord may legally react by giving the tenant an eviction notice.
15. Typical duties of a licensed real estate property manager include screening tenants, maintaining
deposit accounts and routine maintenance.
16. A broker leasing property for a seller for a fee is a trustee.
17. The Certified Property Manager (CPM) designation is available from the Organization of Property
Managers.
18. The designation of “certified property manager” means an IREM graduate property manager.
19. A lease for a definite period of time, which terminates when that time has expired, is a periodic estate.
20. A written lease agreement is still legal even though it fails to include the terms of the lease.
COMPLETION
1. Office and industrial leases of five or more years often include an escalator or
____________________ clause.
2. A lease wherein the owner receives a percentage of the tenant’s gross receipts as rent is called a
____________________ lease.
3. A(n) ____________________ is the total transfer of the lessee’s rights to another person.
4. To ____________________ means to transfer only a portion of the rights under a lease.
5. The amount of rent that the tenant must pay the landlord for the use of the premises is called the
____________________ rent.
6. The rent that a property can command in the competitive open market is called the
____________________ rent.
7. A ____________________ eviction is one whereby a landlord evicts a tenant because of a complaint
made by the tenant.
8. When a property owner offers a premium to entice a prospective tenant to move in, this is known as a
rent ____________________.
9. ____________________ management consists of duties that can be accomplished without being on
the premises.
10. A lease where the tenant pays a fixed rent and the landlord pays all property taxes is a
____________________ lease.
MATCHING
Choose the one most appropriate answer for each.
a.
actual eviction
k.
month-to-month lease
b.
assignment
l.
net lease
c.
constructive eviction
m.
on-site management
d.
contract rent
n.
participation clause
e.
CPM, RPA
o.
percentage lease
f.
gross lease
p.
rent concession
g.
holdover tenant
q.
security deposit
h.
landlord-tenant laws
r.
step-up rent
i.
lessee
s.
sublessee
j.
lessor
t.
sublet
1. the landlord
2. the tenant
3. partial transfer of rights held under a lease
4. complete transfer of rights held under a lease
5. one who holds a tenancy at sufferance
6. example of a periodic estate
7. specified rent increases at various points in time during the life of the lease
8. a lease clause that allows the landlord to add to the tenants rent any increase in expenses during the life
of the lease
9. a lease where the amount of rent paid is related to the income the lessee obtains from the use of the
premises
10. describes leases wherein the tenant pays a fixed rent
11. statutes that set forth the responsibilities and rights of landlords and tenants
12. a lease wherein a tenant pays a base rent plus maintenance, property taxes, and insurance
13. the party acquiring possession under a sublet agreement
14. nonpayment of rent would be grounds for this
15. the amount of rent the tenant must pay the landlord as stated in the lease agreement
16. an unfit premises would be grounds for this
17. an advance deposit given by a tenant to a landlord against which the landlord can deduct for unpaid
rent or damage
18. a premium, such as a free month’s rent, given to entice a prospective tenant to sign a lease
19. a resident manager would be in this category
20. professional designations for property managers