RE Principles Ch.21 Leases

  1. The owner of a property being leased is often called what?  The renter of the property is called?
    • -owner, landlord, lessor
    • -renter, tenant, lessee
  2. According to a 2010 Fannie Mae survey, the three most common reasons that renters do not buy are what?
    • 1. not having enough credit to get a loan
    • 2. not being able to afford the purchase or upkeep of a home
    • 3. thinking it is not a good time to buy
  3. A ______ is a contract between an owner of real estate and a tenant that transfers the right to exclusive possession and use of the owner's property to the tenant for a specified period of time.
  4. The contract agreement between an owner and a tenant lists what three main things?
    • -time
    • -amount of money
    • -rights and obligations of both parties
  5. Real estate licensees are prohibited by the License Act from preparing any document that transfers any interest in real estate, including leases.
    true; have to use the promulgated forms or written forms approved by TREC and done by lawyer
  6. The lessor grants the lessee the right to occupy the property and in return receive payment.
  7. Landlords right to take back possession of property after the lease term has expired is called what?
    reversionary right
  8. The tenant's interest in leased property is called a...
    leased fee estate plus reversionary right
  9. The Texas statute of frauds requires what of a lease for a term of more than one year?
    -to be written to be enforceable.
  10. A lease for one year or less usually is enforceable if it is entered into orally.
    true; but best to have a written contract
  11. What must be given at the first dialogue regarding a residential lease for more than one year or when the purchase of property is contemplated?
    An Information About Brokerage Services form
  12. The owners of single-family rental houses have the duty to disclose to buyers and rental applicants any info about high-risk sex offenders living near the rental dwelling.
    false; owners do NOT have to disclose this
  13. A lead-based paint disclosure and the pamphlet Protect Your Family must be given to tenants in properties built before ______, and must be signed by who and held onto for how long? What are the exceptions to this?

    If renovation or repair work disturbs more than __ sq feet of interior work or __ sq feet of exterior work, rental residents must be notified and given a copy of the EPA pamphlet Renovate Right, and the repairs must be performed by certified renovators.
    • 1978
    • -signed by the residents, owner, and any leasing agent 
    • -three years (retained by owner)

    • Exceptions:
    • -houses exclusively for the elderly or handicapped (unless there is children)
    • -zero-bedroom units (lofts, efficiencies, studios)
    • -properties that have been inspected and found free of lead-based  paint

    • -6 sqft interior
    • -20sqft exterior
  14. ADA stands for?
    Americans with Disabilities Act
  15. The Americans with Disabilities Act (ADA) applies to which kinds of properties?  And what does it requires of these properties?
    -commercial, certain multifamily residential properties in which public goods or services are provided, and multifamily properties of four or more ground-floor units or four or more units with elevators

    -requires that properties be free of architectural barriers or provide reasonable accommodations for people with disabilities
  16. The fair housing laws affect landlords and tenants just as they do sellers and buyers.
  17. Fair housing laws require that the same tenant criteria applied to adults be also applied to families with children, and a landlord cannot charge a higher rent or security deposit because one of the tenants is a child.
  18. For the past several years, discrimination because of race has been the largest source of housing discrimination complaints.
    false; discrimination of disability is the largest of complaints; many housing providers failed to comply with the Fair Housing Act requirements of reasonable accommodations and reasonable modifications for a person with a disability.
  19. A person with a disability is an individual with a _______ or _________ impairment that substantially limits one or more major life activities (seeing, hearing, walking).
    mental or physical
  20. There must be an _________ relationship between the person's disability and the requested accommodation or modification.
  21. Fair housing laws apply to all rental properties.
  22. What is a modification for a disability?
    • -a structural change made to the premises to allow persons with disabilities the full enjoyment of the housing and related facilities (ramp).
    • -must be reasonable, and owner may require that the premises be restored to their original condition at the end of the lease.
  23. Reasonable modifications are usually made at the tenants expense.
  24. What is an accommodation?
    a change, exception, or adjustment to a rule, policy, practice, or service; reserved parking space, service animal
  25. Multifamily dwellings built for first occupancy after March 31, 1991, must meet specific design and construction requirements under the Fair Housing Amendments Act of 1988. What are the three requirements?
    1. public use and common areas must be accessible to disabled persons

    2. units designated as accessible must have an accessible route to the unit and an accessible entrance

    3. accessible units must contain adaptive features such as wider doorways and hallways, light switches in accessible locations, reinforced walls for grab bars in bathrooms, and usable kitchen and bathrooms so wheelchairs can maneuver in the spaces.
  26. The Fair housing does not protect against what two major things?
    • -if the request for modification or accomodation is not reasonable
    • -or would cause direct harm to health or safety to others
  27. In addition to federal fair housing laws, landlords and rental agents must be aware of _________.
    • local laws; martial status, gender identity, and other factors are protected classes in some cities
    • -local laws: smoking and illegal immigrants
  28. The tenant's right to occupy the land for a duration of the lease is called...
    a leasehold estate
  29. The IRS permits certain tax advantages for leases longer than 30 years.
  30. What are the four types of leases?
    • 1. Estate for years
    • 2. Periodic Estate
    • 3. Tenancy at Will
    • 4. Tenancy at Sufferance
  31. What is an estate for years lease?
    • -lease for a set period; ex: office space
    • -specific start/end dates
    • -no automatic renewal
    • -no notice required to terminate
  32. What is a periodic estate lease?
    • -Lease for an indefinite term without a specific expiration date; rent payable at definite (set) interverals 
    • -Automatically renews; month-to-month lease; 
    • -notice required to terminate
  33. When a tenants lease expires and they are still living on the premises the landlord has two options: 1. evict them, 2. convert to a holdover tenancy. What is a holdover tenancy
    -coverting to a month to month lease
  34. What is a tenancy at will lease?
    • -exists for as long as both lessor and lessee desire it to last; lease for indefinite  term
    • -landlord's oral or written consent 
    • -can be terminated by either party's giving proper notice
    • -Ex: an apartment complex is going to be deminoslished, landlord gives tenant notice of that and gives them two options; to move or to stay until the demonsish starts (tenancy at will)
    • -notice required to terminate
  35. What is a tenancy at sufferance lease?
    • -when a tenant who lawfully possessed real property continues to possession of the premises without the landlord's consent after the rights expire.
    • -Landlord "suffers" or permits tenant to remain
    • -may require eviction.
    • -EX: when a tenant in an estate for years fails to surrender possession at the expiration of the lease, or when a borrower continues to possession after a foreclosure sale.
  36. The right of first refusal allows a tenant to match an offer from another party on vacant space in a building. What does this mean?
    -the existing tenants have the first opportunity to match or buyout the space. They are first in line on the offer of renting the space.
  37. Texas requires no special wording to establish the landlord-tenant relationship.
  38. The Texas Association of REALTORS provides a residential real estate lease form for its members' use.  Another popular residential lease used in Texas is the ______ lease form used by members of the Texas Apartment Association.
    TAA lease form
  39. The requirements for a valid lease are essentially the same as those for any other contract, what are they?
    • -offer and acceptance; mutual agreement on all terms
    • -consideration; rent in exchange for something
    • -capacity to contact; parties must have legal capacity to contract.
    • -legal objectives: objections to lease must be legal
    • -legal description
  40. Texas ______________ requires that leases for longer than one year be in writing.
    statute of frauds
  41. A lessor may restrict a lessee's use of the premises though provisions included in the lease.
  42. Neither the landlord nor the tenant is required to make improvements to the leased property.
  43. The Landlord and Tenant Act is a law that addresses the landlord's right of entry, maintenance of premises, the tenant's protection against landlord retaliation for complaints, installation of smoke detectors, the landlord's duty to install or rekey a security device, and the disclosure of the property owners' names and addresses to the tenants. Also states what?
    -remedies if breach of contract between landlord and tenant
  44. One of the major provisions of the Property Code, Landlord and Tenant Act, called the "Keating Memo," published by HUD indicates what?
    • -that a reasonable occupancy standard is two persons per bedroom, and an infant less than six months old may sleep in the same bedroom as the parent or guardian.
    • -Standards may be adjusted based on size and number of rooms, size or rental, ages of children, etc.
  45. The Texas Property Code, 92.010, sets the maximum number of adults that a landlord may allow to occupy a dwelling at three times the number of bedrooms in the dwelling.
  46. Under the Texas law, bedroom means...
    an area of a dwelling intended as sleeping quarters.
  47. Local regulations can affect occupancy regulations.
  48. Housing providers are encouraged to have a written occupancy policy that is consistently followed and justified by the specific characteristics of each property.
  49. By law, at the time an applicant is given a rental application, the landlord must provide the applicant a printed notice of the landlord's tenant selection criteria, what is this? why is this given to the applicant?
    -printed or online notice that includes the grounds for which an applicant may be denied:

    • -criminal history
    • -previous rental history
    • -current income
    • -credit history, or
    • -failure to provide accurate or complete info on the application form.

    -given to help the applicant decide whether to submit an application or not, before they pay any fees

    ****The applicant must sign an acknowledgment indicating that the notice was made available. 

    ****Testers look for this!!! To make sure that everyone is having an opportunity.

    **The acknowledgment may be part of the rental application if underlined or in bold print
  50. An ____________ is a sum of money given to the property owner in connection with a rental application and before a lease is signed; it serves the same function as an earnest money deposit.
    Application Deposit
  51. If an applicant is accepted, the application deposit _____ be credited towards the security deposit or another fee that is due when the tenant signs a lease.  If the applicant is rejected, the deposit ________ be refunded.
    • -may
    • -must
  52. An ___________ is sum of money that may be charged by a landlord to offset the actual cost of screening an applicant for acceptance as a tenant; covers the cost of obtaining credit and criminal background checks; property owner ______ refund if it comes back rejected.
    • -application fee
    • -doesn't have to
  53. What type of deposit safeguards against a tenant's destruction of the rental?
    security deposit
  54. A security deposit is usually equivalent to....
    one month's rent
  55. Under Texas law, within __ days of the tenant's surrender of the premises, either a security deposit must be refunded or the tenant must be provided with an explanation and accounting of damages and other charges being deducted from the deposit and for which the tenant is liable.
    30 days
  56. If a tenant fails to occupy the rental after signing the lease, a landlord must return the security deposit if...
    another tenant is secured.
  57. A landlord may retain a security deposit for failure to give a move-out notice only if the notice requirement is underlined or printed in bold print in the lease, this is under a REALTORS lease. How is a TAA lease security deposit handled if the tenant fails to give move-out notice?
    -with a TAA lease, a security deposit would not be forfeited for failure to give a move-out notice. Instead the tenant would be charged an agreed reletting fee to cover the owner's cost and efforts in attempting to relet.
  58. Although the amount of security deposit is set by the owner, the amount is mainly influenced by....
    supply and demand.
  59. A security deposit is prorated at closing.
    false; is not prorated; the buyer must deliver to the tenant a statement that he has received the security deposit and is repsonsible for its return; it is the sellers responsiblity to see that the new owner gives the statement to all tenants; otherwise seller could still be held liable for the security deposits.
  60. What must the buyer and seller do when dealing with a security deposit?
    • -buyer must deliever a statement to the tenant(s) that he has received the security deposit and is responsible for its return.
    • -Seller must make sure the buyer gives the statement to the tenant(s), or he can still be reliable for the deposit
  61. Late fees must be a reasonable amount and may be charged after rent has been unpaid one full day after the initial due date.
    true; can include an initial fee and daily fee
  62. The lessee may assign the lease and may sublease without the landlord's consent.
    false; cannot assign or sublease without the landlord's consent.
  63. A tenant who transfers all leasehold interests _________ a lease. One who transfers less than all leasehold interests by leasing them to a new tenant _________ a lease. Both do not relieve the original lessee of the obligation to make rental payments unless...
    • assigns
    • sublease
    • the landlord agrees to waive such liablity
  64. Texas requires that a residential lessor maintain dwelling units in a habitable condition and make any necessary repairs.
  65. What is the habitability statute?
    • states that the landlord must make effort to repair any condition that affects the physical health and safety of an ordinary tenant, if the condition arises from normal wear and tear.
    • ***For this to be enforced a tenant must give notice to the person to whom rent is being paid to and must be current in rental payments at the time of notification.
    • ***Landlord must give contact info that is reliable; reachable in 24hrs; pagers and answering machines are not compliance with this requirement, unless checked often.
  66. Under the habitability status, the landlord must repair the condition in a reasonable period which is.... The conditions needing repairs must be significant to where it is affecting the what of the tenant?  What claims are not supported or covered in this statute?
    • -7 days or depending on the type of repair (labor, supplies delivered, etc.)
    • -physical health or safety of the tenat
    • -no covered; if condition only affects tenant mentally or anguish, conditions that are of inconvinence or discomfort without affecting the physical health or safety of tenant. 
    • ***Is directed towards oridaniry perons
  67. If a landlord fails to make repairs within a reasonable time after receiving notice from the tenant, the tenant must send a second notice stating his/her intention to do what three options?
    • 1. terminate the lease
    • 2. repair the property and deduct the cost from rent; cannot exceed one month's rent or $500, whichever is greater.
    • 3. pursue available judicial remedies
  68. If a property condition results from an insured casualty loss, such as fire, smoke, hail explosion, or a similar cause, the period for repair does not begin until...
    the landlord receives the insurance proceeds.
  69. An landlord's insurance policy covers a tenant's personal property.
    false, only covers damage to property and liability claims.
  70. It is increasingly common for a landlord to require all tenants to purchase either liability protection or renters insurance.
  71. The Texas Property Code, Section 92.251, requires that landlords install smoke alarms in all residential rental property. Smoke alarms must be installed...
    in every bedroom and corridor (hallways).
  72. It is the tenant's responsibility to replace the batteries in a smoke alarm.
  73. It is the landlord's responsibility to check the smoke alarms before the tenant moves in.
  74. If a local ordinance requires a fire extinguisher in each rental unit, it is the landlords responsibility to put one in the unit and check its pressure and expiration date.
  75. Residential rental dwellings must be equipped at the landlord's expense with specified security devices including...  The specific devices required for a particular property are based on what?
    • window latches, doorknobs, sliding door latches, and door viewers.
    • -based on the year the property was built.
  76. All security devices operated by a key, card, or combination must be rekeyed by the landlord at the landlord's expense no later than the ___ day after a new tenant moves in.
  77. Servicemembers may terminate a residential lease upon entering the military or being called to duty.
  78. Victims of family violence, sexual assault, or sexual abuse are permitted to terminate a residential lease agreement under certain circumstances.
  79. A tenant who abandons leased property remains liable for the terms of the lease including the future rent. By law, however, the landlord has a duty to mitigate damages, which is what?
    • exercising reasonable care to find another tenant.  
    • ****The vacating tenant remains responsible under the terms of the lease only until another tenant begins rent payments.
  80. If either the owner or the tenant of leased property dies, the lease is terminated.
    false, lease "runs with the land" and the heirs are bond to the responsibility to the lease. The landlord however, must mitigate damages; find a new tenant
  81. If a tenant is delinquent in all or part of the rent, a landlord can use the lockout remedy. How is this remedy legally allowed?
    • -first give notice to tenant in bold or underlined print, 3-5 days in before the locks are going to be changed; notice must also state amount owed to prevent lockout and a designated place to pay it. 
    • -can only change the locks once during a rental payment period.
    • -cannot change locks if someone is in the dwelling
    • -When locks are changed, the landlord must place a written notice on the tenant's front door giving the amount of rent and other charges due and a 24hr address or phone number for the tenant to obtain a key to get into the property. **If there is not a 24hr location for the tenant to pick up a key, the owner must deliver the key to the tenant at the dwelling within two hours after the tenant calls the 24hr phone number; cannot be answered by an answering machine
    • ***For a residential lockout, a landlord has to give the tenant the new key regardless if the rent is paid or not.
    • ***Without court order, the lockout remedy for nonpayment of rent cannot be used by the owner of a MULTIFAMILY housing development that receives a low-income-housing tax credit. 
    • -On a commercial lease, the landlord does not have to give the tenant a key until the rent is paid and then only during the tenant's regular business hours.
  82. For using a lockout remedy, a Landlord should do what important thing?
    seek legal advice to ensure that all requirements for tenant notice are followed.
  83. A landlord may not interrupt electrical service furnished to a tenant as a means for collecting unpaid rent. A landlord may interrupt utility services furnished to a tenant for purposes of what?
    • -bona fide repairs
    • -construction
    • -an emergency
  84. When a tenant breaches a lease or improperly retains possession of leased premises, the landlord may regain possession through a suit of ________, aka forcible _______ suit, filed in the justice of peace court where the property is located. This process is known as __________ and the procedures are outlined in Section 24 of the Texas Property Code.
    • Suit of possession
    • forcible detainer suit
    • actual eviction
  85. A TAA lease requires only ___ hours written notice before filing an eviction suit.
  86. Justice courts have jurisdiction in matters up to...
  87. If a city or a county revokes a certificate of occupancy for a leased property because it is uninhabitable, the landlord is required to do what?
    -must return the security deposit and prorated rent and must reimburse the tenant for expenses incurred.
  88. What is construction  eviction?
    • The termination of a lease by a tenant if the tenant can prove that the premises have become uninhabitable because of the conscious neglect of the landlord.
    • **EX: If a lease requires the landlord to furnish central heat and the landlord fails to repair a defective heating system rendering the leased premises uninhabitable, the tenant may abandon them.
  89. The Servicemembers _____________ Act affects leases involving military personnel, particularly lease termination rights, evictions, and procedures for collecting delinquent rents.
    Servicemembers Civil Relief Act
  90. The manner in which rent is determined indicates the type of lease in force. The three primary types of leases are what?
    • 1. Gross lease
    • 2. Net lease
    • 3. Percentage Lease
  91. What is a gross lease?
    • -typically used for a residential and commercial office lease
    • -pays fixed rent and the landlord pays property charges such as taxes, repairs, insurance, etc. 
    • -tenants pay for utilities
  92. What is a net lease?
    • -typically used for commercial/industrial building and ground leases
    • -tenant pays rent plus all or most property charges; landlord may pay some property charges
    • ***In a triple net lease or net-net-net lease, the tenant pays all operating and other expenses, such as taxes, insurance, assessments, maintenance, and other charges.
  93. What is a percentage lease?
    • -typically used for large retail store leases
    • -lessee pays basic rent plus percentage of gross sales and may pay property costs
    • -Landlord may pay some or all property charges
    • ***Usually requires a tenant to "open its books" so the landlord can verify annual sales figures
  94. A lease requires a minimum monthly rental of $1,300 per month plus 5% of the business's gross sales exceeding $160,000. On an annual sales volume of $250,000 what would the annual rent be?
    $1,300 per month x 12 months = $15,600 base rent

    $250,000 - $160,000 = $90,000 subject to percentage

    $90,000 x 0.05 (5%) = $4,500 percentage rent

    $15,600 base rent + $4,500 percentage rent = $20,100 total rent
  95. What are variable leases? What are the two main types of variable leases?
    • -lease that allows for increases in the fixed rental charge during the lease period.
    • -Graduated lease; provides for increase in rent at set future dates
    • -Index lease; allows rent to be increased or decreased periodically based on changes in the government cost-of-living index or some other index
  96. What is a grounds lease?
    • -Leased land to where a tenant agrees to erect a building on it
    • -typically used in commercial property development and is sometimes an attractive alternative to purchasing land because it reduces the amount of cash needed for construction of buildings
    • -typically longer the lease the better for the tenant; 50 years or longer; net leases; lessee pays rent as well as real estate property charges.
    • ***Under Texas law a ground leasehold is considered to be an estate in land subject to the rights of a landlord.
  97. In Texas, hunting leases are true leases.
    false, they are not true leases; they are licenses granting access to land in order to hunt.
  98. What is an oil and gas lease?
    • oil companies lease land to explore for oil and gas, a special lease agreement must be negotiated. 
    • -usually owner of the minerals receives a cash payment called a bonus, for executing the lease.
  99. Paul's estate for years lease will expire in two weeks. At that time, he will move to a larger apartment across town. What must Paul do to terminate this lease agreement?
    Paul needs to do nothing; the agreement will terminate automatically
  100. A tenant's right to occupy, or take possession of leased premises is a...
    leasehold interest
  101. If a store building collapsed because of conscious landlord neglect and the tenants moved out, this would be a constructive eviction.
  102. A lease for more than one year must be in writing to be enforceable because...
    the statue of frauds requires it
  103. A lease calls for a minimum rent of $1,200 per month plus 4% of the annual gross business over $150,000. If the total rent paid at the end of the year was $19,200, how much business did the tenant do during the year?
  104. Pablo occupies a building under a written lease for a five-year term with monthly rental payments. The lease expired last month, but Pablo has remained in possession and the landlord has accepted his most recent rent payment without comment. At this point, Pablo's lease has been renewed for _________.
    one year
  105. The leasehold interest that automatically renews itself at each expiration is the tenancy...
    from period to period
  106. What is the term that refers to a tenant's legal right to occupy a leased property against the ownership claims of third parties?
    Covenant of quiet possession
  107. A tenant's lease has expired, the tenant has neither vacated nor negotiated a renewal lease, and the landlord has declared that she does not what the tenant to remain in the building. The form of possession is called...
    tenancy at sufferance
  108. If no special provision is included in the lease regarding permanent improvements made by a tenant, such as improvements, are what?
  109. Adams leased space in her new shopping center to Baker for his dress store. However, Baker's business fails and Baker sublets the space to Davis. If Davis fails to make rental payments when due, Adams would have recourse against...
    Baker only
  110. In June, Sharisse signed a TAR lease for one year and moved into an apartment. She deposited the required security deposit with the landlord. Six months later, she paid the January rent and mysteriously moved out. Sharisse did not arrange for a sublease or an assignment and made no further rent payments. She left the apartment in good condition. What is Sharisse's liability to the landlord under these circumstances?
    she is liable for the balance of the rent plus forfeiture of the security deposit.
Card Set
RE Principles Ch.21 Leases