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Accessibility
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- - Fair Housing Act (Federal Fair Housing Law)
- - federal act that makes it illegal to discriminate against a prospective tenant on a basis on the tenant’s real or perceived disability
- - tenant w disability must be permitted to make reasonable modifications to a property at the tenant’s own expensive
- - LL may require that premises would be restored to their original conditions at the end of lease
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- - ADA
- - American with Disability Act
- - when commercial property is being leased
- - requires that commercial nonresidential property be free of barriers
- - or reasonable accommodation be provided
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Fair Housing Act
- - Accessibility
- - Federal Fair Housing Law
- - federal act that makes it illegal to discriminate against a
- prospective tenant on a basis on the tenant’s real or perceived
- disability
- - tenant w disability must be permitted to make reasonable modifications to a property at the tenant’s own expensive
- - LL may require that premises would be restored to their original conditions at the end of lease
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Federal act that makes it illegal to discriminate against a prospective
tenant on a basis on the tenant’s real or perceived disability
- - Accessibility
- - Fair Housing Act
- - Federal Fair Housing Law
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Destruction of Premises
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- - usually residential tenants are permitted to reduce their rent payment in proportion to the amount of space they are unable to use
- - in some states tenant can cover damages
- - tenants who have constructed building on leased land
- - are still obligated for a payment of rent even if improvements are damaged or destroyed
- - they must turn to their insurance companies
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Usually residential tenants are permitted to reduce their rent payment
in proportion to the amount of space they are unable to use
Destruction of Premises
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Assignment of Lease
- tenant transfers the entire leasehold interest to another person (new tenant)
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Tenant transfers the entire leasehold interest to another person (new tenant)
Assignment of Lease
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Subleasing
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- - tenant transfers less than the entire leasehold interest by “subletting” the premises to a new tenant
- - Original Tenant remains responsible for
- - rent being payed by the new tenant
- - damage done to the rental during the lease term
- - New Tenant is responsible
- - only to the original tenant to pay the rent due
- - “sandwich lease”
- - sublessor (original lessee’s) interest in the RE
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Assignment and Subleasing are allowed ...
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- - are allowed only when a lease specifically permits them
- - details should be written
- - most leases prohibit a lease from them w/o a lessor’s consent
- - permits the lessor to retain control over the occupancy of the leased premises
- - lessor must not unreasonably withhold consent
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- - assignment or subleasing does not relieve the original lessee of the obligation to pay rent
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Tenant transfers less than the entire leasehold interest by “subletting” the premises to a new tenant
Subleasing
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In Subleasing Original Tenant remains responsible for ...
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- - Original Tenant remains responsible for
- - rent being payed by the new tenant
- - damage done to the rental during the lease term
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In Subleasing New Tenant is responsible for ...
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- - New Tenant is responsible
- - only to the original tenant to pay the rent due
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“sandwich lease”
- In Subleasing
- - sublessor (original lessee’s) interest in the RE
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Recording a Lease
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- - anyone who inspects a lease property receives actual notice of the tenant’s occupancy
- - for this reason, it is usually considered unnecessary to record the lease
- - although most state sallow a lease to be recorded in the county in which the property is located
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- - leases of 3+ years
- - often are recorded as a matter of course
- - some states require that a long-term lease be recorded
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- - change in the ownership doesn’t affect the leasehold (tenants can remain in the possession until the lease expires)
- - unless there is a provision in the lease
- - prospective buyer (especially an occupied single-family house)
- - should inquire about the status of occupants
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Does change in the ownership affecst the leasehold?
- - change in the ownership doesn’t affect the leasehold
- - tenants can remain in the possession until the lease expires
- - unless there is a provision in the lease
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Nondisturbance Clause
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- - is included in the financing instrument used to mortgage leased premises
- - the mortgagee agrees not to terminate the tenancy of the lessee’s, so long as the lessee is current in payment of the require rent, should (if) the mortgagee foreclose on the mortgagor’s building
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The mortgagee agrees not to terminate the tenancy of the lessee’s,
so long as the lessee is current in payment of the require rent, should the mortgagee foreclose on the mortgagor’s building
Nondisturbance Clause
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Options (3)
- 1) Renewal Option
- 2) Purchase Option
- 3) Right of First Refusal
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Renewal Option
- a clause that grant the lessee the privilege to renewing the lease
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Purchase Option
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- - some leases grant the lessee the option to purchase the leased premises
- - gives the tenant the right to purchase the property at the predetermined price w/i a certain period (possibly lease term)
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Right of First Refusal
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- - option
- - allows the tenant the opportunity to buy the property before the owner accepts the offer from another party
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A clause that grant the lessee the privilege to renewing the lease
Purchase Option
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Gives the tenant the right to purchase the property at the predetermined price w/i a certain period (possibly lease term)
Purchase Option
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Allows the tenant the opportunity to buy the property before the owner accepts the offer from another party
Right of First Refusal
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Types of Leases
- 1) Gross Lease
- 2) Net Lease
- 3) Percentage Lease
- 4) Variable Lease
- 5) Ground Lease
- 6) Oil and Gas Lease
- 7) Lease Purchase
- 8) Sale-and-leaseback
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1) Gross Lease
- - most often for
- - Residential and commercial office leases
- - Tenant pays
- - Fixed Rent
- - Some or all of the utilities
- - LL pays
- - all taxes
- - insurance
- - repairs
- - any other utility expenses
- - maintenance connected to the property (“property charges” or “operating expenses”)
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“property charges”
- - in Gross Lease
- - LL pays maintenance connected to the property
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“operating expenses”
- - in Gross Lease
- - LL pays maintenance connected to the property
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In what lease
- Tenant pays
- Fixed Rent
- Some or all of the utilities
- LL pays
- all taxes
- insurance
- repairs
- any other utility expenses
- maintenance connected to the property
Gross Lease
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2) Net Lease
- - most often for
- - Leases for entire commercial and industrial buildings and land in which they are located
- - Ground Leases
- - Long-term Leases
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- - Tenant pays
- - all or most of the property expenses in addition to rent
- - hazard insurance
- - taxes
- - CAM – Common Area Maintenance
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- - monthly rental is a net income for the LL
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What lease is most often for Residential and commercial office leases?
Gross Lease
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What lease is most often for Leases for entire commercial and industrial buildings and land in which they are located?
Net Lease
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What lease is most often for Ground Leases?
Net Lease
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What lease is most often for Long-term Leases?
Net Lease
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3) Percentage Lease
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- - most often for
- - rental business leases
- - based on
- - min fixed rental fee
- - plus
- - percentage of the gross income received by the tenant doing business on the leased property
- .
- - percentage charge is negotiable based on
- - location
- - general economic conditions
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What lease is most often for rental business leases?
Percentage Lease
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What lease is based on min fixed rental fee plus percentage of the gross income
Percentage Lease
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4) Variable Lease
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- - a lease may allow for increases for the rental charges during the lease term
- - “graduated lease”
- - provides for specified rent increases at set future dates
- - “index lease”
- - allows rent to be increased or decreased periodically based on changes in the consumer price index or some other indicator
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What lease may allow for increases for the rental charges during the lease term?
- Variable Lease
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“graduated lease”
- - Variable Lease
- - provides for specified rent increases at set future dates
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“index lease”
- - Variable Lease
- - allows rent to be increased or decreased periodically based on changes in the consumer price index or some other indicator
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What lease provides for specified rent increases at set future dates?
“graduated lease” (Variable Lease)
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What lease allows rent to be increased or decreased periodically based on changes in the consumer price index or some other indicator
“index lease” (Variable Lease)
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5) Ground Lease
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- - most often for
- - commercial and industrial property development
- - when LL leases unimproved land to a tenant who agrees to erect a building on the land
- - involved separated ownership of the land and buildings
- - often run for the term of 50-99 years
- - it is generally “net leases”
- - at the end of the terms any structures usually become the property of the LL
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What lease is most often for commercial and industrial property development
Ground Lease
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In what lease LL leases unimproved land to a tenant who agrees to erect a building on the land?
Ground Lease
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6) Oil and Gas Lease
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- - when the oil company leases land to explore for oil and gas
- - if oil or gas found
- - landowner usually receives a percentage of it’s value as royalty
- - even after they have expired
- - often listed as exclusions in title insurance policies
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In what lease the oil company leases land to explore for oil and gas
Oil and Gas Lease
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7) Lease Purchase
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- - when tenant wants to purchase the property, but not yet able to do so
- - steps to be done
- 1) Terms of the sale are negotiated and agreed to at the time and the lease is signed
- 2) Down payment is payed (may or may not be refundable)
- 3) Part of the periodic rent may be applied toward the purchase price
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- - both parties hope that, by the time the lease expires, the financing can be obtained
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In what lease tenant wants to purchase the property, but not yet able to do so?
Lease Purchase
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8) Sale-and-leaseback
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- - the property owners sell the property and then lease it back for an agreed period and rental
- - original owner
- 1) pull out their equity to use on other projects
- 2) able to reduce their taxable income when they pay rent to the new owner
- - new owner
- - has a reliable source of rental income for an extended time
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In what lease the property owners sell the property and then lease it back for an agreed period and rental?
Sale-and-leaseback
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