Types of Estates Leases Flashcards

Types of Estates & Leases Flashcards Gross LeaseThe tenant pays a flat monthly amount and the landlord pays for all operating costs for the building. This type of lease often contains an escalation clause that allows the landlord to increase the rent annually to offset increased expenses.Tenancy at SufferanceA tenancy at sufferance exists when a tenant remains in possession of property after the expiration of his lease, and until the landlord acts to eject the tenant from the property.Think a "holdover resident at Stadium View"Also known as "Estate at Sufferance" Fee Simple AbsoluteThe owner is entitled to the entire property with

unconditional power of disposition during the owner's life:-

If intestate (without a will), the property descends to the owner's heirs and legal representatives.- The most common type of value sought.- Owns the bundle of rights- Highest degree of ownership- Has unlimited duration- Is inheritable- Is subject to only the government powers

(PETE)

Step LeaseA lease that allows the rent to be increased at a set amount on an annual basis during the life of the agreement. The increase is based on estimated rather than actual costs.Fee Simple DefeasibleA type of property ownership in which the grant of title or duration of ownership is dependent on a specified condition. Also known as fee simple determinable or determinable fee.- An estate that dictates, "on the condition that..."- An estate that provides the "right to

re-enter"Example: "I will sell my property to you with the

condition that alcohol is never served on the premises. If you have a wine and cheese party, then I have the right to take back the property." Land LeaseA long term lease of land for the purpose of erecting buildings or making land improvements. At the end of the lease, everything reverts back to the owner of the land, including the buildings and improvements.Sandwich LeaseA leasehold estate in which the lessor has acquired a leasehold interest from an owner or another lessee, and has in turn subleased the premises to a subtenant. All leases that lie between the original lessor and the ultimate subtenant are sandwich leases.Think "Sublease" Leasehold/ Leasehold EstateA leasehold or leasehold estate is an ownership interest in which a lessee or a tenant holds real property by some

form of title like a lease from a lessor or landlord.There are

4 types of leasehold estates:1. Tenancy at sufferance2.

Tenancy at will3. Tenancy for years4. Tenancy in severaltyAka "Renting"

Sale-LeasebackConveyance of interest in a property by a seller, who simultaneously leases back the property in order to maintain uninterrupted occupancy. The seller would be able to recognize a capital gain or loss on the sale of the real estate.Cost of Living LeaseA lease that allows the rent to adjust in proportion to general inflation. This is based on the lessor's cost of living versus a national standard.Types of Freehold Estates1. Life estate2. Fee simple absolute3. Fee simple defeasible4. Fee tail estate* (NOT LEGAL IN US) Net-Net-Net LeaseThe tenant pays the base rental amount plus the landlord's operating costs.Included in this amount are real estate taxes, insurance, maintenance, and repairs.Gross LeaseThe tenant pays a flat monthly amount and the landlord pays for all operating costs for the building. This type of lease often contains an escalation clause that allows the landlord to increase the rent annually to offset increased expenses.Think "Churchill and renewal rates increasing" Net-Net LeaseThe tenant pays the base rental amount PLUS real estate taxes, and insurance premiums.Net LeaseThe tenant pays a base monthly rent plus some of the expenses. The increases are based on actual costs rather than on estimates. The rent increases at the time that the landlord incurs an increase in costs.Percentage Leasethe tenant pays either a base amount and a percentage of gross income, or, depending on which is higher, a base amount or a percentage of the gross income.Tenancy at WillDescribes any leasehold where either the landlord or the tenant may terminate at any time on reasonable notice.It usually occurs in the absence of a lease, or where the tenancy is not for consideration.Also known as "Estate at will" Tenancy for YearsA tenancy for years (aka fixed-term tenancy) lasts for some fixed period of time.Also known as "Estate for years" Tenancy in SeveraltyAn individual owns the property.Think the exact opposite of "several"Also known as "Estate in severalty" Types of Leasehold Estates1. Tenancy/Estate at sufferance2. Tenancy/Estate at will3.Tenancy/Estate for years4. Tenancy/Estate in severalty Fee Tail Estate*Property is only inheritable by a monarch - by the "heirs of the body."!! This is always the wrong answer on the test, because it is not legal in the United States !!Life EstateA freehold interest (in real property) that expires upon the death of the owner or some other specified person.Types of Leases1. Cost of Living Lease2. Flat or Fixed Lease3. Gross Lease4. Index Lease5. Land Leasee6. Net Lease7.

Net-Net Lease8. Net-Net-Net Lease9. Percentage Lease10. Sale-Leaseback11. Sandwich Lease12. Step Lease