Legal Aspects of Real Estate - Midterm 1
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Leasehold Estate - CORRECT ANSWER - an estate created when the owner of a property,
lessor(landlord), conveys a possessory interest in the real property to another, Lessee (tenant)
Term Tenancy - CORRECT ANSWER - apartment lease; an estate for a specified period;
start and end date are clear; termination notice not necessary; hotels
Periodic Tenancy - CORRECT ANSWER - an estate from period to period, continuing
period to period until terminated by proper notice from one of the parties; month to month
usually; proper notice must be given in advance; notice given feb 5th keeps you on the hook until
march 31, unless landlord amends contract or situationally lets you off the hook
tenancy at will - CORRECT ANSWER - a tenancy that exists until either party chooses to
terminate it; mutually agreed to contract; trumps in situations
tenancy at sufferance - CORRECT ANSWER - created when a person is wrongfully in
possession of another's land without a valid lease; squatters rights -stays until evicted through the
rent
holdover tenant - CORRECT ANSWER - one who failed to vacate or surrender possession
of the premises on the ending date of a term tenancy
lease - CORRECT ANSWER - an oral or written contract that transfers the right of
possession of the premises to the lessee; commercial leases not as straightforward as residential
leases; includes % of sales, $/sf
essential elements of the lease - CORRECT ANSWER - valid contract, statute of frauds,
description of the premises, statement of lease term, rent
,valid contract - CORRECT ANSWER - mutual consent; supported by consideration (rent);
mutual intent for tenant to have possession and landlord retains a revisionary interest in land;
capacity of parties
statute of frauds - CORRECT ANSWER - written lease required for lease longer than a
year (to prevent fraud).. (all should, in reality)
description of the premises - CORRECT ANSWER - if entire conveyed premises are
being leased, legal description in deed is satisfactory; if something less than all premises is being
leased, lease should state clearly and exactly what is to be leased; make sure lease language
specifies what you are renting will always be what you are renting, aka the same 1000sf as
opposed to random relocation
statement of lease term - CORRECT ANSWER - beginning/end dates and length of term;
courts do not favor leases of unlimited duration; some courts have held that leases that are too
long are barred by state
rent - CORRECT ANSWER - compensation paid by lessee for possession of the property;
money (could be crops, %s); how much, when and where rent is to be paid; joint and several
tenancy can discriminate on class (aka money- rich vs poor)
legal use of the premises - CORRECT ANSWER - when not indicated lessee can make
any legal use of the land; courts uphold limitations designated in lease; could include exclusivity
rights; commercial property has more right to say "we don't want your business"
exclusivity rights - CORRECT ANSWER -
right of possession - CORRECT ANSWER - in all jurisdictions, the right of possession
implicitly resides in the tenant - no one will have possessory rights inconsistent with those
granted to the tenant; double renting same space (hotel room); new construction not ready for
tenants with lease already
, recording the lease - CORRECT ANSWER - permitted in most states because a lease is a
conveyance of an interest in land; uncommon to record residential and short term leases; more
likely to record leases of 3+ years; need to notify other people that you have the rights
types of commercial leases - CORRECT ANSWER - gross lease, net lease, ground lease,
percentage lease, other
gross lease - CORRECT ANSWER - lease in which a flat or fixed amt of rent is paid by
the tenant
net lease - CORRECT ANSWER - tenant pays taxes, insurance, repairs and other
operating expenses of the premises
ground lease - CORRECT ANSWER - lessor leases a piece of vacant land to the lessee,
with the stipulation usually that the lessee at his or her own expense will construct a building
thereon; only thing to mortgage is the leasehold interest
lessor - CORRECT ANSWER - landlord, owner
lessee - CORRECT ANSWER - tenant
percentage lease - CORRECT ANSWER - rental is based in part on the gross sales made
by the tenant on the premises
triple net lease - CORRECT ANSWER - tenant pays for insurance, maintenance, real
estate taxes, and other utilities
lease renewal - CORRECT ANSWER - depending on type of leasehold, the lease will
terminate on its own or on appropriate notice by either party; a renewal is a new lease; can also
renew a lease by holding over - some automatically renew
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Leasehold Estate - CORRECT ANSWER - an estate created when the owner of a property,
lessor(landlord), conveys a possessory interest in the real property to another, Lessee (tenant)
Term Tenancy - CORRECT ANSWER - apartment lease; an estate for a specified period;
start and end date are clear; termination notice not necessary; hotels
Periodic Tenancy - CORRECT ANSWER - an estate from period to period, continuing
period to period until terminated by proper notice from one of the parties; month to month
usually; proper notice must be given in advance; notice given feb 5th keeps you on the hook until
march 31, unless landlord amends contract or situationally lets you off the hook
tenancy at will - CORRECT ANSWER - a tenancy that exists until either party chooses to
terminate it; mutually agreed to contract; trumps in situations
tenancy at sufferance - CORRECT ANSWER - created when a person is wrongfully in
possession of another's land without a valid lease; squatters rights -stays until evicted through the
rent
holdover tenant - CORRECT ANSWER - one who failed to vacate or surrender possession
of the premises on the ending date of a term tenancy
lease - CORRECT ANSWER - an oral or written contract that transfers the right of
possession of the premises to the lessee; commercial leases not as straightforward as residential
leases; includes % of sales, $/sf
essential elements of the lease - CORRECT ANSWER - valid contract, statute of frauds,
description of the premises, statement of lease term, rent
,valid contract - CORRECT ANSWER - mutual consent; supported by consideration (rent);
mutual intent for tenant to have possession and landlord retains a revisionary interest in land;
capacity of parties
statute of frauds - CORRECT ANSWER - written lease required for lease longer than a
year (to prevent fraud).. (all should, in reality)
description of the premises - CORRECT ANSWER - if entire conveyed premises are
being leased, legal description in deed is satisfactory; if something less than all premises is being
leased, lease should state clearly and exactly what is to be leased; make sure lease language
specifies what you are renting will always be what you are renting, aka the same 1000sf as
opposed to random relocation
statement of lease term - CORRECT ANSWER - beginning/end dates and length of term;
courts do not favor leases of unlimited duration; some courts have held that leases that are too
long are barred by state
rent - CORRECT ANSWER - compensation paid by lessee for possession of the property;
money (could be crops, %s); how much, when and where rent is to be paid; joint and several
tenancy can discriminate on class (aka money- rich vs poor)
legal use of the premises - CORRECT ANSWER - when not indicated lessee can make
any legal use of the land; courts uphold limitations designated in lease; could include exclusivity
rights; commercial property has more right to say "we don't want your business"
exclusivity rights - CORRECT ANSWER -
right of possession - CORRECT ANSWER - in all jurisdictions, the right of possession
implicitly resides in the tenant - no one will have possessory rights inconsistent with those
granted to the tenant; double renting same space (hotel room); new construction not ready for
tenants with lease already
, recording the lease - CORRECT ANSWER - permitted in most states because a lease is a
conveyance of an interest in land; uncommon to record residential and short term leases; more
likely to record leases of 3+ years; need to notify other people that you have the rights
types of commercial leases - CORRECT ANSWER - gross lease, net lease, ground lease,
percentage lease, other
gross lease - CORRECT ANSWER - lease in which a flat or fixed amt of rent is paid by
the tenant
net lease - CORRECT ANSWER - tenant pays taxes, insurance, repairs and other
operating expenses of the premises
ground lease - CORRECT ANSWER - lessor leases a piece of vacant land to the lessee,
with the stipulation usually that the lessee at his or her own expense will construct a building
thereon; only thing to mortgage is the leasehold interest
lessor - CORRECT ANSWER - landlord, owner
lessee - CORRECT ANSWER - tenant
percentage lease - CORRECT ANSWER - rental is based in part on the gross sales made
by the tenant on the premises
triple net lease - CORRECT ANSWER - tenant pays for insurance, maintenance, real
estate taxes, and other utilities
lease renewal - CORRECT ANSWER - depending on type of leasehold, the lease will
terminate on its own or on appropriate notice by either party; a renewal is a new lease; can also
renew a lease by holding over - some automatically renew
