Contracts Lesson Five

Learning Objectives  Review meaning of leasehold estate.  Learn and understand lease rights.  Become familiar with the various types of leases.  Explain how leases can be terminated.  Know the difference between actual and constructive eviction.  Statute of Frauds and Oral leases in relationship to lease enforcement.

Leases  Non-Freehold Estate  Landlord/Lessor  Tenant/Lessee

Categories of Lease Rights  Estate for Years  For a Definite Period of Time Example: 6 months, One Year, Five Years

Period to Period  Six Months + One Day = Six Months  One Year + One Day = One Year  Five Years + One Day = Five Years  Must give written Notice to Terminate Listing

Tenancy at Will  Must give Notice to Terminate Lease  May Live in Home until it is Torn Down At will of Owner

Tenancy at Sufferance  A Tenant has Overstayed the Lease Period  In LA this is known as a Holdover Tenant

Non-Farm Leases  Usually for One Month Plus One Week, Gives Another Month Farm Lease  Usually for One Year Plus One Month, Gives Another Year

Types of Leases  Gross Lease (Owner pays Expenses)  Net Lease (Tenant pays Expenses)

$ 2,000base rent Plus$ 2,5005% of the $50,000 in sales $ 4,500rent for the month Percentage Lease

Ground Lease “Separate Immovable”

Step-Up Lease

Graduated Lease  Escalator Clause $400 Increase Taxes & Ins. $250

Sale & Leaseback  Sale  To Obtain Cash  Lease Property from New Owner

Re-Appraisal Lease  $100,000 x 10% = $10,000  $200,000 x 10% = $20,000

Index Lease  Lease $10,000  GNP 8%  New Rent $10,800

Assignment  Transfer of Rights to Third Party  Original Lessee is still Responsible for Lease  One Lease

Sub-Lease  Transfer of Rights to Third Party  Two Leases  Original Lessee is still Responsible

Termination of Leases  Expiration of Time  Mutual Agreement  Breach of Contract  Death  10 Days Notice

Eviction  Actual Eviction Tenants Fault  Constructive Eviction Owners Fault

Security Deposit  In LA Deposit must be returned within 30 days less itemized list of damages.

Statute of Fraud  Requires all Contracts be in writing to be enforceable.  Oral Lease in LA are good for any length.

Note: In both cases it is still wiser to write all leases and long term leases should probably be recorded.