1. Real Estate Principles, 11th Edition
By Charles F. Floyd
and Marcus T. Allen

2. Chapter 7
Real Estate Leases

3. Leases
Agreement between a property owner and tenant that transfers the rights of use and possession to the tenant
Requirements of a Properly Prepared Lease
Names of the lessor and lessee
Conveyance of the premises
Description of the premises
Term or duration of the lease
Amount of rent and manner of payment
Duties and obligations of parties
Signatures of the parties

4. Classification of Leases
Duration of term
Tenancy for stated period
Tenancy from period to period
Tenancy at will
Tenancy at sufferance
Type of Use
Ground lease
Residential lease
Commercial lease

5. Classification of Leases, cont.
Methods of Payment
Gross lease
Net lease
Net-net lease
Net-net-net lease
Fixed-rent lease
Graduated-rent lease
Reappraisal lease
Percentage lease
Index lease

6. Issues in the Landlord-Tenant Relationship
Renewal options
Common area maintenance fees (CAM)
Expense stops
Assignment and subleasing
Security deposits
Improvements
See Lease Example in Figure 7.1

7. Key Issues in Lease Example – Figure 7.1
Retail property (pub in shopping center)
Base rent, percentage rent, expense pass-throughs
Use of premises
Signage
Other rules at landlord’s discretion
Estoppel
Subordination

8. Rights/Obligations of Tenant and Landlord
Covenant of quiet enjoyment
Implied warranty of habitability
See Legal Highlight “Landlord’s Liability for Failure to Provide Adequate Maintenance”

9. Rights/Obligations of Tenant and Landlord, cont.
Maintenance of common areas
Protection against criminal acts
Renewal clause
Negative renewal clause
Positive renewal clause

10. State Statutes Affecting Landlord-Tenant Relationship
Each state has enacted laws that regulate the behavior and relationship between landlords and tenants.