Thomson/South-Western©2008 Chapter 16 Real Estate Leases _______________________________________

Thomson/South-Western©2008 Leasehold Estate Lessee = Tenant Lessor = Owner = Landlord Reversion = right of owner to retake the property at end of leased period.

Thomson/South-Western©2008 Estate Periods Estate for years- specific starting & ending date Estate at will- terminated anytime by either party Periodic estate- one that renews itself automatically Tenancy at sufferance- holdover tenant

Thomson/South-Western©2008 Valid Lease 1.Lessor & Lessee 2.Description of premises 3.Agreement to convey & accept possession 4.Rent payment provisions 5.Start date and duration of lease 6.Signature of parties to lease

Thomson/South-Western©2008 STATUTE OF FRAUDS The Statute of Frauds in Texas provides that a lease of real estate for a term that cannot be performed within one year must be in writing. A lease of one year or less need not be in writing to be enforceable.

Thomson/South-Western©2008 Sample Lease

Thomson/South-Western©2008 Sample Lease (continued)

Thomson/South-Western©2008 Landlord-Tenant Laws Notice needed to terminate tenancy. Landlord’s lien for rent. Need for security devices. Habitable premises. Smoke detectors. Occupying limit of 3 adults per bedroom. Security deposits and 30 day rule for accounting to tenant. Commercial leases 60 days. Duty to mitigate. Family Violence & Service Members.

Thomson/South-Western©2008 Rent Gross lease = Fixed rent Graduated rent = Step-up rent payments over term Percentage lease = Rent is percent of gross income Net lease = Rent plus increases in expenses Index lease = Rent tied to economic indicator

Thomson/South-Western©2008 Lease Terms Option clause Assignment Subletting Ground lease Lease termination Eviction – Forcible Entry and Detainer –3 days written notice –Justice of Peace Court

Thomson/South-Western©2008 Key Terms Escalation clause Ground rent Lessee Lessor Option clause Quiet enjoyment Reversionary interest Sublease Sublessee Sublessor