South-Western Publishing©2002 By Charles J. Jacobus Real Estate Principles Ninth Edition Real Estate: An Introduction to the Profession Ninth Edition South-Western Publishing©2002

Chapter 17 Real Estate Leases _______________________________________

South-Western Publishing©2002 Leasehold Estate Lessee = Tenant Lessor = Owner = Landlord Reversion = right of owner to retake the property at end of leased period.

South-Western Publishing©2002 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

South-Western Publishing©2002 Valid Lease Lessor & Lessee Description of premises Agreement to convey & accept possession Rent payment provisions Start date and duration of lease Signature of parties to lease

South-Western Publishing©2002 Sample Lease

South-Western Publishing©2002 Sample Lease (continued)

South-Western Publishing©2002 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

South-Western Publishing©2002 Lease Terms Option clause Assignment Subletting Ground lease Lease termination Eviction

South-Western Publishing©2002 Property Management Tenant selection Security deposit Tenant retention Collecting rents On-site management Off-site management

South-Western Publishing©2002 Key Terms Assignment CPM, RPA Gross Lease Lessee Lessor Net lease Option clause Quiet enjoyment Reversion Sublessee Sublessor Sublet