Ch. 4 Key Terms

Question 1

An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.

Answer 1

Ground Lease

Question 2

A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, or at will.

Answer 2

Lease

Question 3

The interest or estate which a lessee of real estate has therein by virtue of the lessee’s lease.

Answer 3

Leasehold Estate

Question 4

Also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent.

Answer 4

Periodic Lease

Question 5

Types of Leasehold Estates:

Answer 5

1. Estate for Years
2. Periodic Estate
3. Estate at Will
4. Tenancy at Sufferance

Question 6

Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property.

Answer 6

Covenant

Question 7

A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction.

Answer 7

Security Deposit

Question 8

The method or manner by which a right or contract is transferred from one person to another.

Answer 8

Assignment

Question 9

An arrangement in which the lessee (tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant.

Answer 9

Sublease

Question 10

A legal proceeding by a lessor landlord to recover possession of real property.

Answer 10

Eviction

Question 11

Where one is either by force or by process of law, actually put out of possession.

Answer 11

Actual Eviction

Question 12

Any disturbance of the tenant’s possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased.

Answer 12

Constructive Eviction

Question 13

Any disturbance of the tenant’s possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased.

Answer 13

Quiet Enjoyment

Question 14

A lease which provides for a graduated change at stated intervals in the amount of the rent to be paid; used largely in long-term leases.

Answer 14

Graduated Lease

Question 15

A lease of property whereby the lessor is to meet all property charges regularly incurred through ownership.

Answer 15

Gross Lease

Question 16

A tenant who remains in possession of leased property after the expiration of the lease term.

Answer 16

Holdover Tenant

Question 17

A lease tied to an index such as the Consumer Price Index.

Answer 17

Index Lease

Question 18

A land lease–also called a ground lease–is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.

Answer 18

Land Lease

Question 19

A land lease–also called a ground lease–is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.

Answer 19

Lease

Question 20

A lease that requires the tenant to pay, in addition to rent, some or all of the property expenses that normally would be paid by the property owner. These include expenses such as real estate taxes, insurance, maintenance, repairs, utilities, and other items.

Answer 20

Net Lease

Question 21

A lease in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent.

Answer 21

Triple Net Lease

Question 22

The interest or estate which a lessee of real estate has therein by virtue of the lessee’s lease.

Answer 22

Leasehold Estate

Question 23

A person to whom property is rented under a lease.

Answer 23

Lessee

Question 24

One who rents property to another under a lease.

Answer 24

Lessor

Question 25

A clause in a lease that outlines the terms for renewing or extending an original lease agreement.

Answer 25

Option to Renew

Question 26

A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.

Answer 26

Percentage Lease

Question 27

Also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent.

Answer 27

Periodic Lease

Question 28

A lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building.

Answer 28

Proprietary Lease

Question 29

A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an "implied" contract in which the existence of the contract is assumed by the circumstances.

Answer 29

Express Contract

Question 30

A legal substitute for a contract. An implied contract is an agreement created by actions of the parties involved, but it is not written or spoken. This is a contract assumed to have been drawn.

Answer 30

Implied Contract

Question 31

An agreement that has been fully performed.

Answer 31

Executed Contract

Question 32

A contract which has not yet been fully performed (fully executed).

Answer 32

Executory Contract

Question 33

A clause in a contract that states a mortgage must be obtained in order for the contract to be binding.

Answer 33

Mortgage Contingency Clause

Question 34

A legal term used to disclaim some implied warranties for an item being sold. Denotes that the seller is selling, and the buyer is buying a property in whatever condition it presently exists.

Answer 34

"As is"

Question 35

A Latin term that means "let him beware.". Caveat is usually interpreted as a sort of warning or cautionary expression.

Answer 35

Caveat

Question 36

Let the buyer beware. The buyer must examine the goods or property and buy at the buyer’s own risk.

Answer 36

Caveat Emptor

Question 37

Anything given to induce another to enter into a contract such as money or personal services.

Answer 37

Consideration

Question 38

A provision in a contract that requires the occurrence of a specific event before the contract can be completed.

Answer 38

Contingency

Question 39

A type of offer made in response to another offer, which was seen as unacceptable. A counteroffer revises the initial offer, making it more appealing for the person making the new offer.

Answer 39

Counteroffer

Question 40

Down payment made by a purchaser of real estate as evidence of good faith.

Answer 40

Earnest Money Deposit

Question 41

A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an "implied" contract in which the existence of the contract is assumed by the circumstances.

Answer 41

Express Contract

Question 42

A legal substitute for a contract. An implied contract is an agreement created by actions of the parties involved, but it is not written or spoken. This is a contract assumed to have been

Answer 42

Implied Contract

Question 43

An agreement that has been fully performed

Answer 43

Executed Contract

Question 44

A contract which has not yet been fully performed (fully executed).

Answer 44

Executory Contract

Question 45

A special agreement between the lender and the borrower to delay a foreclosure.

Answer 45

Forbearance

Question 46

A provision in certain legal contracts that allows for the payment of a specified sum should one of the parties be in breach of contract.

Answer 46

Liquidated Damages

Question 47

The act of either: 1) replacing an obligation to perform with a new obligation; or 2) adding an obligation to perform; or 3) replacing a party to an agreement with a new party.

Answer 47

Novation

Question 48

Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person (the “offeror”) to another person (the “offeree”), and an indication by the offeree of its acceptance of those terms.

Answer 48

Offer and Acceptance

Question 49

A right given for a consideration to purchase or lease a property upon specified terms within a specified time; if the right is not exercised the option holder is not subject to liability for damages; if exercised, the grantor of option must perform.

Answer 49

Option

Question 50

A written instrument duly signed and executed by a person which authorizes an agent to act on his/her behalf to the extent indicated in the instrument.

Answer 50

Power of Attorney

Question 51

A remedy whereby a court orders a change in a written document to reflect what it ought to have said in the first place.

Answer 51

Reformation

Question 52

The right of an individual involved in a contract to return to a state identical to that before they entered into the agreement, due to courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a material error in the contract, among other reasons.

Answer 52

Rescission

Question 53

Also known as an addendum, in general, is a writing annexed to an agreement.

Answer 53

Rider

Question 54

A contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before he owner is entitled to enter into the transaction with a third party.

Answer 54

Rights of First Refusal

Question 55

An order of a court which requires a party to perform a specific act, usually what is stated in a contract.

Answer 55

Special Performance

Question 56

State law which provides that certain contracts must be in writing in order to be enforceable at law.

Answer 56

Statute of Frauds

Question 57

A statute barring all right of action after a certain period of time from the time when a cause of action first arises.

Answer 57

Statute of Limitations

Question 58

A standard set of business laws that regulate financial contracts. The Uniform Commercial Code has been adopted by most states in the U.S. The code itself has nine separate articles. Each article deals with separate aspects of banking and loans. The UCC better enabled lenders to loan money secured by the borrower's personal property.

Answer 58

Uniform Commercial Code

Question 59

To have no force or effect; that which is unenforceable.

Answer 59

Void

Question 60

That which is capable of being adjudged void, but is not void unless action is taken to make it so.

Answer 60

Voidable

Question 61

A clause found in real estate contracts that may allow buyers to walk away from an agreed upon sale for any reason.

Answer 61

Attorney Review Clause

Question 62

The portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made.

Answer 62

Down Payment

Question 63

Setup to protect consumers from dishonest attorneys.

Answer 63

Lawyer's Fund for Client Protection

Question 64

A clause in a contract that states a mortgage must be obtained in order for the contract to be binding.

Answer 64

Mortgage Contingency Clause