Chapter 7 – Real Estate Leases
I. Definition
A. A lease is a contract transferring rights of use and possession in exchange for
rental payments. As a contract, it must have the essential elements of a contract.
Typically, leases are put in writing, although some short-term residential leases
may not be.
B. Contents
1. Identify lessor (landlord) and lessee (tenant)
2. Identify property
3. Conveyance of right to use
4. Term of lease
5. Amount of rent and payment details
6. Duties and obligations of both parties
7. Signatures
C. Type of Estates in Land – Non-ownership Interests (Leasehold Estates)
i. Estate for Years (or Estate for a Fixed Period) – don’t let the name fool
you, this doesn’t have to be for any number of years. It could very well be
for shorter than a year. The key factor here is that there is a specified
starting and ending date for the tenancy.
ii. Estate from Period-to-Period (or Periodic Estate or Periodic Tenancy) –
the key factor here is that there is a specified starting date, but no specified
ending date. This is often accomplished through the use of automatic
renewal clauses, which require the tenant to state their intent not to renew
the lease by some specified amount of time prior to lease expiration (like
30 days, for example). If the tenant does not state their intent to let the
lease expire, then it is automatically renewed for a like period, usually at
current market rent (although that requires an additional clause).
iii. Estate at Will – this is a type of tenancy in which the tenant and landlord
agree to terms (including rent) that allow the tenant to stay in the property,
often without a written agreement. This type of tenancy can be ended at
any time by either party with “sufficient” notice. “Sufficient” is usually
defined to mean one rental period, so if you pay rent on a weekly basis,
then either party only needs to give a week’s notice to end the agreement.
This is often called a type of holdover tenancy, because the tenant and
landlord usually had an existing lease in place that expired before the
creation of this type of tenancy. Hence, the tenant is a holdover from a
prior lease.
iv. Estate at Sufferance – in this type of tenancy, the tenant does not have
permission to possess the property and does not pay rent. This usually
happens when a lease expires or a tenant is evicted and the tenant doesn’t
leave the property. Obviously, then, this is another type of holdover
tenancy, but not one the landlord agrees to like an estate at will.
