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