Unit 3 - Real Estate Instruments and Human Rights
I. Leasehold Estates
A lease is both a contract and a conveyance of a non-possessory interest in real estate. While the landlord (Lessor) holds the "Leased Fee" interest, the tenant (Lessee) holds a Leasehold Estate.
Estate for Years: A lease for a fixed period (e.g., 6 months, 1 year). It has a specific start and end date. No notice is required to terminate.
Periodic Estate: Automatically renews for successive periods (e.g., month-to-month). Notice is required to terminate.
Estate at Will: No fixed term; exists as long as both parties want it to. In NY, a 30-day notice is typically required to terminate.
Estate at Sufferance: Occurs when a tenant "holds over" after the lease expires without the landlord's consent. The tenant is a "trespasser" until the landlord accepts rent.
II. Standard Lease Provisions
Leases are governed by the Law of Contracts and must meet the same validity requirements:
Capacity to Contract: Parties must be 18+ and mentally competent.
Demising Clause: Language stating the landlord is "leasing" and the tenant is "taking" the premises.
Description of Premises: Clearly identifying the unit or address.
Term: The duration of the lease.
Consideration (Rent): The amount of rent and due date. Note: Unless the lease specifies otherwise, rent is legally due at the end of the term (in arrears), though almost all NY leases mandate payment in advance.
Writing Requirement: Under the Statute of Frauds, any lease for more than one year must be in writing to be enforceable.
Plain Language: NY law requires residential leases to be written in clear, common English (no "legalese").
III. Residential vs. Commercial Specifics
Commercial Leases:
Use Provisions: Crucial in commercial deals. "For no other purpose" restricts the tenant to one specific business type (e.g., only a flower shop), whereas "Any lawful purpose" gives the tenant broad flexibility.
Renewals: There is no statutory right to a renewal in commercial real estate; it must be negotiated in the contract.
Residential Leases & Rent Regulation:
Emergency Tenant Protection Act (ETPA): Governs rent stabilization. Most tenants in buildings with 6+ units built between 1947–1974 are entitled to automatic 1 or 2-year renewals.
Deregulation: Historically, units could be "decontrolled" if rent/income hit high thresholds (e.g., $2,000+ rent and $175,000 income). Exam Alert: The Housing Stability and Tenant Protection Act of 2019 largely eliminated luxury and vacancy decontrol in NY.
Security Deposits: Law Alert: In NY, a residential security deposit cannot exceed one month's rent. Landlords must return the deposit (minus lawful deductions) within 14 days of the tenant vacating.
Interest: If the building has 6 or more units, the landlord must place the deposit in an interest-bearing account. The landlord may keep 1% of the total deposit as an administrative fee; the rest belongs to the tenant.
IV. Rights and Obligations
Warranty of Habitability: An unwritten guarantee in every residential lease that the premises are safe and fit for human habitation. A tenant cannot waive this right.
Assignment vs. Subletting:
Assignment: The tenant transfers the entire remaining lease term to a third party. The new tenant is primarily liable.
Subletting: The tenant transfers part of the term or space. The original tenant remains liable to the landlord.
RPL 226-b:I. Leasehold Estates
A lease is both a contract and a conveyance of a non-possessory interest in real estate. While the landlord (Lessor) holds the "Leased Fee" interest, the tenant (Lessee) holds a Leasehold Estate.
Estate for Years: A lease for a fixed period (e.g., 6 months, 1 year). It has a specific start and end date. No notice is required to terminate.
Periodic Estate: Automatically renews for successive periods (e.g., month-to-month). Notice is required to terminate.
Estate at Will: No fixed term; exists as long as both parties want it to. In NY, a 30-day notice is typically required to terminate.
Estate at Sufferance: Occurs when a tenant "holds over" after the lease expires without the landlord's consent. The tenant is a "trespasser" until the landlord accepts rent.
II. Standard Lease Provisions
Leases are governed by the Law of Contracts and must meet the same validity requirements:
Capacity to Contract: Parties must be 18+ and mentally competent.
Demising Clause: Language stating the landlord is "leasing" and the tenant is "taking" the premises.
Description of Premises: Clearly identifying the unit or address.
Term: The duration of the lease.
Consideration (Rent): The amount of rent and due date. Note: Unless the lease specifies otherwise, rent is legally due at the end of the term (in arrears), though almost all NY leases mandate payment in advance.
Writing Requirement: Under the Statute of Frauds, any lease for more than one year must be in writing to be enforceable.
Plain Language: NY law requires residential leases to be written in clear, common English (no "legalese").
III. Residential vs. Commercial Specifics
Commercial Leases:
Use Provisions: Crucial in commercial deals. "For no other purpose" restricts the tenant to one specific business type (e.g., only a flower shop), whereas "Any lawful purpose" gives the tenant broad flexibility.
Renewals: There is no statutory right to a renewal in commercial real estate; it must be negotiated in the contract.
Residential Leases & Rent Regulation:
Emergency Tenant Protection Act (ETPA): Governs rent stabilization. Most tenants in buildings with 6+ units built between 1947–1974 are entitled to automatic 1 or 2-year renewals.
Deregulation: Historically, units could be "decontrolled" if rent/income hit high thresholds (e.g., $2,000+ rent and $175,000 income). Exam Alert: The Housing Stability and Tenant Protection Act of 2019 largely eliminated luxury and vacancy decontrol in NY.
Security Deposits: Law Alert: In NY, a residential security deposit cannot exceed one month's rent. Landlords must return the deposit (minus lawful deductions) within 14 days of the tenant vacating.
+1Interest: If the building has 6 or more units, the landlord must place the deposit in an interest-bearing account. The landlord may keep 1% of the total deposit as an administrative fee; the rest belongs to the tenant.
+1
IV. Rights and Obligations
Warranty of Habitability: An unwritten guarantee in every residential lease that the premises are safe and fit for human habitation. A tenant cannot waive this right.
Assignment vs. Subletting:
Assignment: The tenant transfers the entire remaining lease term to a third party. The new tenant is primarily liable.
Subletting: The tenant transfers part of the term or space. The original tenant remains liable to the landlord.
RPL 226-b: In a building with 4+ units, a landlord cannot unreasonably withhold consent for a sublet request.
Apartment Sharing: NY "Roommate Law" allows a tenant to have one additional unrelated person (and their dependent children) live with them, regardless of what the lease says.
⚠️ EXAM ALERT: QUICK FACTS
The "One Year" Threshold: A verbal lease for exactly one year is valid in NY. If it is for one year and one day, it MUST be in writing.
Security Deposit Cap: A landlord can never ask for "first, last, and security" in NY anymore. They are limited to the first month's rent plus one month's security.
Quiet Enjoyment: This is a landlord's covenant (promise) that the tenant will not be disturbed in their possession by the landlord or anyone with a superior title.
Constructive Eviction: If a landlord fails to provide essential services (like heat or water) making the unit uninhabitable, the tenant may be forced to move out and stop paying rent. This is a legal defense for the tenant.
KEY TERMS
Actual Eviction: The legal process by which a lessor (landlord) physically removes a lessee (tenant) from the premises for a breach of the lease terms, such as non-payment of rent.
Assignment: The total transfer of all remaining rights and interests in a lease from the original tenant to a third party.
Constructive Eviction: A situation where a tenant is forced to vacate the premises because the landlord has failed to provide essential services or maintain the property in a habitable condition, making it unusable.
Covenant: A written agreement or promise between parties in a lease or deed to perform or refrain from certain acts.
Graduated Lease: A lease that provides for specific rent increases at set future dates.
Gross Lease: A lease where the tenant pays a fixed rent and the landlord is responsible for all property expenses, such as taxes, insurance, and maintenance.
Ground Lease: Also known as a Land Lease, this is a lease of land only, usually for a long term, on which the tenant often constructs their own building.
Holdover Tenant: A tenant who remains in possession of the leased premises after their legal right to occupy the property has expired.
Implied Lease: A lease created by the actions and conduct of the parties rather than by a written or oral agreement.
Index Lease: A lease that allows for rent adjustments based on changes in a specific public economic index, such as the Consumer Price Index (CPI).
Leasehold Estate: A tenant's right to occupy and use real estate for a specified term; it is considered personal property.
Lessee / Lessor: The Lessor is the landlord (the property owner); the Lessee is the tenant.
Option to Renew: A provision in a lease that gives the tenant the right to extend the lease for an additional period under specified terms.
Percentage Lease: A lease commonly used in retail where the rent is based on a minimum fixed amount plus a percentage of the tenant's gross sales.
Periodic Lease: A leasehold interest that continues for successive intervals (e.g., month-to-month) until one party gives proper notice to terminate.
Proprietary Lease: A unique lease used in cooperative (co-op) ownership, where the shareholder in the corporation is granted the right to occupy a specific unit.
Quiet Enjoyment: A covenant in a lease that guarantees the tenant will not be disturbed in their possession of the property by the landlord or anyone claiming a superior title.
Security Deposit: A sum of money paid by the tenant to the landlord at the start of a lease to ensure the tenant fulfills their obligations and to cover any potential damages beyond normal wear and tear.
Sublease: A transfer of some, but not all, of a tenant's rights to a third party; the original tenant remains primarily liable to the landlord.
Triple Net Lease: A lease where the tenant pays a base rent plus nearly all property expenses, specifically including real estate taxes, insurance, and maintenance costs.
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