RE74R11: Land Contracts, Lease Options and Deeds of Trust

Approved Sept. 29, 2011

1.      Lease (10 minutes)  

a.       Purpose of course – geared to residential properties using different types of land contracts, lease options and deeds of trust

b.      a written or unwritten agreement transferring use and possession of real estate for a definite period of time

2.      Requirements of a Valid Lease (20 minutes)

a.       Define Contract - contract is either implied by an act or expressed, orally or in writing

b.      Capacity to contract

c.       Mutual agreement /valid consideration

d.      Legal objectives

e.       Signatures

f.       Description of premises

g.      Use of premises

h.      Term of lease

i.        Statue of Frauds

j.        Possession of Premises

3.      Lease Options (20 minutes)  

a.       Definition of Lease Options - clauses in a lease that give the tenant the right to purchase the property under certain conditions

b.      Options to renew

c.       Options to extend

d.      Usually runs with the land

e.       Assigning the option

f.       Right of first refusal

4.      Types of Leases (20 minutes)

a.       Types of Real Estate

1.  Office Leases

2.  Ground Leases

3.  Air Leases

4.  Proprietary Leases

5.  Residential Leases         

b.      Term of the Lease

1.  Short-Term

2.  Long-Term     

c.        Method of Rent Payment

1.  Fixed Rental

2.  Graduated

3.  Percentage

4.  Gross

5.  Net

6.  Month to Month

5.  Termination of Leases (20 minutes)

a.  Expiration

b.  Merger of the leasehold & fee estates

c.  Destruction of the property

d.  Condemnation of the property

e.  Abandonment

f.  Agreement of the parties (surrender)

g.  Illegal use

h.  Default/breach of terms & conditions

5.      Land Contract (20 minutes)

a.       Definition of Installment Sale contract - where buyer receives equitable title (right to possession) and seller retains legal title (may also be referred to as "Contract for Deed")

b.      Definition of Contract for Deed - agreement between buyer and seller for the purchase of property in which the payment of all or part of the selling price is deferred

c.       Contains names of buyer and seller

d.      Terms of payment

e.       Legal description of property

f.       Rights and obligations of both parties

g.      Signed by both parties, acknowledged and recorded

6.      Deeds in Trust (used to establish a land trust) (10 minutes)

a.       Definition of Deeds in Trust - real estate which is conveyed by a deed to a trustee

b.      Trustee has full power over trust.


Suggested Reference: The Language of Real Estate by John W. Reilly

Help Us Improve with your feedback