Lecture 7
Contracts, Deeds,
and Leases
Lecture 7
Deeds
Title and Deeds
Title: “Proof of Ownership”
Deed: An Instrument of Conveyance
–
Merchantable Title: Attorney abstracts and opines
conveyance histories
Deeds
TWO PARTIES TO A DEED:
“Grantor”: Owner conveying (selling or giving) right,
interest, or title to another party
“Grantee”: Receives right, interest, or title from Grantor
Deeds: Validity Requirements

Grantor must meet age and mental capacities

Grantor must be identified with certainty

Grantor’s signature required

Consideration required

Contain words of conveyance

Legal description

Signature requirements

Deed must be delivered from Grantor to Grantee
Deeds: Warranty Deeds
Grantor conveys ALL property rights to Grantee.

Seizin: Right to Convey

Quiet Enjoyment: Grantee not to be bothered with
subsequent claims of ownership

Against Encumbrances: Other than specified
easements and other encumbrances, Grantor
discloses all known
Deeds: Special Warranty Deeds
Special Warranty Deed covers only the period AFTER the Grantor
assumed ownership.
Deeds: Non-Warranty Deeds

Quitclaim Deed
–

Grantor gives up rights, interests, and title held at
transfer
Judicial Deed
–
Given by a court following judicial proceedings
Deeds:
Recording After Conveyance
Recording: Conveyance instruments become Public
Records.
- Constructive Notice of Ownership
- Northeast Fla: $10.00 for first page, $8.50 for add’l pages
Documentary Stamps: State Revenue Department taxes
on conveyance of title
- Florida: $0.70 per each $100 of the SALE PRICE
Example: $100,000 sales price = $100,000 * .007 =
$700.00 of Stamps
Lecture 7
Title &
Title Insurance
Evidence of Clear (Marketable) Title

Abstract and Attorney’s Opinion

Certificate of Title

Title Insurance
Title Insurance
TWO SIGNIFICANT FORMS:
Owner’s Standard: Insures rights of new owner
Mortgagee’s Title Policy: Insures owner up to amount of mortgage
debt
ITEMS TYPICALLY INSURED:
Duress in execution of Instruments
Marital rights of spouse reported incorrectly
Undisclosed divorce
False representation of true owner
Forged documents
Deeds written by Grantors who were minors, aliens, or incompetent
Lecture 7
Contracts
Types of Contracts

Valid, Voidable, Void, Unenforceable

Bilateral, Unilateral
Types of Contracts
Valid: Fulfills all legal requirements imposed by law, and therefore
enforced by courts of law
Voidable: Contract is valid, but one party can exercise right to avoid
or set aside contracted obligations
Unenforceable: Contract is valid, but not recognized by courts if legal
action is sought in courts
Void: Contract is NOT valid, and not recognized by courts of law
Types of Contracts
Bilateral: Agreement made between two or more people
1.
2.
3.
One party makes an offer (promise) to second party
Second party accepts
Bilateral contract formed
Unilateral: Offer (promise) made by one party to another
1.
One party makes an offer (promise) to a second party, and second
party receives the benefit of the promise contingent upon the
performance of the offer (promise)
Real Estate Contracts:
Real Estate Listing Agreements:
Bilateral
Unilateral
Contracts: Requirements for
Validity and Enforceability

Agreement (Offer and Acceptance)

Consideration

Competent Parties

Reality of Consent

Legality of Purpose

Necessity of Writing in Certain Instances
Contracts: Requirements for
Validity and Enforceability
AN AGREEMENT
Offer: Initial step in the formation of a contract
1.
2.
3.
4.
Definite and Certain
Complete
Communicated to the Seller
Intended to create legal obligation between two parties
Acceptance: Indication of willingness to be bound by terms of an
offer
1.
2.
3.
Made only by persons to whom offer was made
Unconditional and identical to terms of the offer
Communicated to the offeror
Discharge, Nonperformance,
Breach of Contract
Discharge: Complete performance by both parties
Nonperformance: One party legally excused from a
binding contract
Breach of Contract: Failure by a party to perform
contracted obligations
Liquidated damages, nominal damages, Specific Performance
Lecture 7
The Lease
Leases
LEASE: Written document in which the rights to use and
occupancy of land or structures are transferred by the
owner (Landlord) to another for a specified period of time
in return for a specified rent
Parties to a Lease
TENANT: One who holds/possesses real property;
commonly, a person who occupies and uses the property
of another under a lease (lessee)
LANDLORD: The owner of real estate that is leased to
others
Rights of Tenancy
Fee-Simple/
Freehold Interest
Non-Freehold/
Less-Than Freehold
Use
Use
Exclusion
Exclusion
Possession
Possession
Disposition
Disposition
Non-Freehold Interests
LEASED-FEE INTEREST: Ownership interest held by a
Landlord with the right of use and occupancy conveyed
by lease to others
LEASEHOLD INTEREST: Rights to use and occupy real
estate for a stated term and under certain conditions;
conveyed by a lease
Leased-Fee v. Leasehold
Leased-Fee
Leasehold
Rights Conveyed By Lease
Use
Exclusion
Possession
Disposition
Use
Exclusion
Possession
Contract Rent
Positive and Negative
Leasehold Interests
Negative Leasehold
Positive Leasehold
CONTRACT RENT
CONTRACT RENT
Market Rent
Subletting
SUBLEASE: An agreement in which the lessee in a
prior lease conveys the right of use and
occupancy of a property to another
SANDWICH LEASE: A lease in which an
intermediate, or sandwich, leaseholder is the
lessee of one party and the lessor of another.
Subletting
Leased-Fee
Leasehold
Sandwich
Lease
Use
Exclusion
Possession
Disposition
Sub-Leasehold
Use
Exclusion
Possession
Use
Exclusion
Possession
Contract
Rent
Contract
Rent
Characteristics of
Commercial Leases

Agreement and Consideration
–
–
–

“Meeting of the Minds”
Owner sets asking price, and makes proposal to tenant
Tenant accepts, and lease is commenced
Common Lease Clauses
–
–
–
–
–
–
Fixtures Clause
Tenant Improvements Clause
Hours-Of-Business Clause
Use Clause
Signage Clause
Condemnation Clause
Commercial Rental Structures

Gross Lease
–
–

Landlord pays for all expenses
Expense Stops
Net Lease
–
–
Tenant pays for “pro-rata” share of determined expenses
Triple-Net (NNN): Tenant pays for pro-rata share of Common
Area Maintenance (CAM), Ad Valorem Taxes, Hazard
Insurance
Commercial Rental Structures

Percentage Rent (Overage Rent)
–
–
–

Portion of Tenant’s rent based on business income
Fixed Rental Portion + Overage Portion
Recapture Clause (helps hedge owner risk of tenant’s poor
business performance)
Escalated Rents
–
–
Flat rent amount over a set period, increases periodically
thereafter
Escalators contracted or based on consumer indices
Examples of Rental Structures
1.
Tenant pays $50,000, and Landlord/Owner pays all operating
expenses.
2.
Tenant pays $30,000 annually, PLUS 2% of all retail sales over
$750,000. The store’s gross sales were $900,000.
3.
Tenant pays $10,000 annually plus its share of hazard
insurance, ad valorem taxes, and CAM totaling $30,000 per
year.
4.
Tenant pays $24,000 annually for the first year, and the Landlord
pays all operating expenses. In years 2 through 6, the rent
increases by an amount equal to the respective CPI, or 3.5%.