California Real Estate Salesperson Exam Practice - Question 58

Question

Which of the following is not a requisite for creation of an undeclared leasehold agreement?

Selections

A. Amount of rental payments

B. That rent payments be made in advance

C. Length of time the lease will continue

D. Description of the property

---

Answer: B

---

5 Keys Summary

• A valid leasehold agreement requires several essential elements: competent parties, mutual consent, a property description, the rent amount, and the term (length of time) the lease will continue.

• The lease agreement must define the rental amount and the expected due dates, but it does not specifically mandate that payments must be made in advance for the leasehold to exist.

• If the lease agreement fails to specify otherwise, rental payments are, by default under law, due at the end of each successive holding period or term, not necessarily in advance.

• Because the agreement only needs to define the time and manner of payment, the requirement that rent payments be made in advance (Option B) is not an essential requisite for the creation or validity of the leasehold agreement itself.

• Essential requirements that are requisite include the amount of rental payments, the length of time the lease will continue, and a description of the property.

Explanations

For a leasehold agreement to be valid, whether written or a verbal "undeclared" one (for terms less than a year), several elements are considered essential requisites:

• Amount of rental payments must be clearly stated and mutually agreed upon by the parties.
• Length of time the lease will continue (the term of the lease) is a fundamental aspect, defining the duration of the tenant's possession. This could be a definite period (estate for years) or an indefinite, recurring period (periodic tenancy).
• Description of the property (a proper legal description) is required to uniquely identify the subject property.

While rent payments are normally made in advance at the beginning of the lease period, this is a common practice for how rent is handled, not an essential requisite for the creation or validity of the leasehold agreement itself. The lease agreement must define the "rent amount and expected due dates," but not specifically mandate that these payments must be made in advance for the lease to exist.

Concepts Definitions

Leasehold Estate (Nonfreehold Estate): An interest in real property that permits possession for a specified time period, held by a tenant. It is created by a lease agreement.

Lessor/Landlord: The owner of the property who grants the lease to a tenant.

Lessee/Tenant: The party who receives the right of possession and use of the property under a lease agreement.

Lease Agreement: A contract between a tenant and a landlord that grants the tenant legal tenancy rights. For a valid lease, it typically requires named competent parties, consideration (rent amount), the term of the lease, and a legal description of the property. Leases for more than one year must be in writing.

Rent Amount: The agreed-upon monetary consideration exchanged for the use of the property. This amount must be specified in the lease.

Term of the Lease: The specific duration or period for which the lease agreement is in effect. This determines the type of leasehold interest (e.g., estate for years, periodic tenancy).

Property Description (Legal Description): A clear and unique identification of the parcel of land involved in the transaction.