Now that everyone is back to school after spring break, it’s time for a pop quiz!  Below is a list of questions based on cases involving real estate law and the general positions taken by landlords and tenants during lease negotiations.  For those that are interested in learning more about the business and law of real estate leases, look out for Nadav Ravid’s course at UCLA titled “Understanding and Negotiating Real Estate Leases” (details to follow).

Quiz:

1. Controllable Expenses often exclude the following three major categories: _______, _______, and _______.
2. True or False: A landlord is better off with a short lease form because the laws favor landlords anyway, so if there is ever a dispute between the landlord and the tenant over an issue that is not covered by the lease, the landlord will likely prevail.
3. True or False: A tenant is better off negotiating a simple and short LOI versus wasting time negotiating deal terms because leases drafted by landlords are generally even-balanced.
4. True or False: A lease that provides that the rent will not reduce if the size of the premises is smaller than the amount stated in the lease is enforceable, even if there is evidence that the landlord knew the size was smaller.
5. True or False: An assignee is bound by all of the terms of the lease (including the term) if it occupies the premises and starts paying rent regardless if the assignee executes an assumption agreement.
6. True or False: A landlord may be able to force a tenant to stay open for business if a lease contains a continuous operation clause even if the tenant can show that staying open will result in substantial damages to the tenant.
7. True or False: A landlord that allows its property to be used for the sale of marijuana does not have any risk of penalties imposed by the federal government (including seizure of a landlord’s property), if the property is located in a state that has legalized the sale of marijuana.
8. True or False: If a California lease requires a tenant to exercise an extension option by April 30, 2019, but the tenant does not exercise the option until May 5, 2019, the tenant will still be entitled to the option term as long as the tenant can show that the landlord did not suffer harm by the delay.
9. True or False: It is common for New York landlords to try to prohibit a tenant from suing the landlord for monetary damages in case of a landlord default.
10. A tenant that pays percentage rent on the gross sales made from the premises will want to exclude from its calculation the following categories: _______, _______, and _______.

Answers:

1. Taxes, insurance, and utilities
2. False
3. False
4. False
5. False
6. True
7. False
8. False
9. True
10. Sales to employees, credit card fees, and sales taxes (note: these are just a few of many other categories).