Deck 10: Commercial Leases

Question 1

Commercial leases need not be in writing to be enforceable.

Answer 1

True

Question 2

There is no obligation for a commercial tenant to conduct business on leased commercial property.

Answer 2

False

Question 3

There is no implied warranty of habitability in commercial leases.

Answer 3

True

Question 4

A triple-net clause refers to a percentage of gross sales rental payment.

Question 5

Most shopping center tenants pay a fixed rent.

Question 6

A CPI clause allows rental increases based on an external scale.

Question 7

Rent increases can be incorporated into the original lease.

Question 8

Commercial tenants are usually responsible for decorating their units.

Question 9

Trade fixtures remain the property of the landlord.

Question 10

Hours of operation are assumed in commercial leases.

Question 11

Commercial landlords are generally responsible for maintenance of common areas.

Question 12

Commercial tenants are liable for injuries occurring within their premises.

Question 13

The Americans with Disabilities Act's requirements for access apply only to tenants, not landlords.

Question 14

The nature and role of anchor tenants is changing because of internet sales.

Question 15

Landlords in commercial properties are not liable for damages from third party criminal activity.

Question 16

Assignment permission clauses in commercial leases are invalid.

Question 17

Clauses that prohibit the leasing of center space to competitors are anti-competitive and violative of the Sherman Act.

Question 18

A percentage of gross sales rent clause includes all revenues unless specified otherwise.

Question 19

Requiring a commercial tenant to pay maintenance fees for common areas is void as a penalty.

Question 20

Most states readily permit assignment of commercial leases.

Question 21

Anchor tenants usually pay less rent than other tenants.

Question 22

Commercial properties are exempt from ADA.

Question 23

A lease of yet-to-be-constructed property is void.

Question 24

Some courts have implied a duty of the part of commercial tenants to operate their businesses.

Question 25

Requiring a commercial landlord to abide by a non-compete clause in leasing properties violates federal antitrust laws.

Question 26

Noncompete clauses must be reasonable in scope to be valid.

Question 27

Computation of gross sales in leases is often a subject of litigation.

Question 28

Landlords control the hours of operation for common areas.

Question 29

Landlords of commercial properties are liable for harm caused by criminal activity when there is a pattern of criminal activity.

Question 30

A commercial tenant cannot demand a noncompete clause.

Question 31

A commercial lease for a building that is not yet constructed is still valid.

Question 32

A commercial tenant has the right to terminate a lease if construction or remodeling limits access to its premises.

Question 33

An increase in the landlord's taxes is generally a specific happenings event that permits the landlord to raise tenants' rent.

Question 34

CAM is another term for operating expense.

Question 35

Security deposits in commercial leases are limited by statute.

Question 36

Trade fixtures in commercial leases generally stay with the tenant and not the landlord's property.

Question 37

Landlords are generally liable for the loss of profits that their construction projects cause to their tenants.

Question 38

A landlord can be held liable for injuries to tenants from criminal activity by third parties if the landlord is aware of criminal activity near the tenant's premises.

Question 39

Commercial lease landlords have similar rights of access to the leased premises that residential landlords have.

Question 40

Protection of an anchor tenant's exclusive sales rights is an antitrust violation.

Question 41

A force majeure clause cannot list specific events that will excuse tenant performance.

Question 42

CAMs for commercial tenants are generally computed as a ratio of tenant space to shopping center space.

Question 43

Assignment of leases by commercial tenants generally requires approval of the landlord.

Question 44

Tenants need not conduct due diligence for ADA issues prior to signing a lease because ADA compliance is the landlord's responsibility.

Question 45

There are no limits in security deposits in commercial leases.

Question 46

Landlords can be held liable for the trademark infringement of their tenants.

Question 47

Which of the following statements is true regarding covenants in shopping center leases?

A) They violate the Sherman Act
B) They are generally unenforceable
C) They are void as against public policy
D) They are decided on a case-by-case basis

Question 48

Which of the following is true of shopping center leases?

A) There is an implied warranty of habitability
B) The tenant usually bears the cost of improvements
C) Common maintenance fees are illegal
D) Can no longer include CAM clauses

Question 49

Which of the following cannot be used to preserve the mix of a shopping center?

A) Covenants not to compete
B) Restrictions on types of assignees
C) Eviction of a non?breaching tenant to lure a better tenant
D) Restrictions on types of products sold by certain tenants

Question 50

Constructive eviction:

A) Does not exist in commercial leases.
B) Is available to a limited extent in commercial leases
C) Can exist only in those commercial leases in which the landlord offers some warranties in the lease.
D) Results from the presence of the implied warranty of habitability in commercial leases.

Question 51

The Americans with Disabilities Act access provisions:

A) Do not apply to commercial properties.
B) Do not apply to commercial tenants.
C) Must be absorbed by the landlord.
D) Apply to all commercial properties as places of accommodation.

Question 52

Commercial leases:

A) Must be in writing to be enforceable.
B) Cannot be oral agreements.
C) Are required by state laws to be in writing if they are longer than one year.
D) Are not covered by the statute of frauds.

Question 53

Commercial leases in existence before the property is constructed:

A) Are valid leases.
B) Are void.
C) Are voidable.
D) Need to be honored by the tenants.

Question 54

Which of the following should not be covered in a commercial lease agreement?

A) Lease term
B) Maintenance issues
C) Rent issues
D) First Amendment requirements to present all protestors views

Question 55

The Americans with Disabilities Act does not apply to:

A) Banks.
B) Shopping centers.
C) Medical offices.
D) Plaintiffs who are inauthentic in their litigation against commercial properties.

Question 56

In the absence of an agreement, a commercial/retail tenant leasing premises that are under construction:

A) Need not pay rent.
B) Must continue paying rent if access still exists.
C) Can cease paying rent if business falls off.
D) Cannot recover for lost profits during the shut-down.

Question 57

Anchor tenants:

A) Usually pay less rent than other tenants.
B) Are responsible for the maintenance of common areas.
C) Are increasing as a component of shopping center mixes.
D) Do not pay CAM as part of their leases.

Question 58

Suggs, Inc., owns and operates Parkland Mall. It has leased a food court space to One Potato Two, a fast food franchise that sells baked potatoes. One Potato Two insists on a clause that prohibits Suggs from leasing another food court space to Great Steak and Potato and Spuds, its two major competitors. The clause is:

A) Valid and enforceable.
B) Void because it is anticompetitive.
C) Void because Suggs did not suggest it.
D) Voidable at Suggs' option.

Question 59

The Implied Warranty of Habitability in commercial leases:

A) Is very limited.
B) Is the same as in residential leases.
C) Is void in most states.
D) Is part of the Uniform Commercial Landlord Tenant Act.

Question 60

Fred Evans was robbed and beaten as he tried to get into his car which was parked in the garage next to his office building. The garage is owned by the landlord for his building and operated by Park America. Fred has noted cots in the remote corners of the garage and shopping carts filled with clothes and cans. Tenants have been approached in the garage by vagrants seeking money. Fred:

A)Has no rights of recovery for his injuries from the landlord or Park America.
B)Can probably recover from both his landlord and Park America.
C)Can probably recover from Park America but not his landlord.
D)Can probably recover from his landlord but not Park America.

Question 61

The implied duty of operation:

A)Requires a landlord to lease all spaces before a tenant is required to pay rent on net profit clauses.
B)Does not apply in shopping malls.
C)Requires a tenant to open leased space for business.
D)Violates federal antitrust laws.

Question 62

In order to have rent increase with changing economic conditions, the landlord should include:

A)A CAM clause.
B)A CPI clause.
C)A triple net-net-net clause.
D)A percentage net clause.

Question 63

A commercial tenant's display counters are bolted to the floor of his leased store. The counters:

A)Are trade fixtures and belong to the tenant.
B)Are trade fixtures and belong to the landlord.
C)Are personal property belonging to the landlord.
D)Cannot be removed when the lease terminates.

Question 64

Who is responsible for compliance with the Americans With Disabilities Act in commercial properties?

A) Landlords
B) Patrons who see ADA violations
C) Local housing authorities
D) Federal authorities

Question 65

Long's Drugs is the anchor tenant in Oak Hill Shopping Center. Under its lease terms, Oak Hill is prohibited from leasing any space in the Center to another drug store. The clause:

A) Is invalid because it is anticompetitive.
B) Is invalid because it is too broad.
C) Is valid.
D) Is a violation of the Sherman Act.

Question 66

Which of the following apply to both residential and commercial leases?

A) ADA
B) Warranty of habitability
C) Antitrust violations for tenant restrictions.
D) Assignments cannot be prohibited.

Question 67

Croc Corner leases a small store located in the Cumberland Shopping Mall. Croc Corner's owner has noticed a leak from the ceiling just above the entrance to his shop. There is a constant drip that produces either a puddle or a small bucket full of water just outside the Croc Corner door. Croc Corner's owner has notified the mall leasing agent as well as the limited partnership that owns the mall. "That's your responsibility, not ours," is the response of both the agent and owner. Which of the following statements is correct?

A)If a customer slips and falls on the puddle outside Croc Corner, the owners of the mall are liable for the customer's injuries.
B)If a customer slips and falls on the puddle, both Croc Corner and Cumberland Mall are liable for the injury.
C)Only the building contractor who installed the faulty roof would be liable to the customer.
D)There is no liability because the customer is not an invitee.

Question 68

Which of the following will reduce the tenant's rent when common area expenses are determined?

A)If the share of common area expenses is based on rentable areas
B)If the share of common area expenses is based on rented areas
C)If the share of common area expenses is based on the number of tenants
D)If the share of common area expenses is based on percentage of revenue generated

Question 69

What are mall rats?

A) Rodents and other vermin that have not been removed by the landlord
B) A violation of the warranty of habitability commercial landlords give
C) Teens who frequent malls and often harass other patrons
D) Rats that frequent commercial properties with food establishments.

Question 70

Which of the following is not a required ADA accommodation?

A) Allowing guide dogs
B) Installation of elevators
C) Restrooms wide enough for a wheelchair
D) Sign language interpreters

Question 71

Drake Mall is located in an area that has a high crime rate. The mall parking lot has excellent lighting and the owners of the mall provide 24-hour security for the facility, both inside the facility and outside in the parking lot. A mall patron was attacked, robbed, and savagely beaten at 8:45 p.m. on a Friday evening. Mall security had just been in the parking area where the patron was accosted two minutes before the attack. Which of the following best describes the extent of the mall owners' liability for the patron's injuries?

A)There is never liability from the criminal acts of third parties.
B)There is liability if a patron had been attacked in that area before.
C)There is no liability if the security steps Drake Mall has taken are reasonable and prudent.
D)There is liability because commercial property owners are insurers against crimes to their invitees.

Question 72

Sachi Salon is a beauty parlor with complete hair and nail services. Near the front counter of the salon, the owner of Sachi leases a small space where Belinda's Bags operates. Belinda carries a full line of Gucci, Prada, and Chanel bags. However, none of the bags costs over $175. Sachi's owner has said many times, "I got an $1100 Chanel bag for $110. Somebody's selling knock-offs." Which of the following is correct?

A)Because Sachi's owner is aware of the infringement of the trademarked goods, it can be held liable as a landlord for that infringement.
B)Sachi is not required to police the conduct of its tenants.
C)Sachi can be held liable for infringement only if it shared in profits from Belinda's sales.
D)Sachi need not inquire of Belinda whether the bags are authentic.

Question 73

Anchor tenants:

A)Tend to pay more rent per square foot than the other smaller tenants.
B)Tend to pay less per square foot than the other tenants.
C)Are liable to the smaller tenants for damages if they fail to open their store in a center.
D)Can terminate their leases at any time without having to pay damages.

Question 74

Ben Young leased a store to operate his pizzeria. During his grand opening, water began leaking from the ceiling into Young's pizzeria. Ben's landlord did not respond to his calls or texts about the problem. He had to shut down for two days because the water was dripping onto the food and he feared that the health department would close him down even though he was trying to stop the water drips. Which of the following best describes Ben's rights as a tenant?

A)Ben could undertake an emergency repair of the premises and then collect the costs from the landlord.
B)In a commercial lease, Ben's landlord has no responsibility for the condition of the premises.
C)In a commercial lease, Ben must bear the cost of repairs.
D)Dripping water is not an issue of habitability.

Question 75

What types of issues are covered in a percentage rent clause in a commercial lease?

A)The percentage of lost profits the landlord owes to the tenant
B)What types of sales are included for purposes of determining gross receipts
C)The deduction for CAM
D)An agreement to share customer lists with the landlord

Question 76

George Fiskar has been operating a hat store in the Cumberland Mall. George built the racks that hold his hats. The racks are floor-to-ceiling design and George custom-fit them to the curvature of the store walls. George's business has done well and he needs to move to a larger location. At the end of his lease, the landlord notified George that the hat racks had to stay because they were custom-made. Which of the following is correct?

A)The landlord is correct, the racks must stay.
B)The landlord is incorrect because all attachments in a commercial lease belong to the landlord.
C)The landlord is incorrect because the hat racks are trade fixtures and belong to the tenant.
D)The landlord is correct because without a lease provision the racks stay.

Question 77

When is a landlord liable for injuries to tenants that result from criminal activity by third parties?

A)The landlord is always liable for such injuries
B)The landlord is never liable for injuries that result from criminal activity by third parties
C)The landlord is liable for criminal injuries to tenants by third parties when there has been criminal activity before and the landlord has not taken steps to prevent it
D)The landlord is liable for criminal injuries to tenants by third parties when the injuries are only related to property

Question 78

Walmart entered into a lease agreement for the anchor space in a shopping center and the lease included the following clause:
"Neither Lessor nor any affiliate or related party shall, without Lessee's prior written consent, own, operate or grant any lease or permit any assignment or sublease for a store (or any portion of a store) in the Shopping Center or any of Lessor's real estate located within 1,500 yards of the Shopping Center which permits a tenant under such lease to sell or offer for sale groceries, meats, poultry, seafood, dairy products, fruits, vegetables or baked goods, provided these restrictions shall not be deemed to prohibit a restaurant serving prepared food."
The landlord leased a space to Boston Market, which sells chicken, salads, and other prepared foods for a type of take-out meal that seems to be home-cooked. Which of the following statements is true?

A) The clause in the lease is anticompetitive and cannot be enforced.
B) The clause in the lease could be enforced if it were narrower in scope.
C) Boston Markets fits within the exception and the landlord can lease to them without violating the clause.
D) The clause in the lease is void for unconscionability.

Question 79

Joe's Barbecue negotiated a lease for space in a strip mall with Diamond Enterprises, the owner of the strip mall. During negotiations for the lease, the agent for Diamond told Joe that the crime rate in the area was very low and that the strip mall had not experienced any criminal activity. The agent also told Joe that the strip mall had surveillance cameras that were not readily visible, but that were running 24 hours per day.
Two months after Joe opened for business, assailants entered his restaurant, robbed his customers, and shot Joe. Joe filed suit against Diamond because he learned that there were no surveillance cameras and that two other stores in the shopping center had experienced similar incidents. Diamond has an exculpatory clause in its lease that reads:
shareholders, directors, officers, agents, employees, and staff of Diamond shall not be held liable for any damage or loss of property or injury from any cause whatsoever, including, but not limited to, fire, theft . . .

-The exculpatory clause in the lease is:

A)Void.
B)Voidable.
C)Enforceable.
D)Too narrow to be valid.

Question 80

Joe's Barbecue negotiated a lease for space in a strip mall with Diamond Enterprises, the owner of the strip mall. During negotiations for the lease, the agent for Diamond told Joe that the crime rate in the area was very low and that the strip mall had not experienced any criminal activity. The agent also told Joe that the strip mall had surveillance cameras that were not readily visible, but that were running 24 hours per day.
Two months after Joe opened for business, assailants entered his restaurant, robbed his customers, and shot Joe. Joe filed suit against Diamond because he learned that there were no surveillance cameras and that two other stores in the shopping center had experienced similar incidents. Diamond has an exculpatory clause in its lease that reads:
shareholders, directors, officers, agents, employees, and staff of Diamond shall not be held liable for any damage or loss of property or injury from any cause whatsoever, including, but not limited to, fire, theft . . .

-With respect to Joe's injury and damages. he can:

A) Recover from Diamond because of misrepresentation.
B) Not recover from Diamond because of the exculpatory clause.
C) Recover because the exculpatory clause is void.
D) Not recover because commercials landlords are not liable for criminal activity.