Discussion: Chapter 8: The Property System

Business Law class:

“An understanding of the nature of property is imperative, because at the heart of many transactions is the acquisition, rights to possession of use, or sale of personal or real property. Clearly, these transactions are central to many businesses and the livelihoods of the people involved in business. When thinking about acquiring property, it is important to know not only whether the property is “right” for [you] or for your business but also about the rights and duties associated with acquiring it, the protections afforded to you by law as the owner of it, and how to transfer it to another party at the time of sale, lease, or licensing the right to use. Additionally, liability often attaches to property, and limiting one’s liability is at the heart of what your study of law should encourage you to do.” Page 195.

8 (SKIM AND ANALYZE) Ohlone Shopping Center Retail Lease.pdf

Instructor note: This is a sample retail lease contract that I drafted for this homework assignment. It is fairly accurate, including the numbers (with regard to how much a property along Mission Boulevard adjacent to Ohlone might lease for), in that it typifies what you might see in an actual commercial retail lease contract. But please note that the dates regarding notice may not reflect reality. This is so especially given the fact that many of these contracts are often sample forms created by the companies or their associations and are often written in favor of sellers/landlords. I drafted this lease agreement in a way that is slightly less pro-seller/pro-landlord, and I also excluded some other provisions that you might see in more involved contracts. This assignment draws upon the knowledge you gained in both Chapter 6 and Chapter 8. 

After reviewing the above PDF, imagine the following scenario. Ohlone College sold some land to a development company, for purposes of building a mixed-use shopping complex, adding to the historic Mission San Jose Town Center area. Your name is “OHLONE ALUMNI ENTREPRENEUR” and you want to set-up shop in this shopping center, located at 888 OHLONE BOULEVARD in Fremont, CA. You plan to earn money selling apparel created by artists, designers, and small businesses local to the Fremont Tri-City area. This commercial retail lease agreement was executed on Tuesday, September 3, 2019 between you and “OHLONE LANDLORD PROPERTIES.” But prior to this, you had asked your legal counsel to answer some questions you had about the negotiated lease provisions –

Assume: (1) You have no memory problems such that you very clearly remember the answers that your lawyer provided to each of your questions; and (2) You retained a competent lawyer who correctly answers your questions. With these givens, how did your lawyer answer these following questions –

1. I recall vaguely in my Business Law class that I once took at Ohlone College that leasehold interests may be created in real property. But please confirm with me. What type of tenancy is being created by this contract? And how is this type of tenancy different than the other types of tenancies that can be created?
2. Assuming the grand opening for my store occurs by Halloween, what would be the Expiration Date for this Lease Term?
3. I recall vaguely in my Business Law class that sometimes lease interests can be transferred and conveyed to a third party. Does this contract allow me do that?  
4. I recall vaguely in my Business Law class something about fee simple this or fee simple that—ownership interests that people have in property. What type of ownership interest does OHLONE LANDLORD PROPERTIES have? Complete? Or is it defeasible? I’m not a subtenant, right?
5. I recall vaguely in my Business Law class that landlords also owe different duties to different people, but I do recall distinctly that a customer would be an invitee. But does that mean that OHLONE LANDLORD PROPERTIES is always liable if one of my customers gets hurt in my store? For instance, say one of my employees, an Ohlone student, mops the floor but forgets to put one of those yellow “caution” signs notifying customers that the floor is wet and because of the super wet floor one of my customers slips and falls and injures herself and decides to sue me under the premises liability theory. The landlord would be liable too, right? (HINT: Skim the lease agreement to find the relevant contract provision.)