California Real Estate Practice Exam

A property was leased to a lessee for a two-year period, with monthly lease payments to be $800. The lessor collected the first and last month payments. This agreement would most likely not include which of the following statements?

1. Complaince with local laws

2. Condemnation provisions

3. Escalator clause

4. Third-party liability clause

The correct answer is: Complaince with local laws

In a lease agreement, various provisions are typically included to protect both the lessor and the lessee, ensuring compliance, clarity, and mutual obligations. While the lease should inherently comply with local laws, a formal statement specifically detailing this may not be necessary in a straightforward leasing arrangement, especially for a residential lease of limited duration, such as two years. In the context of lease agreements, a condemnation provision, an escalator clause, and a third-party liability clause each serve specific purposes and may be included depending on the property type and the negotiation between parties. A condemnation provision addresses what happens if the property is taken by governmental action, which is important for long-term leases. An escalator clause allows for rent adjustments over time, possibly due to inflation, and a third-party liability clause ensures that liability for injuries or damages is clearly defined, protecting both parties. Since the question pertains specifically to what the agreement would most likely not include as a formal statement, compliance with local laws tends to be an underlying assumption rather than a highlighted clause in such a lease. Thus, it's reasonable for the lease agreement to lack a specific mention of compliance with local laws, making this the most unlikely inclusion in the lease terms presented.