Commercial Lease Legal Issues Checklist
Posted: July 16th, 2008
Category: commercial news
Our resident commercial real estate attorney has written his Top 10 Checklist for Commercial Lease Legal Issues to help you consider the important issues that come up in your lease.
- Confirm all financial and legal terms from lease LOI and properly reflected in the lease document.
- CAM Charges:
a) Did landlord included capital expenses in CAM.
b) Are CAM charges capped on an annual basis and is this CAM cap a cumulative one?
c) Is there an audit right, what are terms for an approved audit firm, under what circumstances is the landlord responsible for tenants fees if there is a CAM overcharge.
- Repairs
a) Does the lease clearly explain what repairs the landlord or tenant is responsible for especially as applied to HVAC.
b) Does lease require that the landlord repair the roof only to pass such repair through as a CAM charge.
- Indemnification: Does the lease include a corresponding provision that Landlord indemnify tenant for landlord’s negligence although many landlords will use the higher standard of gross negligence when a tenant requests this provision.
- Personal Guaranty: Does the personal guaranty permit its termination prior to the end of the lease term. Does the personal guaranty cover just the “guarantor” or “guarantor and its assigns”.
- Assignment:
a) Does the lease require Landlord’s consent in Landlord’s sole discretion (it need not justify its reason for giving or withholding consent) or that it won’t be unreasonably withheld (a justifiable reason must be given for withholding approval).
b) If lease is assigned does it also permit the termination of the guaranty and if so such termination language must also be in the guaranty.
- Tenant Buildout:
a) Make sure buildout is paid for by landlord and not a loan to tenant that must be repaid.
b) If landlord does not timely complete the buildout there should be liquidated damages such as free rent for each day of delay.
c) If landlord’s failure continues beyond a certain time period the tenant has the right to terminate the lease.
- Use of the Premises: general office versus a medical office. This distinction is important if a tenant wishes to sublease space. Medical office is a far narrower use than general office and therefore, far more restrictive when looking for prospective sublease tenants.
- Option To Renew:
a) Lease should spell out time period required for notice, (i.e 120 or 90 days prior to lease term ending.
b) Lease must include some basis for calculating the new rent for the option period, it cannot say fair market rent at the time of the option.
c) The tenant should be aware that the option period may allow landlord to bring current the CAM charges if they had been capped prior to the renewal term.
- Right to Relocate Tenant: Many leases allow the landlord to relocate tenant under certain circumstances. The lease should be clear that if this happens landlord will pay for the entire move and the new space is substantially the same or higher in quality than the existing space.
If you have questions, please contact Justin.
JUSTIN S. DANIELS
WAGNER JOHNSTON & ROSENTHAL, P.C.
5855 SANDY SPRINGS CIRCLE, SUITE 300
ATLANTA, GEORGIA 30328
PHONE 404-261-0500
EMAIL: JSD@WJRLAW.COM
Discussion: Comments
Dealing with Deliquent Customers
Posted: June 20th, 2008
Category: commercial news
Another Guest Post by local Commercial Attorney, Justin Daniels:
I have received several phone calls from upset clients lately who want to sue a delinquent customer back to the stone age over a $5,0000 or $10,000 account. The problem is that after you have hired an attorney and set aside time and effort on this matter, most people walk away feeling very unhappy with the result as most times they will not recover the full amount plus their attorney’s fees.
A practical approach to this problem is the following:
1) Spend additional time doing due diligence (run a credit check) with new accounts to avoid companies with bad payment histories. You may also consider requiring a full or partial retainer upfront for your products or services.
2) Track your A/R more closely and discuss potential issues with companies that are behind in their payments immediately to possibly structure a payment plan as some payment is better than no payment.
This is also a good time to review your contracts/engagement letters to make sure you have the following:
A) a clause that specifically says that if there is a dispute the winner collects its attorney fees. Please understand this is not a panacea as its in the court’s discretion to award what it thinks are reasonable attorney fees and their view can differ from your view. Also, don’t ever sue someone based solely on your conviction the other side’s behavior demands that attorney fees be awarded. After its over, many times you will find yourself disappointed.
B) When you contract with companies from other states include a provision that says that the parties consent to Georgia courts for jurisdiction for any dispute. This helps you overcome the other party’s objection that you should have filed the suit in their state and not Georgia. If this happens to you, after you untangle this legal mess, your attorney’s fees may exceed the amount of the claim and you have no assurance you will collect those fees in total.
As always your trusted resource for practical legal advice. Have a great weekend.
Discussion: Comments
Atlanta Commercial Real Estate Basics - What is a Triple Net Lease?
Posted: June 8th, 2008
Category: commercial news, tips, tools & tech
A triple net lease is a type of Atlanta commercial leasing agreement. In a triple net lease, the lessee pays taxes, insurance, and maintenance in addition to the rent. There are advantages and disadvantages to a triple net lease for both parties in Atlanta. Individuals considering a triple net lease should research carefully before making a decision. The length of a triple net lease can vary in Atlanta.
A triple net lease is only one of many Atlanta commercial leasing options. In a gross lease, the lessee pays rent while the landlord takes care of everything else. Most people who rent their homes are familiar with the terms of a gross lease, as this type of lease is commonly used for residential properties. In a double net lease, the landlord assumes some of the costs of property upkeep. In a double net lease, landlords commonly cover parking, heating and cooling systems, and the structural integrity of the building.
Read Also: Commercial Legal Issues
The triple net lease is sometimes called a true net lease, because the landlord usually has no responsibilities related to building upkeep. For this reason, many commercial landlords favor triple net leasing options. The building can generate a high level of income while the tenant keeps it in good condition, generally making improvements as well. The tenant has many of the advantages, including control over the property, without the substantial capital investment that a new acquisition represents.
Read Also: Commercial News
A triple net lease can be risky for a landlord. Some Atlanta tenants may not be able to pay fees, or may allow the building to fall into disrepair. In extreme cases, a tenant may deliberately damage a building to collect insurance money. For this reason, some triple net leases include a reserve fund. The Atlanta tenant makes regular payments into the reserve fund, which can be used to cover essential repairs in the event of emergency.
A triple net lease is individualized to the tenant and lessor. The terms of the contract may contain restrictions and stipulations to protect both parties. In some instances, for example, the terms of the lease may include a cap on total property taxes to be paid by the tenant. If the property taxes rise above a certain amount, the landlord will be responsible for covering the remainder. Protections may also be built in to cope with rising insurance rates or unexpected maintenance costs.
When considering lease options in the Atlanta area as a landlord or tenant, the full terms of the lease should always be read before committing. In the case of a triple net lease, make sure that all the terms are clear and agreed upon by both parties. Consulting an Atlanta lawyer who specializes in real estate is an excellent idea.
Discussion: Comments
Properly Titling Real Estate Held by Trusts
Posted: June 6th, 2008
Category: commercial news
Discussion: Comments
CoStar Group Acquires (Dorey) Assets of Atlanta Information Provider’s Online Business
Posted: April 1st, 2008
Category: commercial news
The Official Press Release as of Tuesday April 1, 4:56 pm ET
Acquisition of DoreyPRO Online Business By Commercial Real Estate’s Largest Research Organization Enhances Quality and Scope of Information for Local Service Providers and Confirms CoStar’s Leading Position as Atlanta’s Premier Online Commercial Real Estate Information Service
BETHESDA, Md., April 1, 2008 /PRNewswire-FirstCall/ — CoStar Group (Nasdaq: CSGP - News), the number one provider of information services to the commercial real estate industry, today announced it has acquired the online commercial real estate information assets of First CLS, Inc. (doing business as The Dorey Companies and DoreyPRO), an Atlanta-based provider of local commercial real estate information.
"We welcome the opportunity to expand CoStar’s service in this key U.S. market and add DoreyPRO customers to our comprehensive, international information network," stated CoStar President & CEO Andrew C. Florance. "CoStar has served the information needs of commercial real estate professionals in Atlanta for more than two decades. We’ve long recognized Atlanta’s role as a leading financial center, transportation hub and economic engine for the entire Southeast. This acquisition makes our strong presence in Atlanta and the Southeast even stronger. It will add value to our national network and create additional growth opportunities for our services within the market."
"The vast majority of Atlanta’s commercial property professionals will now be able to access and share high-quality, standardized information across the same platform, resulting in greater efficiency and improved productivity for all market participants," continued Florance. "As the largest research organization serving commercial real estate, CoStar’s research and technology resources are significantly greater than any local company can provide. And the broad exposure our platform can provide to brokers, owners, lenders and investors across the country and internationally offers a significant benefit to our existing customers and those joining us from The Dorey Companies."
Under the acquisition agreement, current DoreyPRO customers will now use the corresponding CoStar information service as called for under their DoreyPRO license agreement: CoStar Property Professional®, the industry’s premier source of comprehensive commercial building information and property listings; CoStar COMPs®, the industry’s most trusted source of verified commercial property sales comparables; and CoStar Tenant®, a searchable database of more than three million tenant records for identifying tenants by square footage occupied, industry type, size or geographic location, and researching lease expirations, move leads and more.
In addition, through a separate agreement, CoStar has acquired the rights to the Dorey Market Analysis Reports. Current Dorey Market Analysis Report customers will now receive the CoStar Market Report. The acquisition does not include Dorey’s print guides.
The new clients joining CoStar in the acquisition will be served by the company’s existing Atlanta research and sales team. CoStar’s database includes more than 32,000 office, industrial and retail properties throughout the greater Atlanta market with a combined inventory of 1.1 billion square feet.
CoStar expects this acquisition will be accretive to achieving a 30% EBITDA margin in its U.S. operations by year-end. We do not expect the acquisition to be material to revenue or earnings for 2008.
About CoStar Group, Inc.
CoStar Group, Inc. (Nasdaq: CSGP - News) is the number one provider of information services to commercial real estate professionals in the United States as well as the United Kingdom. CoStar’s suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information throughout the U.S. as well as in the United Kingdom and France. Headquartered in Bethesda, MD, the company has approximately 1,300 employees, including the largest professional research organization in the industry. For more information, visit http://www.costar.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar’s expectations, beliefs, intentions or strategies regarding the future. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. More information about potential factors that could cause actual results to differ materially from those discussed in the forward- looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including CoStar’s Form 10-K for the year ended December 31, 2007, under the heading "Risk Factors." In addition to these statements, there can be no assurance that the acquisition will add value to our national network and create additional growth opportunities for our services within the market; that the vast majority of Atlanta’s commercial property professionals will now be able to access and share high-quality, standardized information across the same platform, resulting in greater efficiency and improved productivity for all market participants; that the broad exposure our platform can provide to brokers, owners, lenders and investors across the country and internationally offers a significant benefit to our existing customers and those joining us from The Dorey Companies; that the acquisition will be accretive to achieving a 30% EBITDA margin in CoStar’s U.S. operations by year-end; and that the acquisition will not be material to revenue or earnings for 2008. All forward- looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.
Discussion: Comments
Home Search
Join the Conversation
- Atlanta real estate
- marietta real estate
- woodstock real estate
- holly springs real estate
- canton real estate
- ball ground real estate
- jasper real estate
- ellijay real estate
- alpharetta real estate
- roswell real estate
- waleska real estate
