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While negotiating California commercial real estate purchase, sale or lease contracts, the number of critical issues to address may seem endless. Not the least of these issues is often whether or not the public or private commercial property in question meets the Americans with Disabilities Act Standards for Accessible Design. We understand the importance of ADA compliance for both allowing universal access to all and avoiding wasted time and money with unnecessary lawsuits. Unfortunately, ADA discrimination litigation in California is widespread. The Long Beach Press-Telegram reported that California led the nation with more than 2,000 new ADA lawsuits filed from January through June 2019. The reasons for this surge may be widespread, but one theory suggests that California’s promise of damages to the accuser could make even the smallest incidences of non-compliance attractive targets. This susceptibility emphasizes the need for commercial property investors to address any potential issues early in the process to avoid problems in the future. Among other considerations is the significant expense that could be involved with retrofitting buildings to meet the standards set by the ADA. According to the Long Beach Press-Telegram, one southern California business would have to pay $45,000 to bring a single bathroom into compliance. Finding all of the potential accessibility issues that need correction and assessing the cost should be a problem during contract negotiation, and not one you’re rushing to address after the fact. Competent representation with experience in ADA compliance can help prevent you from being blindsided with a lawsuit after you’ve signed the dotted line. Visit our webpage for more information on this topic.

While negotiating California commercial real estate purchase, sale or lease contracts, the number of critical issues to address may seem endless. Not the least of these issues is often whether or not the public or private commercial property in question meets the Americans with Disabilities Act Standards for Accessible Design. We understand the importance of ADA compliance for both allowing universal access to all and avoiding wasted time and money with unnecessary lawsuits. Unfortunately, ADA discrimination litigation in California is widespread. The Long Beach Press-Telegram reported that California led the nation with more than 2,000 new ADA lawsuits filed from January through June 2019. The reasons for this surge may be widespread, but one theory suggests that California’s promise of damages to the accuser could make even the smallest incidences of non-compliance attractive targets. This susceptibility emphasizes the need for commercial property investors to address any potential issues early in the process to avoid problems in the future. Among other considerations is the significant expense that could be involved with retrofitting buildings to meet the standards set by the ADA. According to the Long Beach Press-Telegram, one southern California business would have to pay $45,000 to bring a single bathroom into compliance. Finding all of the potential accessibility issues that need correction and assessing the cost should be a problem during contract negotiation, and not one you’re rushing to address after the fact. Competent representation with experience in ADA compliance can help prevent you from being blindsided with a lawsuit after you’ve signed the dotted line. Visit our webpage for more information on this topic.

As former shopping center anchors like Sears drop out of business, the empty spaces could cause additional problems for California commercial real estate landlords if the outlying tenants begin to complain of dwindling sales revenue. Commercial leases often allow for co-tenancy provisions for smaller retailers, such as alternative or reduced rent scenarios, that can hurt a shopping center owner’s cash flow even further. However, when those provisions involve 25-year-old use restrictions — that anchor retailers must be national credit tenants, for example — it can become increasingly difficult for landlords to fill those spaces with adequate replacements. It may be time to revisit commercial real estate leases and examine precisely what the requirements are for replacing an anchor tenant. Many co-tenancy provisions already agree that replacement by a comparable anchor retailer is acceptable, now landlords and tenants need to decide on what the definition of “comparable” is. According to GlobeSt.com, co-tenancy agreements written decades in the past included use restrictions that would prevent a retailer like an athletic or entertainment venue from occupying a space that was not considered “brand-relevant” to existing tenants. But that shopping center formula centered on nationally recognized retail anchor stores is no longer what consumers seem to want. Instead, some shopping center landlords are already stepping up to work with their retail tenants and increase foot traffic in more non-traditional ways by incorporating new tenants that revitalize the mall experience. CBRE.com reports that the largest mall owner in the U.S. is beginning to broaden its definition of a viable tenant base by including fitness centers, hotels and even areas for office use. As the market demand for destinations like department stores declines, shopping center landlords should continue to see a rise in success with alternative retail development.

As former shopping center anchors like Sears drop out of business, the empty spaces could cause additional problems for California commercial real estate landlords if the outlying tenants begin to complain of dwindling sales revenue. Commercial leases often allow for co-tenancy provisions for smaller retailers, such as alternative or reduced rent scenarios, that can hurt a shopping center owner’s cash flow even further. However, when those provisions involve 25-year-old use restrictions — that anchor retailers must be national credit tenants, for example — it can become increasingly difficult for landlords to fill those spaces with adequate replacements. It may be time to revisit commercial real estate leases and examine precisely what the requirements are for replacing an anchor tenant. Many co-tenancy provisions already agree that replacement by a comparable anchor retailer is acceptable, now landlords and tenants need to decide on what the definition of “comparable” is. According to GlobeSt.com, co-tenancy agreements written decades in the past included use restrictions that would prevent a retailer like an athletic or entertainment venue from occupying a space that was not considered “brand-relevant” to existing tenants. But that shopping center formula centered on nationally recognized retail anchor stores is no longer what consumers seem to want. Instead, some shopping center landlords are already stepping up to work with their retail tenants and increase foot traffic in more non-traditional ways by incorporating new tenants that revitalize the mall experience. CBRE.com reports that the largest mall owner in the U.S. is beginning to broaden its definition of a viable tenant base by including fitness centers, hotels and even areas for office use. As the market demand for destinations like department stores declines, shopping center landlords should continue to see a rise in success with alternative retail development.

Overhead expenses have a big impact on the breakeven and profit points of your business. No matter how much revenue your company pulls in, big overhead expenses can make it impossible for the business to become truly successful. The cost of the lease is not the only factor here either. Who is responsible for premises liability claims? What about utility bills? Will you pay the property taxes or will the landlord? The type of lease agreement impacts this. Forbes highlights the main four. Modified gross or full-service gross lease Business owners split some of the operating expenses and structural repair costs with the landlord. This includes utilities, property insurance and property taxes. This is included in a base rent, which typically does not increase even if operating expenses do. Triple net lease The landlord pays only for structural repairs. The tenant becomes responsible for everything else. This includes insurance, taxes and utilities. This is a risky lease agreement to sign up for, especially if you are new to business ownership and unfamiliar with property management. Double net or net-net lease Tenant pays for insurance premiums, property taxes and utilities. The landlord handles the cost of maintenance repairs. This might work well for buildings that are older and liable to have problems over time, such as with the plumbing or HVAC. Net lease or single net lease Tenant pays for the property tax and the utilities. The insurance premium is the responsibility of the landlord. The landlord also pays for maintenance and repairs. This is a good idea for buildings and spaces that have the potential to create liability issues. Some landlords and property managers might make it clear from the start that they only offer a certain type of lease arrangement. If that lease type does not suit you, you might be able to negotiate a better agreement with a professional’s help.

Overhead expenses have a big impact on the breakeven and profit points of your business. No matter how much revenue your company pulls in, big overhead expenses can make it impossible for the business to become truly successful. The cost of the lease is not the only factor here either. Who is responsible for premises liability claims? What about utility bills? Will you pay the property taxes or will the landlord? The type of lease agreement impacts this. Forbes highlights the main four. Modified gross or full-service gross lease Business owners split some of the operating expenses and structural repair costs with the landlord. This includes utilities, property insurance and property taxes. This is included in a base rent, which typically does not increase even if operating expenses do. Triple net lease The landlord pays only for structural repairs. The tenant becomes responsible for everything else. This includes insurance, taxes and utilities. This is a risky lease agreement to sign up for, especially if you are new to business ownership and unfamiliar with property management. Double net or net-net lease Tenant pays for insurance premiums, property taxes and utilities. The landlord handles the cost of maintenance repairs. This might work well for buildings that are older and liable to have problems over time, such as with the plumbing or HVAC. Net lease or single net lease Tenant pays for the property tax and the utilities. The insurance premium is the responsibility of the landlord. The landlord also pays for maintenance and repairs. This is a good idea for buildings and spaces that have the potential to create liability issues. Some landlords and property managers might make it clear from the start that they only offer a certain type of lease arrangement. If that lease type does not suit you, you might be able to negotiate a better agreement with a professional’s help.

For new commercial landlords, understanding the difference between residential and commercial leases is vital. Particularly if you have been mainly involved with residential real estate in the past, there are some very striking differences in the commercial market. Any time a business rents a commercial property in order to conduct business from that specific location, you must offer a commercial lease. According to Business News Daily, commercial leases are generally less-regulated than residential ones and they do not offer as many protections. How do the regulations differ? One of the biggest differences is that, as a landlord, you will need to tailor each commercial lease uniquely to the business at hand. Most of the time with residential leases, all residents of a particular building will sign similar-looking contracts. This means that many of the assumptions that come along with residential leases do not apply to commercial leases. For instance, the most common length of a residential lease is one year. On the other hand, with a commercial lease, the length could be as long or as short as benefits both landlord and tenant. What protections are missing? This is also related to the comparative lack of regulation described above. Since residential leases govern residential properties, the government at all levels (federal, state, county) has protections in place to ensure that the landlord is providing safe and habitable housing. The caliber of tenant you will get with a commercial lease is generally higher in terms of knowledge about real estate, so the lack of protections actually give you and your potential commercial tenant more room to negotiate terms.

For new commercial landlords, understanding the difference between residential and commercial leases is vital. Particularly if you have been mainly involved with residential real estate in the past, there are some very striking differences in the commercial market. Any time a business rents a commercial property in order to conduct business from that specific location, you must offer a commercial lease. According to Business News Daily, commercial leases are generally less-regulated than residential ones and they do not offer as many protections. How do the regulations differ? One of the biggest differences is that, as a landlord, you will need to tailor each commercial lease uniquely to the business at hand. Most of the time with residential leases, all residents of a particular building will sign similar-looking contracts. This means that many of the assumptions that come along with residential leases do not apply to commercial leases. For instance, the most common length of a residential lease is one year. On the other hand, with a commercial lease, the length could be as long or as short as benefits both landlord and tenant. What protections are missing? This is also related to the comparative lack of regulation described above. Since residential leases govern residential properties, the government at all levels (federal, state, county) has protections in place to ensure that the landlord is providing safe and habitable housing. The caliber of tenant you will get with a commercial lease is generally higher in terms of knowledge about real estate, so the lack of protections actually give you and your potential commercial tenant more room to negotiate terms.

To take advantage of a commercial property in California can be a great opportunity. Forbes explains how when you sign a lease, there is always going to be some amount of risk involved. If you know the risks, you may be able to make a more informed decision. When you set out to sign your commercial lease, there are a few factors to know. Be aware of guaranteed tenant improvements. Tenant improvements include costs to make improvements on the property. If you are not aware of this stipulation, then you could wind up gaining more debt without realizing it. You should always look for any hidden fees before you sign the lease. Once you sing the lease, you agree to abide by all terms and fees. Before you sign, you should break down all of the associated costs and fees. This includes the following: Rent Insurance Management Common area maintenance Add up all of your fees before you sign the lease. When you embark on signing a lease, you should also have specific goals in mind. The office space or commercial property has to meet specific business needs. You always want to evaluate how you will fit in the space that you lease. The other terms you need to pay close attention to are the ancillary terms. These have an impact on how much you will pay every month. For instance, this will cover maintenance costs, unexpected repairs, custodial services and more. The provided information is for educational purposes only. It is not intended to be legal advice.

To take advantage of a commercial property in California can be a great opportunity. Forbes explains how when you sign a lease, there is always going to be some amount of risk involved. If you know the risks, you may be able to make a more informed decision. When you set out to sign your commercial lease, there are a few factors to know. Be aware of guaranteed tenant improvements. Tenant improvements include costs to make improvements on the property. If you are not aware of this stipulation, then you could wind up gaining more debt without realizing it. You should always look for any hidden fees before you sign the lease. Once you sing the lease, you agree to abide by all terms and fees. Before you sign, you should break down all of the associated costs and fees. This includes the following: Rent Insurance Management Common area maintenance Add up all of your fees before you sign the lease. When you embark on signing a lease, you should also have specific goals in mind. The office space or commercial property has to meet specific business needs. You always want to evaluate how you will fit in the space that you lease. The other terms you need to pay close attention to are the ancillary terms. These have an impact on how much you will pay every month. For instance, this will cover maintenance costs, unexpected repairs, custodial services and more. The provided information is for educational purposes only. It is not intended to be legal advice.

As a small business owner, you have to complete a variety of tasks every single day. If your company is expanding, though, finding the right property is likely high on your priority list. Unless you regularly deal with commercial leases, you may feel a bit out of your element. Signing a bad commercial lease can ruin your business enterprise. After all, if you default on the lease, your landlord may have a cause of action against your company. While commercial leases come in a variety of styles, there are some red flags that may cause you to reconsider the commitment. Here are three of them. Excessive lengths As you know, it can be difficult to gauge the future success and growth of any small business. Therefore, you should probably think twice before signing a long-term lease. If your company outgrows the space or you must wrap up business, you may have to continue to pay rent until your landlord finds a new tenant. Generally, commercial leases should be for about two years. The same is true for lease renewals. Triple-net clauses Sometimes, landlords ask renters to pay taxes, insurance, maintenance fees and rent. Known as triple-net clauses in commercial leases, these provisions almost always benefit the landlord. They can cause your property expenses to rise both considerably and uncontrollably. Undefined fees or penalties Good commercial leases are specific. If the lease you are thinking about signing has hidden fees, undefined penalties or other costs, you may be in for a big surprise. As such, always look for a commercial lease that spells out every expense your small business must cover. Like with all contracts, you should read and understand any commercial lease before you sign it. If you notice any of the above red flags, you should think twice before executing your lease. Only when you fully comprehend the consequences of the contract can you make the right decision for your company.

As a small business owner, you have to complete a variety of tasks every single day. If your company is expanding, though, finding the right property is likely high on your priority list. Unless you regularly deal with commercial leases, you may feel a bit out of your element. Signing a bad commercial lease can ruin your business enterprise. After all, if you default on the lease, your landlord may have a cause of action against your company. While commercial leases come in a variety of styles, there are some red flags that may cause you to reconsider the commitment. Here are three of them. Excessive lengths As you know, it can be difficult to gauge the future success and growth of any small business. Therefore, you should probably think twice before signing a long-term lease. If your company outgrows the space or you must wrap up business, you may have to continue to pay rent until your landlord finds a new tenant. Generally, commercial leases should be for about two years. The same is true for lease renewals. Triple-net clauses Sometimes, landlords ask renters to pay taxes, insurance, maintenance fees and rent. Known as triple-net clauses in commercial leases, these provisions almost always benefit the landlord. They can cause your property expenses to rise both considerably and uncontrollably. Undefined fees or penalties Good commercial leases are specific. If the lease you are thinking about signing has hidden fees, undefined penalties or other costs, you may be in for a big surprise. As such, always look for a commercial lease that spells out every expense your small business must cover. Like with all contracts, you should read and understand any commercial lease before you sign it. If you notice any of the above red flags, you should think twice before executing your lease. Only when you fully comprehend the consequences of the contract can you make the right decision for your company.