Blog

In 2020, California’s commercial property owners faced a range of unexpected changes and fluctuations. Many commercial buildings across the state and nation wound up closing abruptly. These sudden closures have raised numerous questions about how property owners should handle their spaces when it comes to liability, insurance and related issues and concerns. According to GlobeSt.com, as a commercial property owner, you have an obligation to stay on top of local, state and federal guidelines when it comes to mitigating possible future losses and maintaining the integrity of your commercial property. You may also want to take these additional steps to help protect the value of your assets during uncertain times. Develop a property management plan You may want to work with an environmental engineer to come up with a list of tasks and duties to take care of while your property remains vacant. These tasks might include performing periodic inspections to check for leaks or HVAC or indoor air quality issues, among other possible areas of concern. Review your insurance policy When your commercial building reopens for business, it may have insurance implications. You may want to see if your insurance policy contains any language about economic losses due to environmental factors and circumstances. Determine whether litigation is necessary If your commercial tenant has to vacate your space for a period, he or she should leave it in appropriate condition. If your tenant leaves your space in poor condition or leaves hazardous materials behind, you may need to file a claim against him or her within a specific timeframe. Sudden business and building closures have created considerable uncertainty among commercial landlords. The more you understand about your responsibilities in these circumstances, the better the chance of you experiencing minimal, if any, losses.

In 2020, California’s commercial property owners faced a range of unexpected changes and fluctuations. Many commercial buildings across the state and nation wound up closing abruptly. These sudden closures have raised numerous questions about how property owners should handle their spaces when it comes to liability, insurance and related issues and concerns. According to GlobeSt.com, as a commercial property owner, you have an obligation to stay on top of local, state and federal guidelines when it comes to mitigating possible future losses and maintaining the integrity of your commercial property. You may also want to take these additional steps to help protect the value of your assets during uncertain times. Develop a property management plan You may want to work with an environmental engineer to come up with a list of tasks and duties to take care of while your property remains vacant. These tasks might include performing periodic inspections to check for leaks or HVAC or indoor air quality issues, among other possible areas of concern. Review your insurance policy When your commercial building reopens for business, it may have insurance implications. You may want to see if your insurance policy contains any language about economic losses due to environmental factors and circumstances. Determine whether litigation is necessary If your commercial tenant has to vacate your space for a period, he or she should leave it in appropriate condition. If your tenant leaves your space in poor condition or leaves hazardous materials behind, you may need to file a claim against him or her within a specific timeframe. Sudden business and building closures have created considerable uncertainty among commercial landlords. The more you understand about your responsibilities in these circumstances, the better the chance of you experiencing minimal, if any, losses.

A leasehold estate is what you have when you have an agreement to rent a property. It covers the time you have rights to and temporary ownership of the property. According to the California Department of Real Estate, there are four types of leasehold estates that you may have. Estate from period to period An estate from period to period is when you rent for a specific time and renew your lease at the end of that time. It can be days, weeks or years in length. Your agreement with the landlord will specify this type of leasehold estate. You probably recognize this as a common type of lease. Many landlords will rent on a month-to-month basis. The main idea, though, is that the lease is in effect for the specified period, and at the end, you and the landlord can decide to renew or not. Estate for years An estate for years may not last for years. It can be days, weeks or months as well. The idea behind this type of lease is that it sets a fixed time period in which you will rent the property. A common use for this type of lease is when the renter knows he or she only needs the property for a set time. For example, if you sold your home and need some place to rent for the two months between the sell of your home and the purchase of the new one, then you may have this type of lease for a two-month period. Estate at sufferance An estate at sufferance is when you remain in possession of the property after the expiration of your lease. This occurs without the owner’s consent, so you do not sign a new lease or make other agreements with the owner that allows you to legally remain in control of the property. Estate at will An estate at will does not have a set time. You or the landlord can decide at any time that you will end the agreement. It is not common because once you start paying rent at a regular interval, it becomes an estate from period to period.

A leasehold estate is what you have when you have an agreement to rent a property. It covers the time you have rights to and temporary ownership of the property. According to the California Department of Real Estate, there are four types of leasehold estates that you may have. Estate from period to period An estate from period to period is when you rent for a specific time and renew your lease at the end of that time. It can be days, weeks or years in length. Your agreement with the landlord will specify this type of leasehold estate. You probably recognize this as a common type of lease. Many landlords will rent on a month-to-month basis. The main idea, though, is that the lease is in effect for the specified period, and at the end, you and the landlord can decide to renew or not. Estate for years An estate for years may not last for years. It can be days, weeks or months as well. The idea behind this type of lease is that it sets a fixed time period in which you will rent the property. A common use for this type of lease is when the renter knows he or she only needs the property for a set time. For example, if you sold your home and need some place to rent for the two months between the sell of your home and the purchase of the new one, then you may have this type of lease for a two-month period. Estate at sufferance An estate at sufferance is when you remain in possession of the property after the expiration of your lease. This occurs without the owner’s consent, so you do not sign a new lease or make other agreements with the owner that allows you to legally remain in control of the property. Estate at will An estate at will does not have a set time. You or the landlord can decide at any time that you will end the agreement. It is not common because once you start paying rent at a regular interval, it becomes an estate from period to period.

When it comes to commercial real estate, the traditional option involves purchasing your own real estate properties. You can then hire property managers to take care of the grunt work and profit off the top. Some California investors may even prefer to manage the properties themselves. Over the years, REITs have grown in popularity. These allow investors to take an even more distanced approach from real estate investment and management. NerdWallet also reports that shareholders generally receive consistently large dividends. Is this the better option for you? Branding For some people, anonymous ownership works as long as it pays the bills. However, this does take away from your ability to build a real estate brand and pass on a true legacy to the next generation. If this matters to you, you may find it easier to achieve via purchasing your own properties. Passion Some real estate investors get into the market because they love real estate. They love buying properties, flipping them, finding new tenants and managing the properties. If you are passionate and want a hands-on real estate approach, buying properties offers a better option. Capital REITs require less startup capital than purchasing real estate property. This makes it especially attractive to people who want to invest in the market but lack the capital to go all the way in. It may also allow investors with leftover capital from larger investments to make use of smaller cash values not in use. Registered REITs perform well in the market, but they do not provide all the perks of owning properties. They may provide an excellent starting point for investors or a complement for existing properties. When managed well, those physical properties may provide the opportunity for you to create your own publicly traded REIT that other investors can pour money into.

When it comes to commercial real estate, the traditional option involves purchasing your own real estate properties. You can then hire property managers to take care of the grunt work and profit off the top. Some California investors may even prefer to manage the properties themselves. Over the years, REITs have grown in popularity. These allow investors to take an even more distanced approach from real estate investment and management. NerdWallet also reports that shareholders generally receive consistently large dividends. Is this the better option for you? Branding For some people, anonymous ownership works as long as it pays the bills. However, this does take away from your ability to build a real estate brand and pass on a true legacy to the next generation. If this matters to you, you may find it easier to achieve via purchasing your own properties. Passion Some real estate investors get into the market because they love real estate. They love buying properties, flipping them, finding new tenants and managing the properties. If you are passionate and want a hands-on real estate approach, buying properties offers a better option. Capital REITs require less startup capital than purchasing real estate property. This makes it especially attractive to people who want to invest in the market but lack the capital to go all the way in. It may also allow investors with leftover capital from larger investments to make use of smaller cash values not in use. Registered REITs perform well in the market, but they do not provide all the perks of owning properties. They may provide an excellent starting point for investors or a complement for existing properties. When managed well, those physical properties may provide the opportunity for you to create your own publicly traded REIT that other investors can pour money into.

When you invest in commercial real estate in California, you assume certain risks. Risk-taking is an important part of achieving success through investing in commercial real estate, but it is wise to manage those risks to the fullest extent possible to avoid potential problems and strengthen your real estate portfolio. According to Dummies.com, you may be able to reduce the risks associated with investing in commercial real estate by taking the following steps. Know your market Real estate moves in patterns, cycling through expansion, contraction, recession and recovery. Knowing where your real estate market is within this cycle should help you time your investments well and avoid making poor decisions. Do your research It is critical that you do exercise due diligence before investing in a particular commercial property. The process of inspecting the property and verifying the validity of all documents pertaining to the property may prove long and arduous, but it is a necessary part of doing business. Otherwise, you run the risk of investing in a property that proves to be a financial drain. Identify exit strategies Maintain flexibility with regard to your exit strategy. Commercial real estate is often in flux, and market conditions are prone to frequent change. Identify potential exist strategies before your deal finalizes so that you have the option to step away if you feel it presents too much risk. Resist overpaying Make sure you are paying a fair price for your property. This is especially important if you are a relatively green investor, as new investors are more prone to overpaying than experienced ones. Overpaying on a particular property has the potential to impact its profitability for quite some time.

When you invest in commercial real estate in California, you assume certain risks. Risk-taking is an important part of achieving success through investing in commercial real estate, but it is wise to manage those risks to the fullest extent possible to avoid potential problems and strengthen your real estate portfolio. According to Dummies.com, you may be able to reduce the risks associated with investing in commercial real estate by taking the following steps. Know your market Real estate moves in patterns, cycling through expansion, contraction, recession and recovery. Knowing where your real estate market is within this cycle should help you time your investments well and avoid making poor decisions. Do your research It is critical that you do exercise due diligence before investing in a particular commercial property. The process of inspecting the property and verifying the validity of all documents pertaining to the property may prove long and arduous, but it is a necessary part of doing business. Otherwise, you run the risk of investing in a property that proves to be a financial drain. Identify exit strategies Maintain flexibility with regard to your exit strategy. Commercial real estate is often in flux, and market conditions are prone to frequent change. Identify potential exist strategies before your deal finalizes so that you have the option to step away if you feel it presents too much risk. Resist overpaying Make sure you are paying a fair price for your property. This is especially important if you are a relatively green investor, as new investors are more prone to overpaying than experienced ones. Overpaying on a particular property has the potential to impact its profitability for quite some time.

Commercial real estate is quite different from residential real estate in many ways, but there is one area where they are quite similar. According to REoptimizer, the law does put restrictions and limits on your interactions with your commercial tenants. One of the main rules that apply in both residential and commercial real estate is the right to equality. You cannot discriminate against tenants due to any protected status. Privacy Your tenants also have rights when it comes to using the property and feeling secure in it. You cannot constantly enter the premises and micromanage the use of the building. You need to give notice prior to entry and make sure that you are giving your tenants privacy. Disclosures There are certain things you must tell tenants prior to leasing a property. This includes anything that could cause a health or safety concern. You should disclose issues that could lead to problems with running a business in the location as well. Evictions Just as residential landlords have to follow certain procedures to evict a tenant, you do, too. You cannot lock your tenant out of the buildings or force eviction without going through the proper channels. You must provide notice of the eviction with an explanation of why. Safe premises Your tenants also have a right to a safe and secure premises. If there are issues that you must legally handle, then you need to do so quickly as soon as you become aware of the situation. You also need to ensure that you follow your lease and take care of anything to which you agreed to have responsibility.

Commercial real estate is quite different from residential real estate in many ways, but there is one area where they are quite similar. According to REoptimizer, the law does put restrictions and limits on your interactions with your commercial tenants. One of the main rules that apply in both residential and commercial real estate is the right to equality. You cannot discriminate against tenants due to any protected status. Privacy Your tenants also have rights when it comes to using the property and feeling secure in it. You cannot constantly enter the premises and micromanage the use of the building. You need to give notice prior to entry and make sure that you are giving your tenants privacy. Disclosures There are certain things you must tell tenants prior to leasing a property. This includes anything that could cause a health or safety concern. You should disclose issues that could lead to problems with running a business in the location as well. Evictions Just as residential landlords have to follow certain procedures to evict a tenant, you do, too. You cannot lock your tenant out of the buildings or force eviction without going through the proper channels. You must provide notice of the eviction with an explanation of why. Safe premises Your tenants also have a right to a safe and secure premises. If there are issues that you must legally handle, then you need to do so quickly as soon as you become aware of the situation. You also need to ensure that you follow your lease and take care of anything to which you agreed to have responsibility.

It is common for local areas to create ordinances to help protect tenants in rental situations. According to the Los Angeles County Consumer & Business Affairs, the Los Angeles County Rest Stabilization Ordinance is a law that limits rent increases and offers eviction protections. There are several conditions of this ordinance that may alter protections, and it does not apply to every rental. Rent increases The rent increase limit provides a restriction on how much a landlord may raise your rent in a 12-month period. As of 2020, that limit is 3%, but it changes often according to the Consumer Price Index. You should always verify the current limit before making a claim that your landlord violated the ordinance. Evictions The eviction protection limits eviction rights to just cause. Potential reasons for eviction include you breaking terms of your lease or rental agreement, if you receive an order to vacate from the government or if your landlord wishes to demolish the property. It also allows for your landlord to evict you if he or she wishes to stop renting or to move his or her close family members into the unit. Coverage This ordinance only covers rentals in the unincorporated area of the county. There is partial and full coverage. Partial coverage only offers protection against evictions, while full coverage provides rent increase and eviction protection. For full protection, your rental unit must be in an unincorporated area and have two or more rentals on the same property. It also must have a certificate of occupancy from one or before February 1, 1995.

It is common for local areas to create ordinances to help protect tenants in rental situations. According to the Los Angeles County Consumer & Business Affairs, the Los Angeles County Rest Stabilization Ordinance is a law that limits rent increases and offers eviction protections. There are several conditions of this ordinance that may alter protections, and it does not apply to every rental. Rent increases The rent increase limit provides a restriction on how much a landlord may raise your rent in a 12-month period. As of 2020, that limit is 3%, but it changes often according to the Consumer Price Index. You should always verify the current limit before making a claim that your landlord violated the ordinance. Evictions The eviction protection limits eviction rights to just cause. Potential reasons for eviction include you breaking terms of your lease or rental agreement, if you receive an order to vacate from the government or if your landlord wishes to demolish the property. It also allows for your landlord to evict you if he or she wishes to stop renting or to move his or her close family members into the unit. Coverage This ordinance only covers rentals in the unincorporated area of the county. There is partial and full coverage. Partial coverage only offers protection against evictions, while full coverage provides rent increase and eviction protection. For full protection, your rental unit must be in an unincorporated area and have two or more rentals on the same property. It also must have a certificate of occupancy from one or before February 1, 1995.