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Along with residential property values, commercial property values have climbed in recent years. For some, this may have been a dramatic increase in value. But it does appear that things are beginning to change. For example, a report that came out just last month showed that property values had fallen 13%. It was noted that there had not been a bigger drop than this during the entire global financial crisis. It will be very interesting to see if it predicts future declines in the months and years to come, or if property values will recover. WHY ARE THEY FALLING? As is usually the case, there are numerous reasons why property values are falling. One is that interest rates have been rising, which tends to make property less affordable, and that takes people out of the market. For those who remain, this can reduce the value of the other properties because demand is lower. Additionally, those who may have invested could be facing financial constraints. It is unclear if the United States is going to enter a full-blown recession, but there are certainly business owners who have encountered reductions in income and who may be concerned about the future. Additionally, many workers have been laid off and may simply be looking for new jobs, rather than buying commercial properties and intentionally leaving to start their own businesses. IS THIS A GOOD TIME TO BUY? As a result, if you’re looking to invest in commercial properties, it may be worth watching this decline carefully. This could be a prime time to buy property as the values fall, anticipating a return to form in the future. Be sure you know exactly what steps you’ll need to take.

Along with residential property values, commercial property values have climbed in recent years. For some, this may have been a dramatic increase in value. But it does appear that things are beginning to change. For example, a report that came out just last month showed that property values had fallen 13%. It was noted that there had not been a bigger drop than this during the entire global financial crisis. It will be very interesting to see if it predicts future declines in the months and years to come, or if property values will recover. WHY ARE THEY FALLING? As is usually the case, there are numerous reasons why property values are falling. One is that interest rates have been rising, which tends to make property less affordable, and that takes people out of the market. For those who remain, this can reduce the value of the other properties because demand is lower. Additionally, those who may have invested could be facing financial constraints. It is unclear if the United States is going to enter a full-blown recession, but there are certainly business owners who have encountered reductions in income and who may be concerned about the future. Additionally, many workers have been laid off and may simply be looking for new jobs, rather than buying commercial properties and intentionally leaving to start their own businesses. IS THIS A GOOD TIME TO BUY? As a result, if you’re looking to invest in commercial properties, it may be worth watching this decline carefully. This could be a prime time to buy property as the values fall, anticipating a return to form in the future. Be sure you know exactly what steps you’ll need to take.

You may have found the perfect location for your business – but now you have to hash out the details of your lease with the potential landlord. Unlike residential leases, almost everything in a commercial lease is up for negotiation. That includes certain “use” clauses that can protect your business far into the future – if you can get one. WHAT’S AN EXCLUSIVE USE CLAUSE? An exclusive use clause is always to the advantage of the tenant, not the landlord because it restricts what other tenants are permitted to do. In essence, an exclusive use clause grants you the sole right to do a particular activity in the plaza, strip mall or commercial building – over all other tenants (including future ones). For example, imagine that you run a coffee shop. In order to protect your business, you want an exclusive use clause from the landlord that will prevent any other business from acting as your competition. If the bookstore at the other end of the plaza decides to install a coffee bar to encourage their customers to sit around and browse or socialize a little, you could ask your landlord to enforce your clause and make them stop. Naturally, landlords aren’t particularly fond of granting exclusive use clauses. They’d much rather have the freedom to rent to whomever they choose, and putting restrictive covenants on their other tenants can make their commercial spaces less attractive. So, how can you get an exclusive use clause out of your landlord? Generally, the more valuable you are as a tenant, the more likely the odds your landlord will capitulate. If you are looking to rent their “cornerstone” property, and have a well-established business and a solid customer base that is likely to bring significant foot traffic to the entire premises, you have more bargaining power than a new, untested business that’s very tiny. Negotiating for the lease terms that you want and need isn’t always easy to do on your own. Because of the complexity, it’s wise to have some legal guidance before you sign on the dotted line.

You may have found the perfect location for your business – but now you have to hash out the details of your lease with the potential landlord. Unlike residential leases, almost everything in a commercial lease is up for negotiation. That includes certain “use” clauses that can protect your business far into the future – if you can get one. WHAT’S AN EXCLUSIVE USE CLAUSE? An exclusive use clause is always to the advantage of the tenant, not the landlord because it restricts what other tenants are permitted to do. In essence, an exclusive use clause grants you the sole right to do a particular activity in the plaza, strip mall or commercial building – over all other tenants (including future ones). For example, imagine that you run a coffee shop. In order to protect your business, you want an exclusive use clause from the landlord that will prevent any other business from acting as your competition. If the bookstore at the other end of the plaza decides to install a coffee bar to encourage their customers to sit around and browse or socialize a little, you could ask your landlord to enforce your clause and make them stop. Naturally, landlords aren’t particularly fond of granting exclusive use clauses. They’d much rather have the freedom to rent to whomever they choose, and putting restrictive covenants on their other tenants can make their commercial spaces less attractive. So, how can you get an exclusive use clause out of your landlord? Generally, the more valuable you are as a tenant, the more likely the odds your landlord will capitulate. If you are looking to rent their “cornerstone” property, and have a well-established business and a solid customer base that is likely to bring significant foot traffic to the entire premises, you have more bargaining power than a new, untested business that’s very tiny. Negotiating for the lease terms that you want and need isn’t always easy to do on your own. Because of the complexity, it’s wise to have some legal guidance before you sign on the dotted line.

You may have a tenant who lives in a multi-bedroom apartment. This tenant may think it’s easiest if they sublet the extra rooms to help pay their rent and save on money. If they can sublet each extra room for half as much as their rent then they’ll be coming out on top. What if, however, you’re not so keen on the idea of your tenants subletting? Subletting can make many tenants’ lives easier, but subletting can make the job of a landlord or management company a lot harder. But, is subletting actually a violation of your rights as a landlord? Can you forbid it? Here’s what you should know. Subletting isn’t always legal A lease agreement may or may not include explicit rules on subletting an apartment. California laws prohibit subletting only if the lease is clear that the tenant can not sublet. On the other hand, a tenant may be within their rights to sublet if their lease doesn’t say anything specifically barring subletting. It’s rare for a landlord to not allow a current tenant to sublet their apartment. Some landlords want to make it easy for their tenants to pay rent. However, this does not mean that you are entirely without options. As a landlord, you’re entitled to raise the rent up to 10% for each additional occupant, and you can still require a background check on the new renters. That gives you some security and helps protect your property values. A good lease is the key to avoiding unnecessary disputes with your tenants. Experienced legal guidance can help you draft leases that are customized to your needs.

You may have a tenant who lives in a multi-bedroom apartment. This tenant may think it’s easiest if they sublet the extra rooms to help pay their rent and save on money. If they can sublet each extra room for half as much as their rent then they’ll be coming out on top. What if, however, you’re not so keen on the idea of your tenants subletting? Subletting can make many tenants’ lives easier, but subletting can make the job of a landlord or management company a lot harder. But, is subletting actually a violation of your rights as a landlord? Can you forbid it? Here’s what you should know. Subletting isn’t always legal A lease agreement may or may not include explicit rules on subletting an apartment. California laws prohibit subletting only if the lease is clear that the tenant can not sublet. On the other hand, a tenant may be within their rights to sublet if their lease doesn’t say anything specifically barring subletting. It’s rare for a landlord to not allow a current tenant to sublet their apartment. Some landlords want to make it easy for their tenants to pay rent. However, this does not mean that you are entirely without options. As a landlord, you’re entitled to raise the rent up to 10% for each additional occupant, and you can still require a background check on the new renters. That gives you some security and helps protect your property values. A good lease is the key to avoiding unnecessary disputes with your tenants. Experienced legal guidance can help you draft leases that are customized to your needs.

You’ve gradually been building up your real estate portfolio for a few years now. It’s time to make your next move. You’ve spotted an ad and the property seems ideal at first glance. Acquiring the right properties is key to your commercial success, but you also need to know when to walk away. Outlined below are some clues that a real estate deal may not be for you. A lack of interest Initially, you thought the property had just been placed on the market. Upon further inspection, you discover that it has just been readvertised, after a price reduction. The building sat on the market for several months before, with no formal interest being noted. Many people must have seen the spot before you got there, and you have to ask yourself why they’re not interested. If this is the “perfect deal”, then why has nobody else taken up the offer? A lack of disclosure Sellers have a legal duty to report fundamental flaws with a property. They must be open and honest if there is a presence of asbestos or other harmful substances for instance. You’ve inquired about this, and nothing has been mentioned. However, when you request to carry out some of your own checks, just to be safe, the seller becomes defensive. Honesty from the seller is crucial in any real estate transaction, and one thing is for sure, you do not want to discover flaws after you have committed to the purchase. You’ve already established your business as a real estate developer, which means you have natural instincts that are trustworthy. If you have any doubts, or you feel that your legal rights have been violated, make sure you further explore your options.

You’ve gradually been building up your real estate portfolio for a few years now. It’s time to make your next move. You’ve spotted an ad and the property seems ideal at first glance. Acquiring the right properties is key to your commercial success, but you also need to know when to walk away. Outlined below are some clues that a real estate deal may not be for you. A lack of interest Initially, you thought the property had just been placed on the market. Upon further inspection, you discover that it has just been readvertised, after a price reduction. The building sat on the market for several months before, with no formal interest being noted. Many people must have seen the spot before you got there, and you have to ask yourself why they’re not interested. If this is the “perfect deal”, then why has nobody else taken up the offer? A lack of disclosure Sellers have a legal duty to report fundamental flaws with a property. They must be open and honest if there is a presence of asbestos or other harmful substances for instance. You’ve inquired about this, and nothing has been mentioned. However, when you request to carry out some of your own checks, just to be safe, the seller becomes defensive. Honesty from the seller is crucial in any real estate transaction, and one thing is for sure, you do not want to discover flaws after you have committed to the purchase. You’ve already established your business as a real estate developer, which means you have natural instincts that are trustworthy. If you have any doubts, or you feel that your legal rights have been violated, make sure you further explore your options.

If you’re starting a private equity, venture capital or other investment business, its success and reputation will be dependent on one or more “key” people to make and manage investments. That’s why it’s wise to include a key man (KM) clause in the contracts of your executives and others who are key to your business. This clause prohibits the business or any fund manager from making an investment of the designated key person(s) if they won’t be around or able to devote sufficient time to the investment. This could occur not just through resignation, termination or death. A KM clause might need to be invoked if a person takes a leave of absence or simply no longer has the necessary time to devote to their responsibilities. The key people named in this clause don’t necessarily have to be partners or other executives with the company. However, they are people whose experience, skills and knowledge in sales, product development and other areas are crucial to the business’s success. A key man clause helps the business and its clients Having a KM clause can help reassure potential investors that their money will by the people in whom they’re placing their trust. A KM clause also protects the company if one of their primary decision-makers leaves or cannot devote enough time to the business. Including the clause is just the first step. You need to detail what the business will do if a key person dies, leaves the company or is otherwise unable to fulfill their responsibilities, such as hiring someone new or training someone to take over. A timeline for this transition needs to be included in the replacement plan. You may also want to invest in key man insurance. This can compensate the company if you suffer losses because a key individual is no longer there. However, it’s much better to have a contractual clause and replacement plan in place so that you don’t have to deal with losses that can significantly affect the success of your company and cause potential investors to go elsewhere.

If you’re starting a private equity, venture capital or other investment business, its success and reputation will be dependent on one or more “key” people to make and manage investments. That’s why it’s wise to include a key man (KM) clause in the contracts of your executives and others who are key to your business. This clause prohibits the business or any fund manager from making an investment of the designated key person(s) if they won’t be around or able to devote sufficient time to the investment. This could occur not just through resignation, termination or death. A KM clause might need to be invoked if a person takes a leave of absence or simply no longer has the necessary time to devote to their responsibilities. The key people named in this clause don’t necessarily have to be partners or other executives with the company. However, they are people whose experience, skills and knowledge in sales, product development and other areas are crucial to the business’s success. A key man clause helps the business and its clients Having a KM clause can help reassure potential investors that their money will by the people in whom they’re placing their trust. A KM clause also protects the company if one of their primary decision-makers leaves or cannot devote enough time to the business. Including the clause is just the first step. You need to detail what the business will do if a key person dies, leaves the company or is otherwise unable to fulfill their responsibilities, such as hiring someone new or training someone to take over. A timeline for this transition needs to be included in the replacement plan. You may also want to invest in key man insurance. This can compensate the company if you suffer losses because a key individual is no longer there. However, it’s much better to have a contractual clause and replacement plan in place so that you don’t have to deal with losses that can significantly affect the success of your company and cause potential investors to go elsewhere.