As a commercial real estate owner, it’s important to you to keep tenants in your properties. For one thing, you need to make sure that all of your costs are covered. Additionally, you care about that local community and you want to see businesses thrive.

However, one of your business owners may want to break their lease early. Since this is a legally binding document, they can’t just decide to stop paying you and leave the space. So how can they do this and what steps do they need to take?

ARE THERE ANY TERMINATION CLAUSES?

One of the first things to think about is if the lease has any termination language, such as clauses saying when that lease can be broken early. For instance, some business owners will request a termination clause saying that they can walk away from the space if they don’t hit earning projections over the first year. This protects them if it turns out that the space is not a good fit for their business.

ARE YOU WILLING TO WORK WITH THEM?

Even if there are no termination clauses, if the tenant is serious about wanting to leave the property, you may be able to work with them to find a tactic that benefits both of you. For example, some landlords will request that tenants find people to sublease the space for the rest of the term of that lease. Other landlords will allow them to break the lease early if they’ll pay for an extra few months, during which that landlord can find another tenant for the space. 

What you decide to do is up to you, but you may have to ensure that it fits your needs and follows all of the proper legal steps.

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The federal government and the state of California have strong laws in place to help ensure accessibility for everyone to public and certain private buildings for those who use wheelchairs and other mobility aids. This is in addition to accommodations for those who are blind and hearing impaired.

Whether you’re investing in a new construction or a commercial building that’s already in place, it’s crucial to ensure that it complies with all construction-related accessibility standards. In California, you can benefit by bringing in a Certified Access Specialist (CASp). You can find these professionals through the Division of the State Architect (DSA).

WHY HAVE A CASP INSPECTION INSTEAD OF ANOTHER PROFESSIONAL INSPECTION?

A CASp can advise you of what accessibility standards are necessary for a particular property based on its age and other factors. While experienced engineers, architects and others may be able to provide the same guidance, a CASp can be beneficial if you were ever to face litigation regarding construction-related non-compliance with the Americans with Disabilities Act (ADA) and other requirements. In fact, having a CASp inspection early on can reduce your chances of facing litigation in the future.

Once the property has been inspected by a CASp, you’ll receive two documents:

• CASp Inspection Report
• Disability Access Inspection Certificate 

Note that the certificate doesn’t mean that you’ve passed the inspection. However, the report will detail any violations and changes you need to make to fix them, if any.

Further, by having a CASp inspection done, you receive something called “qualified defendant” status if you were to be sued. That can help you get a “court stay to postpone legal proceedings and an early evaluation conference.” It can also get you lower fines if any are assessed.

This just touches the surface of what a CASp inspection is and how it can help you. You may want to seek legal guidance to learn more about it. You certainly need to do so if you’re facing accessibility-related litigation regarding your property.

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There’s little that’s predictable with certainty about the commercial real estate (CRE) market these days. However, experts including real estate economists, brokers, developers, investors and owners throughout the western part of the U.S. have made some predictions based on the trends they’re seeking and what they expect 2023 to hold.

We’re all at the mercy of global events and issues like the war in Ukraine, inflation, interest rates, a potential recession, political divisions and continued restrictions on travel to and from parts of Asia. Of course, here in Southern California, we also have the issues of wildfires, homelessness and more.

PEOPLE ARE RETURNING TO WORKPLACES – BUT THEY EXPECT MORE FROM THEM

One phenomenon that many of the experts mentioned is that people are slowly but surely returning to the workplace after a couple of years of working at home and in other remote locations. That’s true in some sectors more than others. 

That means a market for new office space. However, luring workers back to the office is going to require a more comfortable work environment with more amenities, open spaces and lots of windows. That typically means newer buildings rather than renovated ones. Mixed-use buildings that combine offices, retail space and condos or apartments are becoming more popular. 

One real estate executive says, “Low unemployment spells hope in the office market. If we get people back in the office this could turn around quickly.” An official with one global real estate investment bank adds, “From a sector standpoint, fundamentals are the best — industrial, multifamily and also across the alts — data centers, single-family build for rent and student housing.”

Wherever you’re investing your money or developing properties next year, it’s crucial to have experienced legal guidance every step of the way from professionals who know the unique challenges and opportunities of the Los Angeles CRE market.

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California is known for having some of the most expensive real estate in the country. This is especially true in Los Angeles. Like most of the rest of the country, the values of real estate properties have been dramatically increasing over the last few years.

If you’re interested in investing, you may be wondering if this trend is going to continue. How long can the prices keep going up before they drop? Some have proposed that there could be a decline in prices over the winter, and they have seen slight drops already – such as a 1.9% decline in Los Angeles itself. 

But what types of things suggest that the prices will go up overall, especially when looking at the big picture?

SUPPLY REMAINS LOW

One of the biggest reasons for the increase in price is just that the supply of properties is not as high as the demand. From an investment perspective, people can find this beneficial. 

The market is incredibly competitive, the real estate here is beautiful and Los Angeles is the second largest city in the country. It is likely that supply will be lower than demand for the foreseeable future.

HIGHER INTEREST RATES

Another reason for recent increases is that interest rates have gone up – this is often a bit more difficult to predict. It does seem that rising rates are the norm right now, but there could be a shift in the future. Fortunately, this is unlikely to wash out the gains made by the fact that the supply is simply still low and the prices of comparable properties are also increasing.

If you are investing in real estate, you may need to know what legal steps to take.

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You spent many years working in the real estate industry and have now used this experience to build your own company. So far, you’ve made wise investments and your balance sheets are looking good. 

Part of making sound investments also includes knowing when to walk away from a deal. Getting tangled up in an unfavorable investment could potentially set you back years. It may even place all of your hard work in jeopardy. 

Outlined below are a few signs that a real estate investment may not be for you:

THE TENANTS JUST AREN’T THERE 

Your aim is often to purchase property and complete renovations so that you can lease the luxury building to high-income renters. The trouble is, these renters just don’t exist in the location of the real estate. 

The area could be going through a hard time, with high unemployment, high crime rates and many other social issues. You could end up spending a fortune on creating a nice place only for it to sit on the market because the potential tenants cannot meet the price. 

POTENTIAL FOR STRUCTURAL ISSUES 

Most would agree that older buildings have a lot more character, and they certainly have potential. The downside of this is that they tend to require a lot of work, particularly if they have been neglected over the years. 

Renovating old buildings is not for the faint-hearted because surface issues can soon turn into more complex problems. If you’re not careful, you could end up investing in something that looks pleasing aesthetically but has no value in terms of its structure. 

If you’re unsure about an investment or you’d like to walk away from a deal, make sure you look into your options. If you obtain some legal guidance, it’s likely that the appropriate choice for you can be made. 

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Resolving a business dispute in court is not always the ideal solution. It can be very expensive to go to court, and you may have to wait months before you have a hearing in front of a judge. You also have to worry about what the other party might say in court and how their responses to your claims might affect your reputation.

Even when your claim is successful, the other party could still damage your standing in the community and affect your company’s future revenue. Of course, such disputes often end up in court because the parties who originally negotiated the contract no longer agree about what is fair or appropriate related to their arrangement with one another.

Is it possible for you to settle the matter with the other company without taking the matter to civil court?

MANY BUSINESS CONTRACT DISPUTES SETTLE

The good news if you hope to avoid court proceedings in your contract dispute is that many business disputes that resulted in one party filing a civil lawsuit end up settling outside of court. When the other party to the contract realizes that you will assertively pursue your rights, they might finally fulfill their obligations to you or agree to sit down for mediation.

The threat of pending litigation is a powerful motivator for someone who has previously ignored their contractual obligations to you. Trying to work with one another and settle your disagreement amicably can be a smart choice if the other party cooperates and you want to continue doing business with them.

GOING TO COURT MAY MAKE MORE FINANCIAL SENSE

The benefits of going to court can be significant for a company coping with noteworthy consequences related to a breach of contract matter. Especially if you have made payments and not received goods or services or if your company has taken losses and you want compensation, a lawsuit may be the best way to minimize the financial impact another company’s breach of contract has on your organization.

Some people will try their best to negotiate a settlement outside of court, while others may recognize that presenting their case to a judge is the best way to secure optimal results in their situation. Evaluating different options for resolving breaches of contract can help owners and executives act in the best interests of the company that they manage.

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The lack of affordable housing in California – particularly in the Los Angeles and San Francisco areas – has long been a problem. State lawmakers have been attempting to tackle it via legislation that would provide more and lower-priced housing within a finite amount of space.

Last month, Gov. Gavin Newsom signed two bills into law that will allow commercial property owners to convert vacant and underutilized buildings in areas zoned for commercial properties into affordable housing. These include strip malls, office buildings and big chain stores that have been sitting empty or far from fully rented — costing the owners money and becoming a target for vandalism and other crime.

The two pieces of legislation, Assembly Bill 2011 and Senate Bill 6, have been stalled in Sacramento as developers, unions and affordable housing advocates fought for their interests. Housing advocates are calling the laws a “game changer” and a “huge deal.” The projects will also provide considerable job opportunities in the construction industry at union-level wages.

VACANT PROPERTIES ARE IN URBAN AND RURAL AREAS THROUGHOUT THE STATE

While the new laws, which take effect next July, will no doubt impact commercial properties that have been losing money in urban areas, there are a number of properties as well as parking lots in more rural areas of the state that have sat vacant as retailers have moved online and many office workers have begun working remotely.

The two laws have requirements regarding wages and the hiring of union workers as well as environmental standards. There are also restrictions on the number of units that can be offered for sale vs. rental and to ensure that housing is available for people at various income levels – including those who can’t currently afford to rent their own homes.

It’s crucial for commercial property owners, developers and investors to understand the new laws. Having experienced legal guidance can help you make the most of the opportunities they offer and avoid unnecessary legal issues.

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The first few months of your partnership can make you think everything will run perfectly, just as you envisioned. However, the good times may only last a while as things could change along the way, and you may no longer get along with your partners like before. A misunderstanding could be the beginning of the downfall of an otherwise successful venture.

As such, it is best to stay ahead of the situation and avoid a potential fallout with your business partners. A well-crafted partnership agreement that provides clear directions in case of partner disputes can be the lifeline of your business.

YOUR PARTNERSHIP AGREEMENT COULD HELP RESOLVE DISPUTES

Even when in a business partnership with a close friend or family member, it is advisable to have a comprehensive partnership agreement detailing each party’s duties and responsibilities. 

A business can test even close friendships or blood ties, and resolving disagreements can be difficult without a formal agreement. However, if everyone clearly understands their duties and responsibilities in the partnership, it will help avoid disputes in the first place.

Importantly, your partnership agreement should also include a dispute resolution process that partners should follow if there is a misunderstanding. Having a well-outlined procedure for handling partner disputes will help address issues that arise before they spiral out of control.

HOW EFFECTIVE IS YOUR PARTNERSHIP AGREEMENT?

A partnership agreement is essentially the constitution of your business, and you cannot risk any loose ends or ambiguous language in this crucial document. Therefore, you must ensure that it addresses every likely scenario that could affect your business operations, like disagreements among the partners.

If you are in a partnership or are thinking of partnering on a business, it is worthwhile to have a properly drafted business agreement that protects both individual and business interests.

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A commercial landlord may buy a property with some ideas already in mind about the type of businesses they would like to have in that space. Maybe they just think it fits the area or it fits the type of building that they bought. In any case, it’s their property and they have plans for how they want to develop it.

It is common for commercial landlords to ask business owners what type of business they’re going to run as part of the pre-screening process. If the landlord believes that the business idea is not going to be successful, or if they see red flags in the financial statements provided by the business owner, they may decide not to rent to that individual. They’re certainly allowed to do this on the grounds that specific businesses might appear to be too much of a risk to them and they may not believe the lease will be paid.

AVOIDING DISCRIMINATION

One thing that is important for commercial landlords to remember is that they need to be careful to avoid discriminating against any of the potential tenants. Discrimination on the grounds of things like religion, race or gender is prohibited, just as it is with residential properties.

So, a business owner may believe that they can deny someone the space by claiming they don’t want that type of business to be at the location or that they don’t think it is going to succeed. And that’s fine from a business perspective, but they need to be sure that they’re not actually denying it based on one of these protected classes.

You can see why it’s so important to get the details right and why anyone working in the commercial property industry needs to make sure they always understand their legal options. You don’t want to make a mistake that puts your investment in jeopardy. 

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Most people who invest in home purchases hire an inspector to ensure the place they’re buying isn’t a fixer-upper. Home inspectors cover a wide range of issues in homes. Inspectors, however, can fail to do their job and cause investors to sink money into poorly maintained homes.

If you want to make sure your home inspector did their work, you may need to check these commonly missed issues in a home:

1. CRACKS IN THE FOUNDATION

One of the worst things to find in a home is a crack or break in the foundations. A broken foundation can spell doom for the future of a home and could cost thousands of dollars to repair. An inspector may dismiss early signs of foundation problems without a keen eye.

2. BASEMENT LEAKS 

Many basements develop leaks that can ruin finished basements and create a breeding ground for mold. Some leaks in a home can only be noticed when there is rainy or wet weather, however, there may be obvious signs there’s a problem, which many inspectors should know to watch for. There may be signs of a quick, temporary fix or dark patches in the wall that show there’s been water damage.

3. ROOFING ISSUES

Many inspectors won’t climb onto a roof to thoroughly check for issues, but that doesn’t mean they can’t spot serious issues. There may be mold or missing tiles that can be seen on the ground and obvious leaks or holes that can be found in the attic. Any of these issues could cause serious issues with the structure of a building.

If you believe the home inspector you contracted missed something during their job, it could cost you a fortune. You may need to reach out for legal help when recovering from your losses.

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