Leasing commercial property is a great way to grow your business. When entering into a commercial landlord/tenant agreement, your lease will be the blueprint between you and the property owner. A good lease will offer protection to both parties, while also providing guidance in the event disputes arise.

However, not all commercial leases are in your best interest. Forbes lists some clauses and language to look out for if you want to protect your investment. In the very least, these clauses require clarification, or modification if you believe they will adversely affect you down the road.

Provisions that favor only one party

Leases are supposed to favor both parties equally. Provisions that offer benefits only to the landlord – or worse – can be construed as detrimental to you, are clearly not in your best interest. If one such provision exists in a lease, it is likely that the document was designed to favor the property owner and not the tenant.

Vagueness surrounding obligations

Both you and the property owner will have certain obligations when it comes to the commercial property. These obligations and responsibilities must be explicitly stated, otherwise disputes are bound to occur. When they are not, occurrences out of your control may become your responsibility. As a result, you may face legal action for a situation that the landlord should have been in control of.

Typos and errors

While mistakes are part of being human, leases are an important legal document. Accordingly, they must be reviewed and edited diligently to ensure they are accurate and free of mistakes. Numerous mistakes may indicate the landlord is also careless in other ways, which can directly impact you should the building require repairs or maintenance.

Never let a questionable clause or provision slip by unnoticed in a commercial lease. It is best to have the document reviewed by an attorney to pinpoint any issues, so you can make the right decisions for your business.

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In certain real estate transactions, you may find yourself drafting your own home sale contract as opposed to someone else creating it for you. This can happen when you are buying or selling a home without a real estate agent or buying a property directly from the seller.

In these instances, it is important to include specific elements in the contract to reduce problems later.

Contract requirements

According to FindLaw, a home sale contract must include the following elements:

• The full, legal names of both the buyer and the seller
• The property address and a description of the property
• The amount you are buying or selling the property for
• Signatures from all parties involved

Including these elements in your contract ensure that it is both legal and binding.

Additional components

While you can still sign a contract that has only the bare-bones requirements, it is often a good idea to add other clauses and specifics. For example, including financing, contingency and inspection clauses can protect both parties in the future. Federal law also requires homeowners to disclose certain risks, such as potential lead paint exposure.

It is a good idea to add specifics to the home sale contract that detail: the date that both parties sign the contract, the date that the buyer can take over the property, the names of any agents involved in the transaction and any money that is put towards the purchase. This list is not exhaustive.

If you have any questions about the validity of your home sale contract, it is a good idea to have a professional look over the paper before you sign it.

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Investing in California real estate alongside like-minded individuals may offer many advantages. It may give you access to more knowledge or capital than you would have otherwise, for example. It may also make it easier and faster for you to generate wealth through your investments. An important aspect of any solid investment partnership is a strong partnership agreement, and the language you include in yours may have far-reaching effects.

According to SmallBusiness.Chron.com, a strong investment partnership agreement contains specific elements and gives you something to reference in the event that something unanticipated arises. What areas do you want to make sure to address in your investment partnership agreement?

The contributions and expectations of everyone involved

Make sure that your agreement dictates exactly how much each partner contributed from the get-go. If you have plans in place as far as who plans to invest what and when moving forward, be sure to include this information, too.

Profit and loss information

In the absence of an investment partnership agreement, there is an assumption that all partners are going to split profits evenly. You have the opportunity to dictate otherwise in your agreement, though. You may use the agreement to stipulate how much of a percentage each partner has in the business. If preferable, you may use it to state that each partner’s profits and losses are going to fluctuate based on their contributions to the business.

While these are some key areas to address in your agreement, there are many other areas you may also want to consider therein. You may also want to use the agreement to outline who has decision-making authority, for example, to address the process of adding or removing partners if need arises.

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As a California commercial landlord, you may encounter a tenant who wishes to sublet your space for a portion of the lease term. Your tenant may not need the entire space anymore and is looking to generate income by renting some of the rental property. Conversely, your tenant may have already vacated the space but still has a good bit of time remaining on the lease.

SFGate reports that there are certain guidelines you must follow when a tenant requests to sublet a commercial space.

The subleasing process

If your commercial tenant wishes to sublease some of the space you leased, you must give your approval first. When responding to the request, do so in writing. You maintain the right to refuse a request to sublease your space. If you fail to respond to the written request, the tenant may assume that it is acceptable to move forward with subleasing the extra space.

Valid reasons for denying a sublease request

You need to have a valid reason for refusing to allow a commercial tenant to sublet. If the prospective subtenant runs a business that is not well-suited for the building, this may constitute valid grounds for denial. The same holds true if you question the legality of the proposed use. You may have valid grounds to refuse a sublease request if your original tenant was unable to stay current on rent.

If you refuse the request in writing, you may have legal recourse if the tenant moves forward with the sublease, anyway. Ignoring your refusal may constitute grounds for eviction.

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Being a landlord comes with its fair share of risks because there are so many regulations to follow. Because of this, it is important to take certain steps to reduce exposure to liability and tenant conflicts.

Treating tenants fairly and minimizing your risks can help give you peace of mind as a landlord.

Make your property somewhere you would want to live

Chances are that you would not be willing to live in subpar conditions, and your tenants do not want to either. Be sure to fix unsafe conditions and make it a point to maintain your property. If a tenant calls you with a problem, respond as promptly as you can.

Safety is also a big issue when it comes to desirable living conditions. According to FindLaw, you may be held liable for crimes occurring on your property. Be sure to install safety features such as motion lights and even an alarm system if necessary.

Treat all tenants fairly

Laws exist to prevent housing discrimination and the authorities take them very seriously. Brush up on your knowledge of these laws to ensure that you do not cross over the line by accident. In general, do not deny housing to someone based on their gender, disability, race, religion or other protected status factors.

Whatever screening process you ultimately decide to use to determine tenancy requirements, be sure to use that same process for every single person. Exceptions can land you in hot water.

Accommodate disabled residents

Before you rent a property to anyone, make sure that it complies with the Americans with Disability Act’s requirements. If there are any additional improvements you can make to accommodate your resident, put the effort towards doing that.

Complying with all laws regarding fair housing requirements and putting in a little extra effort can go a long way towards avoiding tenant disputes.

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As a landlord in California, you probably watched the past few years with bated breath. Government officials made several attempts to introduce rent control measures to make housing more affordable, but these propositions face continuous defeat.

The most recent defeat you may have noticed came in November of last year when Californians voted down Proposition 21. This ballot measure aimed to give local governments the right to dictate the ceilings for rent, with some exceptions.

ABC7 notes that this represents the second time in two years that voters rejected rent control measures. The last time occurred in 2018 and involved Proposition 10.

Costa-Hawkins Vs Propostion 21

The Costa-Hawkins Rental Housing Act of 1995 restricts local jurisdictions from placing rent control measures on units built after 1995. The most recent proposition had hoped to change this restriction to apply only to properties 15 years or older on a rolling basis. It also hoped to restrict how much you could raise the rent by when a tenant moves out.

Housing affordability crisis

Housing affordability remains a top concern all across the country, in both rental and ownership markets. This problem has compelled some people to move into rural areas. Some people have also decided to pursue alternative means of homeownership, such as RVing or living in stick-built tiny homes. These markets continue to grow but have done nothing to stem the demand for traditional homes.

California continues to face concerns related to homelessness and high costs of living. Because of this, another rent control proposition will likely resurface in the next few years.

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When you first invested in California real estate, you may have pictured an easy business model that could grow your wealth. Real estate investments can be exactly that, but only when other entities follow through on keeping the terms of real estate contracts.

When another entity breaks a real estate contract, the options available to you depend on the jurisdiction and the laws affecting it. Even minor details in your case can make a difference in available remedies, but two main solutions exist.

Monetary damages

According to the Houston Chronicle, when another entity fails to hold up its end of a real estate agreement, you might have the opportunity to claim monetary damages. If successful, this results in you receiving cold hard cash that you can use to pay for damages suffered as a result of the deal not going as planned. Here are some common expenses real estate investors recoup costs for:

• Mortgage application fees
• Title search costs
• Property inspections

Equitable remedies

If you prefer to push forward with the original contractual agreement, you might successfully persuade a court to enforce the contract. These generally do not involve monetary claims, but enforcing the contract might make or save you money. Injunctions also form part of equitable remedies. Courts might issue injunctions on your behalf to stop entities from damaging property or committing other acts.

Finance gurus often attempt to pass real estate investment off as passive income. While it certainly has the potential to generate passive income, more hands-on investors tend to make more money. That said, hands-on involvement also means potentially tackling occasional instances of dishonesty and negligence in business relationships.

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When you became a landlord, you thought it would be a great way to make extra income while offering housing to people in California. If you have little landlord experience, then you may have the same amount of experience with tending to landlord/tenant disputes.

AllBusiness.com describes several ways that landlords may sort out issues with residents. Prepare for the inevitable sooner rather than later.

Get everything in writing

Create a file for all your tenants where you document all verbal altercations, maintenance requests, lease violations and anything else that may land you in legal scalding water. With thorough documentation, you give yourself a layer of protection that could serve you well if you take a tenant to court or if a resident takes legal action against you.

Meet in-person

When tenants have something to get off their chest, request to meet face-to-face rather than try to hash the matter out over the phone. Further, make yourself open to talking things out rather than stewing in negative emotions that may linger and sour your relationship with your residents. Let your tenants know that they can come and talk to you about major and minor issues. A discussion may help you reach common ground and avoid escalation.

Learn the law

If you have not already, familiarize yourself with the latest laws and regulations for landlords and tenants in California. Understand your obligations and your tenants’ obligations, so you know when a tenant may bend or break the law or when you may violate a tenant’s rights and sow seeds of dispute.

Understand how to protect yourself and put out fires sparked by upset tenants. The right knowledge may save you a great deal of frustration.

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From bad business deals to partnerships breaking down and the work to get capital investments, you may have faced your fair share of obstacles. Real estate investment is not without its challenges.

During your research, you may have come across REITs. Are they a more risk-free way for you to grow your real estate investment portfolio?

What are REITs?

According to Nerdwallet, in 1960, Congress created real estate investment trusts. These provided an avenue for small real estate investors to purchase stakes in larger businesses. Put simply, REITs are the crossroads between real estate and the financial market. There are three types to keep in mind:

• Equity REITs
• Mortgage REITs
• Hybrid REITs

What are the benefits of choosing REITs?

The biggest draw is that REITs need to return at least 90% of the taxable income to people who hold shares. It also sets rules in terms of how the entity managing the REIT can earn income and invest money. These and other restrictions add some safety features to this security type. Publicly traded REITs and public non-traded REITs register with the SEC and meet the provided guidelines.

Are they risk-free investments?

Non-traded and private REITs present higher levels of risk. Neither belongs to liquid markets where owners can trade them freely and immediately, compared to publicly-traded REITs. Investors also have a difficult time valuing these REITs, which can further complicate the selling process.

Publicly traded REITs might offer a great opportunity to diversify your financial portfolio and your real estate portfolio. However, Congress created REITs for smaller investors with fewer resources and lower disposable incomes. They do not replace managing real property investments. A more profitable angle for you to consider is whether you can create REITs for your investment properties to obtain more capital investments.

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When handling a real estate dispute, you may find it tempting to turn to litigation right away. But this is not necessarily your best option. While litigation has its place in the resolution of disputes, it is not the only card on the table.

So what are your other options, then? And which one will do you the most favors in your current dispute?

Role of a mediator

FINRA discusses alternative methods to litigation. Two of the most popular ones are arbitration and mediation. Both offer less expensive options that also take up less time. Mediation allows you the most freedom. A mediator does not have the ability to pass down a legally binding decision like arbitrators or judges. Instead, they help facilitate discussion. They step in if arguments get out of hand and ensure all parties say their share.

A mediator may also put their advice and opinions forward. This is often valuable, as they act from the standing of a neutral third party. But in the end, the final decision on how to handle the dispute is up to you and the other involved parties.

Role of an arbitrator

If your dispute involves higher assets or a more vitriolic disagreement, mediation may not hold enough weight. In this case, consider arbitration. It functions closer to litigation. An arbitrator listens to everyone present their side of a case. Then, they make a legally binding decision on how to handle the matter that all parties must abide by. You still get to skip the court date and related hassle, but it provides more structure for bigger arguments.

What works best differs from situation to situation. If you want more insight, you can speak to a legal professional about yours.

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