From exchanging products and services to leasing and transferring real estate, legal contracts are an essential part of American commerce. Adopted by every state in the U.S., the Uniform Commercial Code ensures that businesses can rely on the law to enforce those contracts if necessary. 

In the event of a contract breach, the non-breaching party may be able to recover monetary damages in court. However, financial compensation is not always enough to restore a business’s position. Equitable remedies offer a potential non-monetary alternative when parties need to resolve a contract issue. 

1. Specific performance enforcement

When the subject of a contract is unique or difficult to acquire from another source, such as a piece of property or a rare good, it may be preferable to request that the court enforce the terms of the original agreement. Known as specific performance, under this remedy the court orders the breaching party to perform the specific actions stated in the contract. 

2. Contract reformation

In some cases, a contract may contain a mistake, ambiguity or misrepresentation that does not reflect the original intentions of each party. When this happens, a judge may order the parties to rewrite the contract in whole or in part so that it accurately conveys the true intention of the agreement. 

3. Contract Rescission

Rescission allows one or both parties to dissolve the original contract entirely. This may be preferable when parties agree that doing so will help to minimize the cost of mutual damages. Rescission may also be appropriate if one party has committed a misrepresentation or mistake, breached fiduciary duty or else exercised undue influence or coercion. 

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Commercial real estate laws are much different than those for residential real estate because the goals are different. In commercial real estate, you have the right to limit who you rent to. 

While you cannot discriminate based on protected factors, such as race or religion, the California Department of Real Estate does state that you have the right to limit the use of your property. Essentially, this means that you can deny a rental application if you do not like the specific business the applicant wants to put there. 

Contract details

You can include in your contract limitations about the use of the property. This would allow you to exclude certain businesses for the premises. It is essential to ensure your contract is clear and covers everything possible to exclude certain types of businesses. If your contract is not precise, then you will have no legal grounds upon which to object to the business operations. 

Change of business

If your tenant suddenly changes his or her business or shifts the focus to something of which you do not approve and it violates the contract, then you can terminate the agreement. You may still have to go through the eviction process. The tenant may also have the right to end your agreement in some situations without a breach occurring. 

Illegal activities

If the business activities are not legal, then you still must state in your contract that the tenant cannot use the property for illegal purposes if you want to be able to end the agreement. Illegal activity is not an automatic trigger for your rights to evict. 

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Adverse possession is a legal concept governing the possession of land owned by someone else. The adverse possessor acquires valid title to the property in question as long as he or she has the land for the length of time dictated by the state statute and meets all common law requirements. 

The doctrine of adverse possession helps encourage landowners to be more responsible about their properties as a way to avoid land waste and helps align land title disputes when there is a difference between the official records and how people use the property in reality. An effective adverse possession claim meets all five required elements. 

Continuous possession

A single person must have continuous possession of the land. The adverse possessor uses the property for an ongoing and uninterrupted time. He or she must use the property as the true owner would. For example, seasonal use of a vacation home over the course of many years is acceptable because that is how the owners would use it too. 

Hostile possession

Possession of the property is hostile when it infringes on the rights of the true owner. The adverse possessor must have awareness of trespassing, occupy the land or make an honest mistake. An example of an honest mistake is if a person relies on an incorrect deed. 

Open and notorious possession

The person’s act of trespassing cannot be secret or sneaky. He or she has to openly act like the owner of the property. The adverse possessor’s actions put the true owner on notice about the trespassing. 

Actual possession

The adverse possessor must actually physically possess the property and treat it as his or her own. Merely planning to occupy the land does not count. 

Exclusive possession

The person’s possession of the property must remain exclusive, meaning that he or she does not share control of the property with anyone. The adverse possessor keeps others off of the land, including the owner. 

The period required for occupation of adversely possessed in California is five years and the person must also pay taxes during that time. 

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There are many reasons why disputes between landlords and tenants come up. Our blog has touched on eviction and other legal issues that arise when landlords and tenants encounter problems, whether a tenant falls behind on rent or violates a rental agreement in some other manner. Our law office understands that a range of negative emotions often come up during these disputes, such as high levels of stress or feeling depressed or even angry.

Unfortunately, these emotions sometimes interfere with a landlord’s ability to secure a favorable outcome.

Strategies to reduce negative emotions during a dispute

There are multiple ways in which landlords can reduce negative emotions such as anger, stress and depression during a dispute with a tenant. Sometimes, reaching out to a tenant helps clear up confusion and allows both parties to move forward in a more amicable manner. However, this is often impossible for many landlords and contacting a tenant is sometimes a bad idea. It is always beneficial to develop a clearer understanding of one’s legal options and relevant laws, as well as the approach they will take if the dispute heads to court. Moreover, picking up a hobby or spending more time with friends and loved ones also helps many landlords.

When negative emotions get in the way

These negative emotions frequently interfere with a landlord’s ability to protect their interests. For example, high stress levels sometimes prevent landlords from devoting a sufficient amount of time and energy into reviewing their options. Moreover, those who are struggling with anger or depression often have greater difficulty in the courtroom if legal action arises. Review our site for more on legal matters involving tenants.

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Whether you are an entrepreneur preparing for your first brick-and-mortar opening or an established company looking to relocate or expand, establishing favorable terms during lease negotiations can make the difference between struggling and striving.

Businessmen and women themselves, savvy landlords often create lease contracts that ensure the profitability of their own bottom line. One of the most important aspects of negotiating a commercial lease is deciding between a shorter or longer-term contract.

1. Know that landlords often favor longer lease terms

Landlords generally favor longer leases that allow them to realize a stable cash flow while minimizing the expense associated with contracting and installing a new tenant.

On the other hand, business owners often prefer shorter leases for various reasons. New businesses that anticipate rapid growth and the need for more space may prefer to keep options for relocation or expansion open. Meanwhile, entrepreneurial companies may not be ready to commit to a specific space.

2. Consider the potential advantages of a longer lease

Because many landlords prefer longer, stable lease terms, they may be willing to offer prospective tenants certain perks for committing to a long-term lease.

In addition to reducing the cost per square foot of space, a landlord may provide significant tenant improvements if a business owner chooses to commit for a certain period of time. That might include changes to walls, ceilings and lighting as well as custom design elements.

3. Remember to think about renewal options

Business owners considering a lease should also pay close attention to renewal options. Often a contract includes options to renew either via formal request or automatically.

Established companies may benefit from a longer original lease term with multiple options for renewal, while a start-up organization may prefer a short initial contract followed by one or more renewal options.

4. Realize that terms are negotiable

Whether your organization is just getting started or you have an established brand, know that commercial leases are nearly always negotiable. By taking the time to evaluate all your options, you may be able to get more for your money than you anticipated.

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Buying commercial real estate is one thing; profiting from it is an entirely different matter. We know that your goal involves the latter. Otherwise, why bother making the purchase in the first place?

Even if you are a seasoned real estate investor, there is no harm in reviewing the basics involved in a successful and profitable purchase of commercial real estate. We know that not every investment is a home run. However, if you find yourself striking out more often than usual, you may want to examine this guide by AZ Big Media to review the basics see where you may be going wrong.

Financing options

You have two basic options when purchasing commercial real estate. You can find or form an investment partnership or you can take out a commercial loan. If you choose a partnership, keep in mind that your partners will have equity in the property. Therefore, you must ensure that they not only bring enough to the table to make it worthwhile to partner with them, but you must also verify that they share your vision for the property.

Risks and benefits

If you are obtaining a commercial loan to purchase the property, bear in mind that you may have to make a significant payment up front. This depends on many factors, including your credit history. Remember that a successful investment in commercial property also involves a commitment of time to develop it into something that is useful and desirable for potential tenants.

Potential benefits of investment in commercial property include flexibility and the potential for a high return. However, you must weigh the benefits of buying a specific property against the risks to determine whether the purchase is worth your while.

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As prices rose and real estate sales slowed in Los Angeles during the second quarter of 2020, many developers began to plan their next moves in an unsure market. As reported by the Los Angeles Business Journal last month, multifamily properties such as apartment, townhome and condominium buildings will be the first sector to rebound. 

If you are planning to expand your operation by investing in multifamily real estate this year, get started with this simple guide to the Los Angeles landscape. 

Historically strong demand 

Prior to the recent slowdown, 2019 saw the highest sales ever for multifamily real estate in Los Angeles. This unprecedented volume came from the ongoing high demand for rental units in Southern California. In fact, the L.A. Business Journal also reports increased sales volume in this sector of 574% between 2009 and 2019. 

Location matters 

When tenants seek their next home, they are looking for a great location above all else. When choosing rental properties, you should also keep this consideration top of mind. Look for neighborhoods with well-kept homes and amenities, high-demand school districts, nearby retail and dining, and other hallmarks of high growth that attract great renters. 

Financial due diligence 

Before investing in a multifamily property, carefully review the building’s existing finances. At minimum, you should become closely familiar with: 

• All existing financial reports 
• Current service contracts 
• Current rent status 
• Income and expenses for the past three years 
• The local vacancy rate 
• Copies of existing tenant leases 
• Proof of rental payments 

Legal considerations 

If you are new to commercial real estate investment in general or the multifamily realm in particular, work closely with professionals who have experience in local real estate. For example, a property management company or real estate attorney can help make sure your tenant screening practices are in line with state, federal and local laws. This can help you avoid costly housing discrimination lawsuits. A good team will also make sure your leases have the required disclosures and cover your investment from damage and liability. 

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When you rent out property to tenants, you have a responsibility to inform them of certain information, such as problems or defects on the property. The act of sharing this information with prospective tenants is a disclosure. 

If someone has died on the property, is this a fact that you have to disclose to tenants? California law says yes, but only under certain circumstances. 

Material fact 

According to SF Gate, a material fact is one that could negatively influence a potential tenant’s decision to rent the property. Generally speaking, you cannot withhold material facts from prospective tenants in the hope of manipulating their decision. The law protects the right of the tenant to take legal action if he or she finds out after renting that you had knowledge of a material fact and failed to disclose it. 

Time limit 

California law regards a death on your property as a material fact, but only within the first three years of its occurrence. This means that you have to disclose any deaths on the property that happened three years ago or less. However, you do not have to disclose a death that occurred more than three years ago. 

Cause of death 

California makes an exception if the cause of death was acquired immune deficiency syndrome. The law prohibits you from disclosing an AIDS-related death because it would be discriminatory against someone with a disability. 

Tenant questions 

Although the law does not require you to disclose certain deaths, if a tenant asks you if there have been deaths on the property, it requires you to respond truthfully to the question. 

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California real estate professionals like you may sometimes get into disputes. Whether it is with a client or someone else, disputes are harrowing. Even professionals find these situations stressful. 

There are different ways to handle disputes. Some methods are better suited to certain situations than others. Mediation and arbitration are two of these methods. 

How do mediation and arbitration help save relations? 

The Balance discusses mediation and arbitration for real estate. There are other methods of handling disputes as well, such as litigation. But litigation is often expensive and time-consuming. It involves all parties going to court. In the end, you may also end up burning bridges that could have come in handy in the future. 

There are better ways to go about this that do not involve burning bridges. Many entrepreneurs like yourself prefer to maintain peace and relations. Arbitration and mediation are two ways of doing that. They both involve negotiations outside of court. This saves time and money. 

Primary differences between mediation and arbitration 

So what are the primary differences? With arbitration, an arbitrator hears evidence from all involved parties. From that, they make a decision on what you should do. Mediation is a more flexible process. It relies on all parties working together to come to a conclusion that everyone can accept. At the end, you walk away with a written agreement. But this agreement is not legally binding. 

In other words, arbitration does not rely on the disputing parties as much as the arbitrator. In mediation, the parties share an equal amount of responsibility. The mediator is often there just to keep things running in a smooth way. 

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Residential rent control is a cap on the amount of money a landlord can charge tenants per month to lease a living space. It is beneficial for residential tenants because it prevents their rent from increasing to something more than they can afford. However, what is beneficial in residential real estate can be detrimental to commercial real estate.

Approximately 30 years ago, the California legislature recognized the potential statewide adverse economic effects of commercial rent control. Therefore, it passed a law prohibiting any public entity from enacting or enforcing it.

Why is commercial rent control detrimental?

SF Gate explains why commercial rent control is not beneficial. The businesses that receive the benefit of commercial rent control have an unfair advantage over their competitors. This discourages competition among businesses, and the open market suffers as a result.

Why is a statewide prohibition on commercial rent control necessary?

According to the California Civil Code, even if only one community were to enact commercial rent control, the economic impact would extend beyond its borders. The resulting economic drain could extend statewide.

What are the law’s limitations?

The text of the law expressly limits its scope in a number of ways. For example, a commercial lease is a legal document that requires certain duties of both tenants and landlords. The law prohibiting commercial rent control does not relieve either party of the obligation to fulfill his or her duties under the terms of the agreement. Additionally, if a tenant wishes to sublet the property and the landlord allows it, the law does not prevent the landlord from establishing the price required of the sublessee expressly in the commercial lease.

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