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Orange County Legal Blog

Review collection terms in development construction contracts

When beginning a new project here in Orange County or elsewhere, it will usually be necessary to enter into an agreement with a company to handle the renovation or build. Construction contracts can be long with a substantial amount of provisions and fine print. Two items to make sure to review -- in conjunction with everything else -- prior to signing and beginning work on the development involve the contractor's rights when it comes to collecting for non-payment.

It probably would not be surprising to see provisions regarding the filing of construction and mechanic's liens against the property owner for non-payment. More than likely, the provision will include more than just the general contractor. It will probably include suppliers, subcontractors and others who may provide goods or services for the construction.

Co-leasing clause worth considering for commercial lease

Many California shopping centers rely on the draw of their anchor tenants. As a result, many smaller businesses in shopping malls or centers may also rely on those tenants to obtain business due to the foot traffic generated by the bigger stores. Unfortunately, if an anchor tenant leaves a shopping center, the smaller stores could suffer. As a result, leasees may consider utilizing a co-leasing clause in their commercial lease.

A co-leasing or co-tenancy clause could help protect smaller businesses by essentially connecting their lease terms with the anchor store. For example, a smaller store could obtain a co-leasing clause that indicates that its rent would decrease or it would have the option of ending its rental agreement early in the event that the anchor store left the shopping center. The decrease in traffic the anchor store once generated could warrant a decrease in rent for smaller businesses.

Obtaining an estimate versus a bid for a construction development

Whether looking to build on or renovate a piece of Orange County property, it will most likely be necessary to hire a construction contractor. Depending on the size of the planned development, property owners and investors will want either an estimate or a bid for the project. What some newer developers may not realize is there is a difference between the two.

When receiving an estimate regarding the project, a construction contractor may provide a preliminary cost estimate. Even though the contractor will need to provide a fairly reasonable estimate of what the job will cost the customer, it does not necessarily serve as a final commitment to do the work for a particular price. What it does is provide the property owner some numbers to work with.

Getting your CC&R ducks in line

If you are a shopping center developer here in Orange County, one tool at your disposal for regulating usage of your available space are covenants, conditions and restrictions clauses, known collectively as "CC&Rs."

CC&Rs can also dictate how a business can display signs to advertise the business. Maybe the shopping center is located in an historic district where garish neon lights would detract from the overall ambiance of the area. Inserting a restriction on signage or other features can address this issue before it becomes a real headache. Learning how to use CC&Rs to your advantage can save you time and hassles later.

Finding rental space isn't always easy for a commercial tenant

Some would argue that this may not be the best time for a business to look for rental space anywhere in Orange County or elsewhere. However, with companies attempting to get back on their feet, it may be necessary for a potential commercial tenant to begin looking for the right location with the right price. With money undoubtedly tight right now, that could be a challenge.

Working with an Orange County commercial real estate broker could help in the search, but he or she does not have to be the only avenue for finding the right location whether it is for retail, office or industrial space. Talking to other business owners in the same industry could provide a lead or option not previously considered. Perhaps another company owner recently had to vacate a space that would work well for another one. It would probably at least be worth a look.

Commercial real estate markets could see drastic changes

There is no denying that a lot of things have changed in a short amount of time for people here in California and around the world. The question then becomes how these changes will affect the future, and nearly every individual and every industry is asking that question right now. The fact is that many markets, including the commercial real estate market, will probably see some changes.

Many businesses already feel the financial sting of the current situation. It may not be until next year before some of them can even consider anything resembling normal. In the meantime, many offices, shopping centers and other retail establishments are no longer able to afford their rents and/or mortgages. Some need to move out of the spaces they currently occupy because they cannot afford them. 

Landlord questions for prospective tenants

Obviously, a property owner will ask a prospective tenant numerous questions prior to considering leasing to someone in particular. However, there may be some questions that a landlord may forget to ask or may not know to ask that could provide important information about what kind of tenant a particular California business will be. Below are just some of the additional questions it may be worthwhile to ask before making a decision.

Does a prospective tenant have sufficient experience? Even if the tenant has a new business, it does not mean that the owner or owners do not have enough experience in its industry to know how to appropriately operate the business in order to keep it viable and paying rent. The answer to this question could make a difference in the structure of the lease -- or whether there will be a lease at all.

Construction loan options for California developers

Funding a project is a primary concern for property owners and those they work with. Like many other places, construction costs here in California are not cheap, and finding the money for a development may require some searching and creativity, depending on the situation. In some cases, the land will need to be purchased before lenders will work with developers on funding the construction of the project in order to guarantee some collateral for a loan.

Lenders look at a variety of factors before deciding to extend credit to developers, not the least of which is the cost of the project. The closer lenders will look at the factors involved. It may be necessary to look at one or more sources for loans in order to get the funding needed for a project.

Developers need a thorough environmental impact study

There is more to California's environment than just the air, water and soil. Developers may focus on these three factors as they obtain an environmental assessment. The problem is that if they forget to account for the potential impact on ecosystems and local animal populations, they could end up with expensive delays and could end up having to stop a project all together.

For example, a California judge recently blocked continued work on a development consisting of around 270 acres. The judge noted that the development company failed to account for fact that the project will interfere with the area's mountain lions and western pond turtles. Moreover, the development covers one of the last avenues for these and other animals to move from the inland to coastal mountains and vice versa. 

Consider these 3 factors before starting your own pharmacy

You've been a pharmacist for years, and you've realized that there is a lot of money to be made by running your own independent pharmacy. You are interested in running a pharmacy, but you know that it can take a lot of work and be costly.

Before you decide if you want to buy or start your own pharmacy, there are a few things you should consider. You will need to think about accounting, management and the team that you want to build.