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Orange County Legal Blog

Thinking about a development on abandoned property?

It is no secret that land is at a premium here in California. For this reason, it may work to a developer's benefit to consider purchasing a piece of abandoned property that requires revitalization. Doing so could result in an ultimately profitable development.

The Environmental Protection Agency's Land Revitalization Program encourages developers, local government and the public to take on abandoned sites and make them useful again. The documentation on these sites helps eliminate any surprises in the future and let's a developer know what the issues currently are. Some of the locations provide access to nearby communities and already have infrastructure, which makes them good candidates for development.

A landlord may need to give something to entice a tenant

Even when rental properties are at a premium in a certain locale such as Orange County, a prospective tenant may be willing to go elsewhere in order to find the right property with the right lease terms. This could be because a landlord failed to offer the appropriate incentives to attract the desired tenant. It may be necessary to give something in order to get a lease signed.

One thing that commercial tenants would probably appreciate is free rent. Some property owners want to know that they have a property rented out for a good while, so it might be necessary to give up a month or more of rent in order to lock in a tenant for an extended lease period. The free rent does not have to come at the beginning of the lease in order to work as an incentive to the tenant. Instead, it could come at some later point in the lease term -- perhaps somewhere in the middle.

Resolve disputes through ADR, whenever possible

Mediation and arbitration are tools often used to help resolve almost any kind of legal dispute or disagreement. This is often the first option for many people in a legal dispute because it usually will be solved more quickly and with less expense than taking a case to trial. 

 

When developers are told there is a "cloud on the title" to land

It can take some time for California entrepreneurs to become familiar with all the lingo associated with real estate. One of the phrases that developers do not want to hear, but need to understand, is if there is a "cloud on the title" to a piece of property they want to purchase. Understanding what this means can help determine whether to move forward with the sale.

When there is a cloud on the title to a piece of property, it means that someone else may have an interest in it. For instance, if a previous owner had work done on the property and failed to pay a contractor or subcontractor, there could be a mechanic's lien on the property. The same goes for unpaid taxes, an unpaid mortgage loan and more.

Is a NNN lease really in the best interest of a landlord?

When it comes to renting commercial property, owners have numerous lease options. When determining the best option, an Orange County landlord might consider a NNN lease, also called a triple-net lease. However, some analysis is in order to make sure it turns out to be the best choice under the circumstances.

One of the primary negotiating points in a NNN lease is whether the owner pays for anything. Depending on the potential tenant, the landlord may not be responsible for the payment of repairs and maintenance, among other things. For instance, if the structure is used as a fast food restaurant such as KFC or McDonald's, the tenant will most likely pay for everything. The property owner may end up footing the bill for repairs to the structure and the roof, but nothing else.

Can a commercial tenant negotiate a personal guarantee?

Plenty of rental property owners here in California have ended up not receiving the monies promised in leases. In fact, some landlords end up discovering that a tenant broke the lease and moved out in the middle of night. For these reasons, many of them now require prospective tenants to sign personal guarantees, which make them personally liable for the rental payments outlined in their leases. A commercial tenant essentially ends up paying for the bad acts of those who came before them.

Even so, that does not mean that the personal guarantee is not up for negotiation. It may be possible to eliminate the need for it by providing a potential landlord with proof of a good rental history, including consistent and on-time payments, along with evidence of steady income. Some property owners will not be swayed, however.

Reasons why a development could encounter construction problems

After the real estate deal is closed, most Orange County residents who are new to investing in land feel as though the worst is behind them. Unfortunately, the construction phase of any development could actually be where the problems truly begin. Avoiding these problems could help keep the project on track.

Not every issue during construction can be anticipated. However, there are common problems that arise in many development projects that end up requiring a change order to which everyone involved must agree, usually cause cost overruns and add more time to the completion date. For instance, some developers jump the gun and begin construction before the design is completed, which some would say courts disaster.

It�s never too early to lease for holiday pop-ups

Pop-up shops have become a key part of the shopping mall ecosystem. Once rare, they’re now expected. And while many customers look forward to the costume shops and candy stores that arrive before the holidays, landlords might look forward to the ways they occupy valuable floor space.

When you rotate your retail space with pop-ups, you’re constantly scheduling different businesses to get the most from your space in the valuable holiday periods. You’re also dealing with many more leases, and you want to make sure you cover your bases.

Attracting a commercial tenant means more office amenities

It is possible retail property owners here in California and elsewhere are already used to providing more for their prospective renters these days. Now, it appears that those who own office buildings may need to step up their game as well in order to attract tenants. These days, a commercial tenant expects more amenities when renting office space. 

The work environment has changed in recent decades. More people than ever have the opportunity to run their businesses from home. Moreover, an increasing number of workers also work from home, at least part time. This means that the offices they spend their workdays in need to provide them with certain benefits and perks.

Consider creating a separate LLC for each development

For Orange County business-minded individuals, owning real estate could be a lucrative and satisfying endeavor. One of the primary concerns of anyone in this position is protecting themselves and their investments. One way in which to do this is to form a limited liability company for each development.

The first reason to put property into an LLC is for the personal liability protection. Under most circumstances, an Orange County developer could avoid personal liability for the debts, lawsuits and more. Even those who already know the benefits of creating an LLC may wonder why it would be beneficial to do so for each property owned.