Legal Information : Real Estate Law - Commercial

Legal Tips : Real Estate Law - Commercial

 
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19-Oct-2009
Incidental Use Can Violate Restrictive Covenants
In Kerney v. Endres (Tenn. App., July 2009), the Court held that a home based business violated residential- only restrictions even though the business was incidental to residential use. The plaintiffs in this case sued their neighbor to stop her ...
 
20-Jul-2009
My Business is leasing a commercial space and due to the economy I am going to have to move out early or sublet the space. But, my lease states that s
First, you need to speak with your landlord regarding your situation. He/she may have some options for you. However, if the lease agreement states that subletting is not permitted and the landlord will not change their mind, then this is the rule. Th...
 
13-Mar-2009
I am quitclaiming my property over to my sister and myself, each 50% ownership. However, she has a few judgments against her stemming from an accident
Yes... you both should be concerned about the potential ramifications from this transfer. If she has judgments against her, these judgments will attach to the property. Judgments follow the debtor to any property that the debtor purchases or has titl...
 
20-Feb-2009
I want to Quitclaim a piece of property to my new LLC. Will there be a gift tax?
It depends on several factors. My first suggestion would be to consult an accountant with that question. The Tennessee Department of Revenue can enforce a gift tax to certain transfers and there is the potential for a federal gift tax in certain tran...
 
06-Feb-2009
How much do I need to charge my tenant for a security deposit?
That is a personal decision for the landlord to make. It has been the "norm" to charge the tenant a Security Deposit equal to one month of rent. However, some landlords are attempting to entice tenants with a "No Security Deposit Required" sales pit...
 
30-Jan-2009
My LLC is renting office space in a complex. Will the landlord require my personal guarantee on the lease?
Probably yes... Typically in this type of setting, landlords will require that the principals of the LLC or other type of company personally guarantee the terms of the lease agreement. There is a risk of the entity going out of business and the landl...
 
09-Jan-2009
Do banks typically care if there is a survey exception in the policy because I really do not want to pay for an ALTA survey?
Typically yes... Most lenders require the attorney's office issuing the policy to remove the survey exception. Then in turn, the attorney's office will let the borrower know what needs to be done in order for the exception to be removed. This may...
 
19-Dec-2008
Is there a different Title Policy for Commercial Properties?
Yes and No... One of the main differences in a policy that is issued to a buyer in a residential piece of property versus the policy that is issued to the buyer of a commercial piece of property may be the exceptions in the title policy. Like any...
 
28-Nov-2008
What does "Potentially Commercial" mean on a FOR SALE sign?
This term is used in the commercial arena when a property is not currently zoned commercial. It may be zoned residential, agricultural or any number of zoning classes. Please be aware that this term of "potentially commercial" does not promise anythi...
 
21-Nov-2008
Mechanics Liens -What You Need To Be Aware of
By not being aware of potential mechanics' and materialmen's liens issues, it can leave a buyer with liens on their "dream home." What this means is that the buyer could be stuck with liens after closing that they would either have to pay or could p...
 
31-Oct-2008
Mechanics Liens -What You Need To Be Aware of
It is of the ultimate importance to be aware of mechanics' and materialmen's liens issues. If you or your client is purchasing a new home or a remodeled home, speak with an attorney so that this transaction is done correctly and you are fully aware o...
 
17-Oct-2008
Mechanics Liens -What You Need To Be Aware of
After the Notice of Completion document has been completed in full, it has to be recorded at the Register of Deeds Office in the county where the property is located. After recording, most attorneys require the document to be recorded for 10 days. P...
 
03-Oct-2008
Mechanics Liens -What You Need To Be Aware of
A Notice of Completion is a document that gives a multitude of information. It states the owner of the property and the contractor of the property and the property address. It also gives the date of full completion of the project and an address for p...
 
26-Sep-2008
Mechanics Liens -What You Need To Be Aware of
Different title insurance underwriters require different steps to be taken in order for title insurance to be underwritten on a certain real estate transaction. Please consult with your closing attorney for specific information on a particular deal. ...
 
12-Sep-2008
Mechanics Liens -What You Need To Be Aware of
With a changing real estate market, it is very important to protect your clients when dealing with the potential for mechanics' and materialmen's liens. This is obviously more important when purchasing a new construction home. However, one also needs...
 
29-Aug-2008
Mechanics Liens-What you need to be aware of
Mechanics' and Materialman's lien laws are very important concepts for anyone in the real estate or construction industry to be aware of. The concept behind these laws is that the laborers and suppliers need special protection from general contractor...
 
22-Aug-2008
Commercial Disclosures and Practices-Are Most Properties sold "AS IS"?
Yes, most commercial pieces of real estate are sold "AS IS". That is not to say that negotiations cannot be made otherwise. Sellers are not as legally obligated to make repairs and disclose items as are legally required in residential real estate tra...
 
15-Aug-2008
Commercial Disclosures and Practices
There are much fewer required disclosures when dealing with commercial real estate. There is a Commercial Real Estate Property Disclosure that exists. However, few transactions require it. However, this is something that can be a condition to the pur...
 
31-Jul-2008
Financial Analysis- Is this real estate transaction "feasible?"
Some of the items that are to be considered for the feasibility of the real estate transaction are as follows: (f) Copies of existing appraisals, environmental reports (g) Copies of existing leases and any lease proposals for vacant space or matur...
 
15-Feb-2008
Part two of a multi-part series Are there many differences between dealing in commercial real estate and residential real estate?
Another difference between residential versus commercial real estate are the lien and title issues. The bigger the development, the more tenants in the leasehold, the risk become greater and there may be bigger problems that have to be dealt with. Fo...
 
05-Feb-2008
Part one of a multi-part series…Are there many differences between dealing in commercial real estate and residential real estate?
Yes. There are huge differences in residential real estate versus commercial real estate. One of the differences is as follows: (1) Risks- Any real estate transaction has the potential for problems or unforeseen risks. However, in a commercial real e...
 
01-Feb-2008
What is Commercial Real Estate?
Commercial Real Estate can be defined as dealing with any real property in a business context. It can vary along a broad spectrum of business dealings. It can involve the leasing or selling of office space, owning an apartment complex, or selling rea...
 
28-Dec-2007
Partnerships--- How do they compare to an LLC?
In the event of death of any partner, the partnership is deemed to be terminated. This is even if the remaining partners wish to continue the partnership. For instance, if there are three partners in the partnership and one passes away, the partnersh...
 
12-Dec-2007
Partnerships--- How do they compare to an LLC?
There are also vast differences in how a partnership and an LLC can be terminated. A partnership can terminate by the intent of any partner. Upon the death of any partner, the partnership automatically dissolves. ...
 
15-Nov-2007
Partnerships--- How do they compare to an LLC?
A similarity between partnerships and LLC's is the tax treatment. If the LLC qualifies as a flow through entity, both the LLC and partnership will be treated the same for federal income tax purposes. However, please consult with a licensed tax attorn...
 
09-Nov-2007
Partnerships--- How do they compare to an LLC?
Likely, the greatest difference between partnerships and an LLC is the partner's or member's personal liability for the debts and obligations of the entity. In a general partnership, all partners are jointly and severally liable for the partnership's...
 
25-Oct-2007
Partnerships--- How do they compare to an LLC?
Partnerships are usually operated and managed equally by its partners. However, an LLC does not have to be operated by its members or owners and can be managed by elected officers. ...
 
12-Oct-2007
Partnerships--- How do they compare to an LLC?
Partnerships and LLC's have characteristics that are similar. However, there are many differences between the two also. A Partnership does not require an agreement. However, some partnerships do have a Partnership Agreement, but it is not required. ...
 
04-Oct-2007
Partnerships--- How do they compare to an LLC?
Limited liability companies (LLC's) are comparable in many ways to general partnerships due to the fact that they can be structured and operated similarly to a general partnership. Both entities can be operated by their partners/ members and can be t...
 
27-Sep-2007
Sole Proprietorships- I have a Sole Proprietorship.. Can I convert it to an LLC?
Yes, a sole proprietorship can be converted to an LLC. The sole owner of the sole proprietorship can transfer the sole proprietorship's assets to the LLC. Along with this transfer, there may be tax consequences. This should be discussed with a licen...
 
14-Sep-2007
Sole Proprietorships- How is the Tax treatment and Termination different from an LLC?
There are differences in the tax treatment between a sole proprietorship and an LLC. These differences would need to be discussed with a licensed accountant or tax attorney. There are also differences in the termination of an LLC versus a sole pro...
 
07-Sep-2007
Sole Proprietorships- How is the liability different from an LLC?
Likely, the greatest difference between a sole proprietorship and an LLC is the liability. In a sole proprietorship, the owner is personally liable for the business's debts and obligations. However, in an LLC, there is protection available for the...
 
31-Aug-2007
Sole Proprietorships- How are they different from an LLC?
A Sole Proprietorship is generally operated and managed by its owner. An LLC can be operated several different ways, dependent upon the setup of the LLC. For instance, the LLC could be operated by the managers, members or other ways specified in the...
 
17-Aug-2007
Sole Proprietorships- How are they different from an LLC?
The first main difference between a sole proprietorship and an LLC is the way that they are set up. A sole proprietorship does not require any paperwork to be filed. It can be created just by one's spoken words. It only takes one person to form a sol...
 
27-Jul-2007
Sole Proprietorships- What are they?
Sole proprietorships are usually operated and managed by the sole owner. However, the sole owner can hire managers to run the company. They are similar to LLC's in some ways including the tax treatment and the operation and management of the 2 entit...
 
29-Jun-2007
What you need to know about LLC's.. Continued
Generally, any individual, corporation, partnership (general or limited), trust, business trust, association, estate, or other LLC can be a member of an LLC. Previously, LLC statutes required at least two members to form an LLC. This requirement ens...
 
15-Jun-2007
What you need to know about LLC's.. Continued
LLC's have a flexible organizational structure. The owners can adopt an Operating Agreement which allows owners to determine, with some limitations, how the LLC will be managed, controlled and structured. The LLC can be board managed, member managed ...
 
08-Jun-2007
What you need to know about LLC's.. Continued
An LLC is typically formed to accomplish two things: (1) Limit Liability and (2) to provide Pass- Through Tax Treatment LLC...
 
18-May-2007
What you need to know about LLC's
A Limited Liability Company (LLC) is a noncorporate business entity formed pursuant to a state statute that provides owners protection against unlimited personal liability from creditors and third parties. Other business entities provide protection ...
 
13-Apr-2007
BEWARE of how you are signing if you are signing on behalf of an entity
Recent cases have reflected that the courts are looking closely at exactly how documents are signed when an entity (LLC, corporation, partnership etc.) is involved. When an entity is a party to a real estate transaction, whether it be a contract or a...
 
05-Jan-2007
Duty to Mitigate Damages in Commercial Lease
There is a common law duty on the part of the landlord to mitigate their damages in the event that the tenant does not fulfill their lease obligations. What this means is that the landlord still has a duty to attempt to find a replacement tenant f...
 
28-Dec-2006
Commercial Evictions -- Can the Landlord recover for future rent?
Maybe yes.. Maybe no... Many leases provide a clause similar to an acceleration clause in a Deed of Trust. This is a clause where if the tenant defaults on his/her obligations under the rent, the landlord can recover the remainder of the rents due...
 
22-Dec-2006
Commercial Evictions for Non- Payment.
If a commercial landlord is successful at trial when suing the tenant for non-payment, he/she will not only be awarded legal possession of the premises, but also recover a monetary judgment. This can include past due rent, general damages, interest a...
 
30-Nov-2006
Commercial Evictions and Self Help Cont...
The exception to the rule that landlords cannot use “self help” to evict tenants is that the tenant has clearly and unequivocally abandoned the property. The problem in making this determination is that it is a judgment call. It depends entirely on t...
 
10-Nov-2006
Commercial Evictions
Tennessee holds that if a landlord resorts to self-help (taking matters into your own hands), the damages recoverable by the tenant for a wrongful trespass/eviction can include not only punitive damages, but the difference between the market value of...
 
27-Oct-2006
In a Commercial Lease–Can I physically evict my tenant if they are not paying?
No.... Some landlords believe in the “old school” way of evicting their tenants if they are not paying or if they are exhibiting some other undesirable behavior for the landlords. This is not allowed under the laws of Tennessee. Some believe it to be...
 
02-Aug-2006
Real Estate Agency Law Basics: When do I “shift gears” and change agency status? Part V of VI
This issue of changing agency status comes up in a number of different contexts. For example, one common situation is when you are working with a buyer as a buyer’s agent and show the buyer your own listing. Assuming that you are the seller’s agent...
 
22-Jun-2006
Construction Contracts-Forms
There are many different forms for construction contracts. In commercial jobs, the developer or owner will generally decide which form to use. Forms are published by the American Institute of Architects (AIA), the National Society of Professional En...
 
16-Jun-2006
Commercial Real Estate Issues 101-Construction Loans Part 4 of a Multi-part tip
Constructions loans are another tool that are used frequently in the commercial and residential world of real estate. There are issues that arise in a construction loan that do not exist in other forms of lending. At the time that the lender makes th...
 
09-Jun-2006
Commercial Real Estate Issues 101-Ground Leases Part 3 of a Multi-part tip
SMITH.SHOLAR.ASSOCIATES.PLLC REAL ESTATE LEGAL TIP OF THE WEEK Commercial Real Estate Issues 101-Ground Leases Part 3 of a Multi-part tip TIP 250 An example of where a ground lease would be useful is with a hospital. A hospital would...
 
30-May-2006
Commercial Real Estate Issues 101 Part 2 of a Multi-part tip
SMITH.SHOLAR.ASSOCIATES.PLLC REAL ESTATE LEGAL TIP OF THE WEEK Commercial Real Estate Issues 101 Part 2 of a Multi-part tip TIP 249 Our first topic covered real estate financing. Leases are used in commercial real estate as an alte...
 
19-May-2006
Commercial Real Estate Issues 101
For the next few weeks, we are going to briefly address commercial real estate issues. Some will relate to residential transactions also. However, for the most part, commercial transactions exist in a world of their own.... a world that is much diffe...
 
19-Jan-2006
Commercial Evictions -- What actions can the tenant take to stop the Eviction?
The tenant may have some defenses when it comes to their being evicted from the commercial property. If the landlord files a bankruptcy petition, the automatic stay will prohibit the landlord from proceeding with the eviction. The landlord will ha...
 
08-Dec-2005
Installment Contracts- “Are they enforced?”
The Tennessee Court of Appeals has said “Yes”, installment sales contract for real estate are enforceable in Kafozi v. Windward Cove, LLC (Tenn. App., August 2005). In this case, the court allowed a seller to terminate an installment sales agreement...
 
12-Jul-2005
Greenbelt change must be challenged promptly or you may lose your right to challenge it
In Metropolitan Government v. Cain (Tenn. App., March 31, 2005), the Court of Appeals held that a taxpayer could not contest the loss of greenbelt status in a delinquent tax suit. The taxpayer in Cain owned a 37.25 acre parcel of commercial property ...
 
02-Jun-2005
Part II of a multi-part series on “As Is” contracts and sales: How to protect a Buyer in an “As Is” sale.
Some agents and buyers are skeptical about properties being sold “As Is,” fearing that the owner has something to hide. This is probably not the case, however, because there are many reasons to sell property “As Is.” If the Buyer likes the location ...
 
02-Jun-2005
Real Estate Agency Law Basics: Do the Tennessee Real Estate Agency statues apply to commercial transactions? Part VI of VI
Yes The Tennessee statues that govern agency laws and representation by real estate agents does apply, for the most part, to commercial transactions. For example, the duties owed to all parties in 62-13-403 and the duties owed to the licensee’s cli...
 
02-Jun-2005
Real Estate Agency Law Basics: What duties do I owe my client? Part IV of VI
T.C.A. Sec. 62-13-404 sets forth the duties you owe to your client. These duties are in addition to the ones you owe all parties covered in our last Tip of the Week. The statute states: 62-13-404 Duty owed to licensee’s client. Any licensee who a...
 
02-Jun-2005
Real Estate Agency Law Basics: What duties do I have all parties to a transaction, even if I am just a facilitator? Part III of VI
T.C.A. 62-13-403 sets forth the duties all licensees have to all of the parties involved in the transaction. The statues provides: 62-13-403 Duty owed to all parties- A licensee who provides real estate services in a real estate transactio...
 
02-Jun-2005
Real Estate Agency Law Basics: When do I tell the buyer/seller who I represent? When do I get this in writing? Part II of VI
Tennessee Code Ann. Section 62-13-405 provides as follows: Written disclosure: (a) If a licensee personally assists a prospective buyer or seller in the purchase or sale of a property, and such buyer or seller is not represented by this or an...
 
02-Jun-2005
Real Estate Agency Law Basics: Part I of VI
When first meeting a prospective buyer or seller, you must first ask yourself “Who do I represent in this transaction?” The answer to this can be found first by consulting your Broker’s office policy for agency relationships. Remember, there are dif...
 
12-May-2005
IT’S MAY- CLOSE EARLY & SAVE THE SUFFERING!
Here’s a word to the wise about closings in May, June and August-close early in the month! These are the three busiest closing months of the year and all of them have a three day weekend at the end. Since Buyers want to move on Memorial day weekend...