The Tenant-Buyer's Bottom Line Secrets
 
July/August 2011
 
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If you are like me, you probably have gotten tired of the 'lets wait and see' mentality many people have with respect to the economy.  Many seem to be waiting for the economy to make some sort of quick shift back to the way things were a few years ago.

I hate to say it, but I do not think this is not going to happen. We are very likely to drag along at this rate and pace for quite some time with slight ups and downs.

As in most cases, business operators who continue to be active in working their plan around the current conditions are going to continue to benefit.  There is no doubt that many business strategies and plans will need to change.

If you are confused or frustrated about how you are using the real estate you own or lease for your business in the best possible manner, please give me a call. We can discussit and simply see of there is a fit and something that can be done!
 

Best regards,
Rob Cassam

Carolina Realty Advisors  Follow Me!
704-442-1774 Ext. 100


Eight Critical Questions To Ask Regarding The Condition of Your Next Space You Lease
Knowing what the condition is of the space you are considering leaseing is important!  Failure to discuss these issues and address them on your lease could lead to lots of unwanted problems and potential charges.

Consider these important questions:

1.  Is the tenant accepting the premises AS IS and without any build-out obligation from landlord? Even so, the landlord should still represent and warrant that the condition of the premises, building and project comply with applicable laws as of the commencement date, including those relating to disability access and hazardous
materials (including asbestos), and that the building systems serving the premises are in good working order.

2. Is the landlord delivering a cold shell, warm shell or turn-key tenant improvements?

3. Can you describe the line between the work the landlord is to perform (and pay for) and the work the tenant is to perform (and pay for)? Misunderstandings about the parties' build out responsibilities are a major source of conflict, so be sure to discuss these responsibilities in great detail.

4. What is the tenant improvement allowance and how is it calculated? Per rentable or usable square foot? Is the landlord open to providing an additional allowance which would be amortized and repaid over the term of the lease as additional rent?

5. If the entire allowance is not applied, who gets the remainder? Preferably it would be credited to rent. Alternatively, the funds remain available to the tenant for alterations later in the lease term.

6. Are there any unusual build-out requirements, such as internal staircases, high density file cabinets, showers, training or childcare facilities, satellite dishes or extra HVAC? Have those been approved by the landlord at least in concept?

7. Has the landlord approved the tenant's finishes?

8. Does the lease provide a mechanism for delivering a punchlist and when is the punchlist due?

North Carolina Becomes Third State in 10 Months to Enact Broker Lien Law
By Randyl Drummer- NCCCIM June 22, 2011

North Carolina last week became the 29th state to enact a law allowing commercial real estate brokers to obtain a lien as a legal remedy against a property if the buyer, seller, lessee or lessor fails to pay the agreed-upon commission or fee.

The Tar Heel State follows Colorado and Michigan, which adopted similar laws in August and October of 2010, respectively. Legislation has been introduced in a number of other states over the last year, including Oregon, North Dakota and Delaware.

The laws have a common purpose: to protect brokers by statute from clients who can't or won't pay commissions, often forcing a time-consuming and costly legal standoff where costs may far exceed the disputed commission or fee. Without the protection of a lien, proponents of the law say, the real estate broker may get stiffed on the commission, or forced to accept a reduced fee or "commission-ectomy," as it's known in the business.

The past real estate downturn was rife with examples of brokers losing out on commissions, often by financially distressed buyers, sellers, landlords and tenants.

North Carolina Gov. Bev Perdue on June 17 signed HB174, the Commercial Broker Lien Act. The legislation, co-sponsored by Reps Darrell McCormick (R-Iredell), Pryor Gibson (D-Anson), Leo Daughtry (R-Johnston) and Tom Murry (R-Wake), culminates an effort that started in 1997.

The legislators worked in cooperation with the North Carolina Association of Realtors to steer the bill through the Legislature. In most states, Realtor groups, with support from the National Association of Realtors (NAR) and its affiliates, the Society of Industrial and Office Realtors (SIOR), the CCIM Institute, the Institute of Real Estate Management (IREM), and the Realtors Land Institute (RLI), have led legislative initiatives to introduce and enact the state laws.

Opposition to the laws historically has come through State Bar associations, banks and other groups opposed to the addition of another lien to the property transaction process. Opponents claim the liens may complicate deals, cloud a property's title, impede financing, interfere with basic property rights and even violate due process.

James A. Hochman, a commercial real estate attorney with Coman & Anderson P.C. based in Lisle, IL, said such arguments are an attempt to exploit "fear of the unknown" and are not grounded in facts, based on his experience asserting and litigating broker lien claims in several states over the last two decades. Hochman has consulted for and represented real estate groups and testified before several legislatures in pushing for broker lien acts, including the first significant law, enacted in Illinois in 1992. He worked as legal counsel for CB Richard Ellis when several of the early laws were adopted.

In North Carolina, he represented NAR and its affiliate SIOR, working with Rep. McCormick and the state association to craft and fine tune the legislation, and address objections.

"[Broker liens] don't hurt anybody other than somebody who agrees in writing to pay a commission and then doesn't do it," Hochman tells CoStar. "When brokers have lien rights, they typically get paid without the need for litigation. The mere threat of the broker lien leads to payment at closing in exchange for a lien waiver."

The NAR supports enacting legislation in the remaining 21 states where no broker lien law exists, the association said in a statement.

Litigation to recover commissions is not always economically feasible and invariably results in delays, to the detriment of the real estate brokerages and commissioned agents involved in the transaction, CCIM Institute said in a public policy statement published on its Web site this week. However, because attorney's fees can be recovered by the successful lien claimant, brokers in states protected by the law can threaten or pursue litigation to protect their interests that otherwise wouldn't make financial sense, Hochman said.

Language varies from state to state, but most laws require that the lien language be placed in the written agreement signed by both the client or party the broker represents, and the real estate brokerage agency. Typically the agreement is valid only for the principal broker.

In its position statement, CCIM Institute "supports the enactment of commercial broker lien laws in all states to serve as a safety net for brokers who previously had no means of insuring payment of the agreed upon fee for their services, other than costly legal battles." Further, lien laws should be forceful and efficient in protecting brokers in commercial lease transactions as well as property sales.

"As more and more states contemplate creation of such laws, commercial brokers will have a greater sense of security when completing a transaction, which is beneficial to not only the brokers themselves, but their clients and the commercial real estate market as a whole," CCIM said.

Although brokers take haircuts on commissions in good times and bad, the weak economy and pressure on small brokerages played a role in finally pushing the law through in North Carolina after 14 years.

"Because of the economic situation we're in, and what we're seeing happening to our brokers, this definitely gave us a better leg to stand on to get this done," said Cady Thomas, director of government affairs for the North Carolina Association of Realtors, who pushed for the recent legislation. "We've been trying to enact this law since 1997. We couldn't even get a hearing back then."

Realtors in North Carolina resurrected the issue two years ago during the recession but could not get the state legislature to bring the matter to a vote.

The North Carolina law gained impetus from the case of a Raleigh broker who had been working on a transaction for several years with an investor based in Texas, which has lien rights for brokers. "Whenever they sent a closing packet, it included a lien waiver. The broker promptly called the investor and said 'we don't need this, we don't have lien rights,'" Thomas said.

The Texas investor then said they intended to renegotiate the broker's commission, at a loss of $170,000.

"That gave us a real-life example of our brokers being taken advantage of," Thomas said.

Some claim the broker lien laws afford more protection for smaller firms that may lack the legal resources of larger ones, Thomas said. Larger companies tend to have more clout, contacts and resources than boutique shops, ensuring their participation in a transaction from start to finish, and often representing both sides in deals.

"The broker is the easiest party to cut out of a transaction when they don't have lien rights because in most cases it's not economically feasible to sue for their commissions," added Thomas.
In This Issue
8 Questions to Ask Regarding Condition
NC Broker Lien Law
Announcement 

Class A Office Space For Sale and For Lease In Huntersville for as little as 10 percent down!

Mills Galleria- Bargain Space at The Concord Mills Mall!

Personal Note
Resource

How to Block Your Phone Number from Spies

 

You normally do not want to have your phone number blocked when calling from home or on your cell phone. But there are times when you really don't want someone or a company you need to call to have access to your phone number
-- particularly your cell number. Fortunately there's a pretty easy
solution to this dilemma.

If you are using either a land line phone or a cell phone all you need do to block your phone number is dial *67 before dialing the number you wish to call.

This trick works across carriers and on all telephone networks. It is the standard way to hide your phone number. And it works on both landline and cell phones.

Some smart phones are set up so you can set your cell phone to always block your number if you wish. For example, on the AT&T iPhone simply go to Settings/Phone/ Show My Caller ID. Just set the switch to Off.

Now you can go anonymous whenever you want!
 CLICK HERE

Contact Information
Rob Cassam, MBA, CCIM
Carolina Realty Advisors
1001 East Blvd. Suite B
Charlotte NC 28203
Tel: (800) 587-4066 Ext. 100
Fax: (704) 442-8841

robcass@ix.netcom.com
www.charlotteNCproperty.com
What I do...

I provide real estate brokerage services for small and medium sized businesses, investors, and individuals who are fed up with loosing money, paying too much, spending too much time not getting the right piece of property for their particular situation.

 

I act as the quarterback in the real estate transaction for my clients who coach me in managing all of their different needs. 

 

My clients love not needing to worry about making bad decisions or bad investments and love winning negotiations.

Ask yourself these questions:

What types of growing pains is your company facing with your location?

Are rising occupancy costs a challenge your company is facing?

Is having too much space or not enough space a challenge your company is facing?

How much of a problem is dead equity in your property for you?

How long are you prepared to go on doing nothing about situations in your business that are not quite right?

 

Give me a call, I may be able to help with your lease or purchase!

 Carolina Realty Advisors

charlotte nc commercial real estate leasing
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