Duration of Seller Warranties

Negotiating seller’s representations and warranties in a commercial real estate purchase and sale contract can be contentious since buyer and seller have very polarized positions.

Estoppel Certificates Protect Buyer (and Seller too!)

To verify a property’s cash flow, buyer customarily reviews the leases since any inaccuracies can greatly affect the property’s net operating income and thereby its value. But, buyer cannot by only reviewing the leases determine how much tenants actually currently pay for base rent, property taxes, insurance and other common areas costs, and if such payments are current.

Agent Can Sue Agent for Commission-Sharing Disputes

Increasingly, real estate agents are forming teams to work cooperatively on deals and agreeing to split commissions generated from the team’s deals. After a team breaks up, and sometimes even while agents are working as a team, disputes arise regarding an arrangement to share commissions.

Cotenancy Breach Remedies

A California court of appeal has held that a shopping center lease provision allowing the tenant to completely abate monthly rent starting when a cotenancy requirement was not satisfied was an unenforceable penalty since the tenant admitted it did not suffer any damages from the violation of the cotenancy requirement.

Finder – a precarious status

Often, parties call a person involved in a real estate deal – who is not licensed as a real estate agent – a “finder” in order to compensate this person. But, to qualify as a “finder”, such person’s entire activities in the transaction must be limited to arranging an introduction between the parties and no more.

Commercial Brokers Must Disclose Agency

New law requires California commercial real estate brokers, like their residential counterparts, to disclose which party they represent in a transaction. The source of payment of the broker’s commission does not necessarily determine the principal that the broker represents.

Risks of circumventing the safety clause

Even though real estate brokerage listing agreements typically include a “safety” clause which obligates the owner to pay the broker a commission if the property is sold or leased within a specified period after the listing period expires, the parties may nevertheless be tempted to go around the broker.

Making Enduring Sublease Deals

Subleases may present the opportunity for a subtenant to save money by renting space at below market rates or for a sublandlord to make a profit by renting space at above the master lease rent.

Emails May Create Deals – Unsuspectingly

In the “old” days, if there wasn’t a written agreement signed with wet, ink signatures, there was no binding deal. Now with email, it’s much more complicated.

Unintended Dual Agency

A dual agency may be created unintentionally, which may have severe consequences for the real estate broker and others. If the dual agency is neither disclosed to nor approved by both parties to the transaction, undisclosed dual agent cannot recover any compensation, and a principal can rescind the transaction.