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SELLING A LEASED PROPERTY

On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Thursday, August 16, 2018.

Whether you are just tired of the responsibility of being somebody’s landlord or you inherited a rental home, you can’t always wait until a rental is empty in order to sell. That makes it important to know your options when it comes to putting a property on the market.

What are your legal obligations to your tenants when you decide to sell?

The answer largely depends on what type of rental agreement your renter is currently under. A renter with a month-by-month agreement generally has fewer rights than a renter with a fixed lease. Here are some guidelines you can use.

1. Determine what type of lease your tenant holds

You may or may not be aware of the type of lease your tenant holds (especially if you just inherited a property). Review the lease to determine whether or not the tenant has a month-by-month contract or a fixed-term one.

2. Decide if you have the ability to clear the property

Selling an empty property is generally easier than selling one with a tenant still living in it. For your purposes, it’s better if you can end the lease and then put the property on the market.

If the tenant is on a month-to-month contract, you need to give a 30-day notice to vacate. If the tenant is on a fixed-term contract, you will have to decide whether you can wait until after the lease expires to sell. Keep in mind, it may be possible to terminate the lease early if your property is occupied by a “problem” tenant. You can review the terms of the lease for violations and initiate eviction proceedings — although that does put you through more effort and expense than simply waiting out the lease.

3. Consider an offer to the resident of cash to buy out their lease

If you don’t have any way to terminate a lease early, you may be able to broker a deal with your tenant. Consider offering two months’ rent plus moving costs — enough for the tenant to start over somewhere else without significant expense. That may be cheaper (and quicker) than an eviction.

If all else fails, you can still sell the rental contract with the property — although that does mean finding a buyer who is willing to assume the lease.

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CELL PHONE TOWER LEASE AGREEMENTS REQUIRE A UNIQUE APPROACH

On behalf of Michael Brooks of Law Offices of Michael A. Brooks on Saturday, August 11, 2018.

It’s unsurprising that the demand for wide-ranging, reliable networks have cell phone companies scrambling for new places to build cell towers. There are reasonable incentives for businesses, property owners and landowners. The additional income and long-term profits make cell phone tower lease agreements tempting.

Despite the upfront benefits, it’s important to consider some issues that may arise. A cell phone tower lease agreement is different than any other standard commercial or residential agreement. Wireless carriers and companies are powerful and well-rehearsed in the world of negotiation.

Cell tower lease agreements request a lot of land

A cell tower company asks for a lot of land, but needing the land is a different story. Oftentimes companies will request 2,500 square feet of land, when it might not be necessary, depending on the cell tower. Over time, they could start expanding into space that wasn’t agreed upon. It’s important to hold your ground and protect those set boundaries.

Additionally, tower companies take as much space as they can get. Crews gradually start to load onto the property, bringing with trucks, lights and loud equipment. The negotiated lease agreement from years ago is now benefiting them more than it is you, or the community.

Cell tower companies can leave at any time

Most cell tower agreements include what’s called an early termination clause. This means they can quit the agreement at any time. On the other hand, you may have signed a 20-year lease agreement with no way out. For this reason, you should avoid providing extended duration on the lease.

In continuation, wireless carriers and tower companies are often able to terminate a lease agreement on short notice. If this occurs, it’s important to negotiate a reasonable termination fee or request a longer notice.

Any type of lease agreement potentially has issues. Cell tower lease agreements tend to have a unique set of dilemmas. They have their own team of experts to help them navigate the complicated process, and so should you. With the right representation and negotiation tools, both parties have an opportunity to come to a reasonable agreement at any stage of the lease.

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VARIANCES, REZONING AND CONDITIONAL USE PERMITS CAN RESCUE A DEAL

On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in land use & zoning restrictions on Thursday, August 9, 2018.

What can you do when you find the perfect piece of property — except for the zoning regulations that stand in the way of what you’d like to accomplish? Do you just walk away and start your search all over?

That’s always an option, but you don’t have to go that route automatically. There are a number of ways to potentially circumvent zoning issues. Following are a few of those.

A variance

This is a discretionary modification or waiver of the usual zoning regulations. It’s most appropriate when there’s some unusual characteristic of the property that makes a strict application of the zoning requirements a hardship.

For example, imagine that you want to build a home of similar size to all the other homes in the area. However, the irregular shape of a parcel of land makes it impossible to do so and obey the regulation that requires a property to sit back at a specific number of feet from the road. A variance would allow you to build your home closer to the road.

Rezoning

Rezoning asks the city to change the allowable use of a property altogether. For example, say that you want to build a shopping center on a spot that’s currently designated for agricultural use only. If the city agrees to rezone the area for commercial use, you could move ahead with your project.

Conditional Use Permits

Somewhat like a variance, these permits allow a property to be used in a way that it normally wouldn’t without a change in zoning. This type of permit is most likely to be granted when your plans for the property would benefit the city or the public.

For example, you might seek a conditional use permit to operate a small business out of your home, like a bed-and-breakfast, in an area that’s strictly residential. You could argue that your business encourages tourism to the area and thus, indirectly, benefits the public as a whole.

Overcoming a zoning restriction can help you achieve your dreams. Consider getting help from a California attorney experienced with real estate transactions as you decide which of these methods will work best for your needs and how to approach the zoning board with your request.

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WHAT LANDLORDS SHOULD KNOW ABOUT BANKRUPT COMMERCIAL TENANTS

On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Thursday, August 2, 2018.

For most commercial landlords, a tenant’s bankruptcy hardly comes as a huge surprise. More than likely, the rent payments have been getting later and later — or they’ve gone missing a few times. It isn’t uncommon for tenants in financial trouble to stop communicating — usually because they’re trying to figure a way out of the situation or are unsure of their next step.

So, what happens when you finally get the notice that a commercial tenant has filed for bankruptcy protection?

When the automatic stay is in place

An automatic stay goes into effect as soon as the bankruptcy is filed. You can’t collect back rent, enforce a judgment or put a lien on their business equipment during that time. You also cannot immediately apply the security deposit to the unpaid rent without the bankruptcy trustee’s permission.

When you have already terminated the lease

You can be subject to sanctions and fines if you violate the terms of the automatic stay, but that doesn’t necessarily mean you are without rights. If you terminated the lease due to nonpayment prior to the bankruptcy, you can ask the trustee in the case to lift the stay so you can proceed with an eviction.

When the tenant has skipped out

If the property was vacated before the lease was terminated, you can usually gain access to the property quickly. Be careful, however, about how you treat anything the tenant left behind. Material goods, equipment and the like may all be subject to liens and part of the bankruptcy estate. It’s always necessary to get the trustee’s permission to dispose of anything — even something that has no obvious value.

When the tenant wants to continue

Your tenant can usually continue the remainder of the lease only if he or she can satisfy the unpaid rent and provide you with a reasonable assurance that you’ll continue to be paid. You may be able to require an additional security deposit or a guarantee of credit from the tenant’s backers as part of that reasonable assurance.

Because bankruptcies are so complex, it’s wisest to seek legal advice regarding a commercial tenant who goes bankrupt. There are often remedies available to help your situation — but it takes some experience to know when and how to press your case.

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