Category: Real Property Law

Ordering Title Searches When Negotiating a Lease: Is the Failure to do so Malpractice?

As tenant’s counsel, did you ever think it was good practice to order a title search when your client contemplated putting in expensive improvements or in other situations where the lease may have value? The cost is modest and the information obtained by such a search can reduce the risk of your client being hurt by unintended adverse title matters.

• Published: January 17, 2010
• By Mark Morfopoulos

Memorandum of Lease Clause: No More Significant than the Gender Clause??

A Memorandum of Lease or Short Form Lease (MOL) is usually a very short document (one to five pages in length, on average, depending on the complexity of the lease and the jurisdiction of the premises). The MOL typically contains only the most critical, but not confidential, provisions of a lease (e.g., a description of the premises; the term of the lease, including renewal rights; right[s] of first refusal; exclusive use clauses; etc.). A MOL is recorded wherever deeds are recorded, and the recording fees are typically paid either by the party designated in the lease, or, if not so designated, by the party requesting the MOL. Depending on the jurisdiction, the costs to record a MOL can be nominal or quite large.

• Published: January 17, 2010
• By Karen E. Abrams

The Art Of Reviewing A Leasehold Title Insurance Commitment

Often overlooked, leasehold title insurance policies and the title commitment that precedes them are not to be ignored. The commitment, itself, is a prime part of a thorough due diligence review for a leasehold because it reveals information that may not affect title to the property or to the leasehold but expose the rights that others have at the property that can inhibit the tenant’s intended use. For example. it may show maintainance obligations or exclusive use rights held by others. Ignore a leasehold title insurance commitment at your own risk.

• Published: January 17, 2010
• By Mark Morfopoulos

The Application of the New Jersey Realty Transfer Fee to Transactions Between Related Entities

The New Jersey Tax Court has rejected the Division of Taxation’s regulations that sought to require payment of a realty transfer fee in connection with deeds to some related entities.

• Published: November 12, 2009
• By Steven Gellerstein

Be Ambiguous at Your Own Risk: Sloppy Draftsmanship Bites Again!

Ambiguous or vague contract provisions are an invitation for a court to undo the actual intentions of parties to an agreement. Be careful to write what you mean because failing to do so will upset the predicabilty of your contract or lease and allow a court to rewrite your agreement after the fact.

• Published: November 2, 2009
• By Mark Morfopoulos

Crafting Letters of Intent in Purchase Contracts

A letter of intent or “LOI” is a valuable tool to be used when negotiating a deal for the purchase or sale of commercial property. It can clarify the key terms, making it easier to draft the contract. Here are some common items to address when preparing an LOI. Remember that each deal is different, so the LOI must be tailored to your specific deal.

• Published: August 23, 2009
• By Steven Gellerstein

Exclusive Use Clauses

When a retail tenant signs a lease, it does so with the intention of operating a particular business. In order to be successful, a tenant needs to maintain a competitive advantage over other tenants in the same center. With this in mind, many commercial retail leases include a very thorny and hotly-negotiated provision, called the “exclusive use” clause. The inclusion of an exclusive use clause, or a decision not to do so, is a critical issue, and is one that is commonly glossed over by the parties.

• Published: August 23, 2009
• By Karen E. Abrams

“Development Rights” As “Like-Kind” Property As Part of a 1031 Tax-Deferred Exchange

Development rights qualify as real property interests in a “like-kind” exchange if: (a) the development rights are “in perpetuity”; (b) the development rights are directly related to the taxpayer’s use and enjoyment of the underlying real property; and (c) the sale of development rights is done as part of an arms-length transaction.

• Published: August 23, 2009
• By Steven Gellerstein

Lease Audits: Adding Value in Troubled Times

Keep costs under control is to perform an audit of your landlord’s compliance with various provisions under your lease. Tenants should carefully examine the operating expense provision or common area cost provision within all of their leases and then use their audit rights to verify that they have been properly charged.

• Published: June 26, 2009
• By Mark Morfopoulos

Helping Tenants Survive by Relocating or Reducing Their Space Needs: 7 Key Provisions

Tenants are struggling to survive and are doing whatever they can to cut costs. One way is to relocate to smaller, less expensive space or to reduce the size of the space they are currently leasing. Agreements to substitute or reduce space can usually be accomplished with a simple and straightforward amendment to an existing lease. Here are seven key provisions that should be included in all such lease amendments.

• Published: June 10, 2009
• By Karen E. Abrams