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Category: Real Property Law

Basic Principles of Ground Lease Agreements – Yes, a Contract!

A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for 50, 75, “99,” and even 500 years. That takes it beyond the life of the parties involved in its creation, and the future brings surprises. Neither Nostradamus nor Jules Verne got everything right.

  • Published: January 7, 2013

A Loaded Question: How Do You Calculate Rentable Square Footage Floor Areas?

So what’s the difference between rentable square footage and usable square footage? Aren’t they the same? Some tenants may think so and are surprised to learn that the usable square footage is actually smaller because rentable square footage includes a tenant’s pro rata portion of the common areas (such as lounges, bathrooms, etc.) and can also include its pro rata portion of building service areas (such as mechanical rooms, janitorial closets, elevators, and stairwells) within the building.

Pitfalls of 1031 Exchanges: Placing Funds In Unqualified Escrow Accounts Results In Taxable Gains

To complete a “like-kind exchange” under Section 1031 of the Internal Revenue Code (“Code”) and thereby defer payment of tax on what would have been your gain, many technical rules must be followed. One of these is rules is that you must deposit the sales proceeds with a “qualified intermediary” pursuant to a qualified escrow agreement. If you do not, you will ruin your exchange.

A Short Diatribe On Granting And Crafting Exclusive Use Rights Provisions In Leases

Exclusive Use Rights in Commercial Real Property Leases can be the source of a battle between a landlord and its tenant. This Article presents some concepts that should guide each toward reaching a solution that addresses the legitimate needs and cocerns of each party.

A Liability Insurance Primer for the Business and Real Property Lawyer

Attorneys seem to have a hard time drafting insurance requirements into leases, mortgages, and contracts of sale. Here is a primer that takes a step by step approach to understanding commercial general liability (CGL) insurance coverage. It discusses CGL insurance coverage in the framework of real property transaction, and is accompanied by suggested lease and mortgage insurance provisions.

How to Maximize Your 1031 Exchange - Simple rules help prevent taxpayers from getting the “boot”

Section 1031 “like-kind” exchanges are a valuable method of deferring the payment of capital gains taxes on the sale of qualified property. To avoid possible boot, a taxpayer intending to purchase personal property together with real property should purchase those items in a separate transaction. The taxpayer can also allocate the purchase price between the personal property and the real property and pay for the personal property with other funds and not exchange proceeds.

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.

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.

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