Real Estate Law Blog
Welcome to the Angel Law Offices Real Estate Law Blog -- where we provide information, insights, observations, as well as real estate tips and legal updates.
MindJet, the leading mind mapping software company, features Rick Angel as a MindJet Success Story for his innovative use of technology in the legal industry. Rick began using MindJet Mindmanager over 5 years ago as a tool to manage the firm's transactions and to provide efficiencies for his clients. Mind mapping has been instrumental in the firm's efforts to improve client services and decrease client costs. [Read More]
Why would a landlord waive claims against a tenant for damage to landlord’s building caused by the tenant’s negligence? If a landlord’s negligence results in damage to a tenant’s personal property, furniture, fixtures and equipment, why would a tenant waive its rights to recover its losses from the landlord? The short answer is because it makes good business sense. In commercial leases, landlords and tenants are often asked to waive certain claims against each other.
To understand why, we need to know something about shoes and insurance.
In commercial leases, landlords and tenants typically carry insurance for their own property. The landlord insures the building, while the tenant insures its personal property. When a loss occurs, the landlord makes a claim against its insurance for damage to the building and the tenant makes a claim against its insurance for damage to its personal property. Straight forward.
Here is where the shoes come in. If the building is damaged by a covered loss, the landlord’s insurance company will pay the landlord the amount necessary to repair the damage to the building. By law and terms of the insurance policy, once the insurance company settles landlord’s insurance claim, it is “subrogated” to landlord’s causes of action. “Subrogation” is the process whereby an insurer “steps into the shoes” of its policyholder and pursues reimbursement for amounts paid to its policyholder from the party that caused the damage. If the tenant is the party that caused the damage, the insurance company can sue the tenant to recover the loss. If the tenant is sued and loses, its financial viability may be threatened. This is obviously detrimental to the tenant, but is also a potential problem for the landlord who wants its tenant to remain financially viable.
Conversely, if the tenant’s property is damaged by a claim covered by tenant’s insurance, the landlord and tenant generally expect...Read More...
When acquiring commercial real estate, it is important to conduct due diligence to ensure there are no surprises that will affect the value or use of the property. One aspect of the due diligence process is considering obtaining an ALTA Survey. The two main reasons for obtaining an ALTA Survey are (i) to satisfy the title insurer’s requirements for the issuance of ALTA title insurance coverage for Survey Risks (defined below), and (ii) to specifically locate both record and non-record matters that affect the property, which can be critical for evaluating whether or on what terms to proceed with an acquisition. This is particularly important when the preliminary title report raises many or difficult-to-locate easements or other similar exceptions, or when the facts on the ground seem complicated.
An ALTA Survey is a survey...Read More...
Service providers such as architects, engineers, surveyors, environmental consultants, etc., often contractually limit their liability for errors and omissions to the amount of the fee paid by their client for the project.
From the service provider’s perspective, the prospect of earning a small fee (e.g., $5,000) is not worth the risk of being exposed to a potentially huge liability (e.g., $1,000,000). From the client’s perspective, they are retaining and paying the service provider to obtain protection against the very liabilities and losses the service provider is unwilling to assume.
How to resolve this conflict?
A. Clients should ask the service provider to provide...Read More...
Part 2 - Seller Defenses Against the Flip
Sellers of commercial real estate generally loathe dealing with flippers. First, the original buyer/flipper, if successful, makes a profit that the seller believes he or she should be pocketing. Second, if the flipper cannot close the transaction on its own, a higher probability exists that the sale will not close at all, resulting in a waste of seller’s time, resources and money. This article, the second in a series, examines ways in which a seller can defend against its property being tied up by a flipper. (The first article in this series analyzed the needs and concerns of the original buyer in a flip transaction).
In order to profit from flipping by assignment, the flipper must be able to ...Read More...
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