The Schmidt Group’s Post

Effective Negotiation Strategies take place before a lease is executed. Understanding Operating and NNN expenses: Key Negotiation Strategies 1. Conduct Thorough Market Research Before entering negotiations, conduct comprehensive market research to understand current trends, average rental rates, and comparable property values in the area. This knowledge will provide a solid foundation for negotiations as well as set realistic tenant expectations. 2. Clarify Expense Responsibilities Clearly define which expenses fall under the tenant's responsibility and which are landlord responsibility, By ensuring that these responsibilities are explicitly stated in the lease agreement we can prevent disputes and misunderstandings in the future. 3. Negotiate Favorable Rent Increases Rent escalation clauses are common in most commercial leases to account for inflation and market changes. Negotiate terms that include a fair and predictable increase in rent, such as annual percentage increases or tying the increases to a reliable index like the Consumer Price Index (CPI), can be critical down the road to a company’s financial survival. 4. Secure Long-Term Commitments Longer lease terms can provide stability for most companies and reduce risks of  rents spiking 30-50% down the road. We recommend lease terms of 7-10 years with renewal options. This approach not only ensures a consistent expense stream but also makes the lease more attractive if you are 20% under future market rents. 5. Address Maintenance and Repair Obligations While tenants are typically responsible for maintenance and repairs in NNN leases, it's essential to specify the extent of these obligations. Outline who handles major structural repairs, HVAC systems, and roofing to avoid ambiguity and ensure the property remains in good condition. 6. Include Lease Assignment and Subletting Provisions This language will allow you to assign or sublet the lease, which can enhance the lease's flexibility and attractiveness to a subtenant or investor. However, landlords would want to include provisions that require landlord approval and ensure the new tenant meets specific financial and operational criteria. 7. Negotiate a Reasonable Security Deposit Landlords want a substantial security deposit to protect against potential tenant default or property damage. Try to negotiate one month, usually equal to the last month’s rent.. 8. Seek Legal Counsel Leases involve intricate legal and financial details. We recommend clients to engage an experienced commercial real estate attorney to review the lease agreement and ensure all terms are fair, compliant with local laws, and protect your interests. Reach out to The Schmidt Group 619-218-5907  

Effective Negotiation Strategies take place before a lease is executed. Understanding Operating and NNN expenses: Key Negotiation Strategies 1. Conduct Thorough Market Research Before entering negotiations, conduct comprehensive market research to understand current trends, average rental rates, and comparable property values in the area. This knowledge will provide a solid foundation for negotiations as well as set realistic tenant expectations. 2. Clarify Expense Responsibilities Clearly define which expenses fall under the tenant's responsibility and which are landlord responsibility, By ensuring that these responsibilities are explicitly stated in the lease agreement we can prevent disputes and misunderstandings in the future. 3. Negotiate Favorable Rent Increases Rent escalation clauses are common in most commercial leases to account for inflation and market changes. Negotiate terms that include a fair and predictable increase in rent, such as annual percentage increases or tying the increases to a reliable index like the Consumer Price Index (CPI), can be critical down the road to a company’s financial survival. 4. Secure Long-Term Commitments Longer lease terms can provide stability for most companies and reduce risks of  rents spiking 30-50% down the road. We recommend lease terms of 7-10 years with renewal options. This approach not only ensures a consistent expense stream but also makes the lease more attractive if you are 20% under future market rents. 5. Address Maintenance and Repair Obligations While tenants are typically responsible for maintenance and repairs in NNN leases, it's essential to specify the extent of these obligations. Outline who handles major structural repairs, HVAC systems, and roofing to avoid ambiguity and ensure the property remains in good condition. 6. Include Lease Assignment and Subletting Provisions This language will allow you to assign or sublet the lease, which can enhance the lease's flexibility and attractiveness to a subtenant or investor. However, landlords would want to include provisions that require landlord approval and ensure the new tenant meets specific financial and operational criteria. 7. Negotiate a Reasonable Security Deposit Landlords want a substantial security deposit to protect against potential tenant default or property damage. Try to negotiate one month, usually equal to the last month’s rent.. 8. Seek Legal Counsel Leases involve intricate legal and financial details. We recommend clients to engage an experienced commercial real estate attorney to review the lease agreement and ensure all terms are fair, compliant with local laws, and protect your interests. Reach out to The Schmidt Group 619-218-5907  

Understanding Lease Deeds :- Lease Deed: A formal legal document outlining the terms and conditions under which a property owner (lessor) grants another party (lessee) the right to use and occupy a property for a specified period in exchange for rent. It includes details such as property description, lease duration, rent amount, and responsibilities of both parties. Long-Term Lease: Typically refers to a lease agreement that spans ten years or more. These leases are often used for commercial properties, providing stability and predictability for both landlords and tenants. Normal Lease: Usually lasts 6 months to 1 year, common for residential and commercial properties, offering flexibility. Types of Lease Deeds: Fixed-Term Lease: For a specific period. Periodic Lease: Automatically renews after a specific period (e.g., monthly). Perpetual Lease: Has no fixed end date but can be terminated under certain conditions. Short-Term Lease: Typically for a few months to a year. Long-Term Lease: Extends over several years, often up to 99 years. Finance Lease: Used in business where the lessee uses the asset for a significant portion of its useful life. Current Scenario: Lease deeds are crucial in real estate transactions, providing legal clarity and protection for both parties. With increasing urbanization and commercial development, long-term leases are becoming more common, especially in commercial real estate. Legal Sections and Regulations: Transfer of Property Act, 1882: Section 105: Defines a lease as a transfer of a right to enjoy immovable property for a certain time in exchange for a price paid or promised. Section 107: Outlines the procedure for creating a lease. Registration Act, 1908: Section 17: Mandates the registration of lease deeds for leases exceeding one year. Section 18: Provides exceptions for leases less than one year. Specific Relief Act, 1963: Section 31: Allows for the cancellation of a written instrument, including a lease deed, if it is void or voidable. Indian Contract Act, 1872: Section 19: Deals with the voidability of agreements without free consent, including leases.

Understanding the Difference: Deed of Lease vs. Deed of Agreement It’s essential to recognize that these two documents serve distinct purposes. To choose the one that fits your needs, consider the following: A Deed of Lease is used for temporary possession (rental), whereas a Deed of Agreement is used for property sale and purchase. Deed of Lease A Deed of Lease is a contract between a lessor (landlord) and a lessee (tenant), granting the lessee temporary possession and use of a property for a defined period. Key features: 1. Lease duration: Usually ranges from 1 to 99 years. 2. Rent and payment terms: Specifies rent amount, payment schedule, and conditions. 3. Property use: Defines allowed uses of the property. 4.Termination clauses: Outlines conditions for ending the lease. 5. Renewal and expiration: Addresses renewal options and lease expiration. Deed of Agreement Also known as a Deed of Contract or Agreement for Sale, a Deed of Agreement details the terms for property sale and purchase. Key features: 1. Sale and purchase: Formalizes the agreement to sell and buy. 2. Price and payment: States the purchase price, payment terms, and conditions. 3. Property description: Provides an accurate description of the property. 4. Completion date: Sets the transaction completion date. 5. Conditions precedent: Lists requirements to be met before completion. Key Differences 1. Purpose: A Deed of Lease grants temporary possession, while a Deed of Agreement facilitates property sale. 2. Duration: Leases have a defined term; Deeds of Agreement target permanent transfer. 3. Ownership: Leases do not transfer ownership, whereas Deeds of Agreement do. 4. Obligations: Leases focus on rental terms, while Deeds of Agreement emphasize sale and purchase terms. In summary, a Deed of Lease is used for rental arrangements, whereas a Deed of Agreement is for property sales.

It’s just a lease. It could be your friend. Leases are not the mystical unfathomable documents some perceive them to be. They’re simply a rule book… a list of dos and do nots for property owner and occupier. A lease details division of responsibilities and each one is unique to the property it applies. A lease is full of helpful dates, plans, amounts, schedules and “how to” guides that should, if applied as intended, make life stress free for parties involved. But things have a habit of changing. A myriad of external factors that will mean that leases need updating from time to time. Economy, environment, death, mergers, tax, government, development…..the list is endless. Old forgotten documents, languishing in dusty dark depths of that last remaining filing cabinet you’ve lost the key for, need care and attention. These documents, often like their real estate they detail, need maintenance. A polished car, regularly driven, with regular fluid changes will run more sweetly and be something you’re rightly proud of. Send WLT Commercial Property Consultancy your leases. We’ll polish them up together with the property to which they apply, for the mutual benefit of all involved.

Understanding the Distinction: Deed of Lease vs. Deed of Agreement Recognize that these two documents serve unique purposes. To determine which document suits your needs, consider the following: Deed of lease is for temporary possession (Rental) while deed of agreement is for a property sale and purchase. Deed of Lease A Deed of Lease is a contractual agreement between a lessor (landlord) and lessee (tenant) granting the lessee temporary possession and use of a property for a specified period (lease term). Key features: 1. Lease duration: Typically ranges from 1-99 years. 2. Rent and payment terms: Specifies rent, payment schedule and conditions. 3. Property use: Defines permitted uses of the property. 4. Termination clauses: Outlines conditions for termination. 5. *Renewal and expiration: Addresses renewal options and lease expiration. Deed of Agreement A Deed of Agreement, also known as a Deed of Contract or Agreement for Sale, outlines terms for the sale and purchase of a property. Key features: 1. Sale and purchase: Documents the agreement to sell and purchase. 2. Price and payment: Specifies purchase price, payment terms and conditions. 3. Property description: Accurately describes the property. 4. Completion date: Sets the date for transaction completion. 5. Conditions precedent: Lists conditions that must be met before completion. Key Differences 1. Purpose: Deed of Lease grants temporary possession, while Deed of Agreement facilitates property sale. 2. Duration: Lease agreements have a fixed term, whereas Deeds of Agreement aim for permanent transfer. 3. Ownership: Lease agreements do not transfer ownership, whereas Deeds of Agreement result in ownership change. 4. Obligations: Lease agreements emphasize rental obligations, whereas Deeds of Agreement focus on sale and purchase terms. In summary, a Deed of Lease governs rental agreements, while a Deed of Agreement facilitates property sales.

10 key steps involved in a #CommercialRealEstate transaction: 1. Needs Assessment and Goal Setting: Define your objectives. Are you looking to buy, sell, lease, or invest? Determine your budget, property requirements, and desired timeline. 2. Engage a Broker or Advisor: Partner with a commercial real estate broker who has local market expertise and experience relevant to your specific property type (retail, industrial, office, etc.). 3. Market Research and Property Search: Conduct a thorough market analysis to identify potential properties that match your criteria. Your broker will provide insights on market conditions, comparable properties, and potential opportunities. 4. Financial Analysis: Perform a detailed financial analysis, including cash flow projections, return on investment (ROI), and potential expenses. For buyers, this step includes securing financing or assessing available capital. 5. Property Tour and Evaluation: Visit shortlisted properties to assess their suitability based on location, condition, amenities, and potential ROI. Evaluate the pros and cons of each option. 6. Offer and Negotiation: Submit a Letter of Intent (LOI) or an Offer to Purchase, outlining the terms and conditions. Engage in negotiations on price, terms, contingencies, and other factors to reach an agreement. 7. Due Diligence: Conduct due diligence to verify all aspects of the property, such as title, zoning, environmental assessments, building inspections, and lease agreements. Ensure there are no hidden risks or liabilities. 8. Finalizing the Contract: After successful negotiations and due diligence, draft the Purchase and Sale Agreement or Lease Agreement. Review the terms carefully with your legal counsel to ensure all details are accurate and fair. 9. Financing and Closing Preparations: Secure final financing, arrange for property appraisals, insurance, and finalize any additional documents required for closing. Prepare for any closing costs or additional fees. 10. Closing the Deal: Complete the transaction by signing all necessary documents and transferring funds. This is the official handover where ownership or lease rights are transferred to the new party.

Understanding the Distinction: Deed of Lease vs. Deed of Agreement Recognize that these two documents serve unique purposes. To determine which document suits your needs, consider the following: Deed of lease is for temporary possession (Rental) while deed of agreement is for a property sale and purchase. Deed of Lease A Deed of Lease is a contractual agreement between a lessor (landlord) and lessee (tenant) granting the lessee temporary possession and use of a property for a specified period (lease term). Key features: 1. Lease duration: Typically ranges from 1-99 years. 2. Rent and payment terms: Specifies rent, payment schedule and conditions. 3. Property use: Defines permitted uses of the property. 4. Termination clauses: Outlines conditions for termination. 5. *Renewal and expiration: Addresses renewal options and lease expiration. Deed of Agreement A Deed of Agreement, also known as a Deed of Contract or Agreement for Sale, outlines terms for the sale and purchase of a property. Key features: 1. Sale and purchase: Documents the agreement to sell and purchase. 2. Price and payment: Specifies purchase price, payment terms and conditions. 3. Property description: Accurately describes the property. 4. Completion date: Sets the date for transaction completion. 5. Conditions precedent: Lists conditions that must be met before completion. Key Differences 1. Purpose: Deed of Lease grants temporary possession, while Deed of Agreement facilitates property sale. 2. Duration: Lease agreements have a fixed term, whereas Deeds of Agreement aim for permanent transfer. 3. Ownership: Lease agreements do not transfer ownership, whereas Deeds of Agreement result in ownership change. 4. Obligations: Lease agreements emphasize rental obligations, whereas Deeds of Agreement focus on sale and purchase terms. In summary, a Deed of Lease governs rental agreements, while a Deed of Agreement facilitates property sales. #DeedOfLease #DeedOfAgreement #PropertyDocuments

Terminating a Commercial Lease While commercial leases are typically intended to provide a stable and predictable arrangement for both landlords and tenants, circumstances may arise that require the premature termination of the lease. As a real estate professional, it's essential to help your clients understand the potential grounds for termination and the associated risks and obligations. 1. Termination by Agreement - In some cases, the landlord and tenant may mutually agree to terminate the lease early, such as when the tenant's business needs have changed or the landlord wishes to redevelop the property - Negotiate any early termination provisions carefully, including any required notice periods, termination fees, or the allocation of costs associated with the termination - Ensure that any agreement to terminate is properly documented and executed by both parties to avoid potential disputes or misunderstandings 2. Termination for Default - Most commercial leases include provisions allowing either party to terminate the lease if the other party defaults on their obligations, such as the tenant failing to pay rent or the landlord failing to maintain the property - Review the default and termination provisions carefully and negotiate any terms that may be unfavorable to your client, such as short cure periods or excessive penalties - Advise your client to promptly address any potential defaults and to carefully document any issues or disputes that may give rise to a right to terminate 3. Termination for Cause - In some cases, the lease may allow for termination due to specific events or circumstances beyond the parties' control, such as a condemnation of the property or a casualty that renders the premises unusable - Negotiate any termination for cause provisions to ensure that they are clearly defined and provide adequate protections for your client's interests - Consider the potential impact of any such events on your client's business operations and the allocation of costs and obligations associated with the termination 4. Advising Clients - Help your client understand the potential grounds for termination under their lease and the associated risks and obligations - Advise them to carefully consider the short-term and long-term implications of any decision to terminate, including the potential impact on their business operations, finances, and reputation - Encourage your client to seek legal counsel and to approach any termination discussions with the landlord in a professional and collaborative manner, seeking to minimize disputes and reach a mutually acceptable resolution By effectively addressing the potential for lease termination in commercial leases, you can help your clients protect their interests and navigate any unexpected changes or challenges that may arise during the course of their tenancy. In our final post, we'll provide a conclusion and summary of the key takeaways from this series on navigating the leasing process.

Understanding the Distinction: Deed of Lease vs. Deed of Agreement Recognize that these two documents serve unique purposes. To determine which document suits your needs, consider the following: Deed of lease is for temporary possession (Rental) while deed of agreement is for a property sale and purchase. Deed of Lease A Deed of Lease is a contractual agreement between a lessor (landlord) and lessee (tenant) granting the lessee temporary possession and use of a property for a specified period (lease term). Key features: 1. Lease duration: Typically ranges from 1-99 years. 2. Rent and payment terms: Specifies rent, payment schedule and conditions. 3. Property use: Defines permitted uses of the property. 4. Termination clauses: Outlines conditions for termination. 5. *Renewal and expiration: Addresses renewal options and lease expiration. Deed of Agreement A Deed of Agreement, also known as a Deed of Contract or Agreement for Sale, outlines terms for the sale and purchase of a property. Key features: 1. Sale and purchase: Documents the agreement to sell and purchase. 2. Price and payment: Specifies purchase price, payment terms and conditions. 3. Property description: Accurately describes the property. 4. Completion date: Sets the date for transaction completion. 5. Conditions precedent: Lists conditions that must be met before completion. Key Differences 1. Purpose: Deed of Lease grants temporary possession, while Deed of Agreement facilitates property sale. 2. Duration: Lease agreements have a fixed term, whereas Deeds of Agreement aim for permanent transfer. 3. Ownership: Lease agreements do not transfer ownership, whereas Deeds of Agreement result in ownership change. 4. Obligations: Lease agreements emphasize rental obligations, whereas Deeds of Agreement focus on sale and purchase terms. In summary, a Deed of Lease governs rental agreements, while a Deed of Agreement facilitates property sales. #DeedOfLease #DeedOfAgreement #PropertyDocument