SEATTLE MULTI-FAMILY REGULATION

In 2015, the City of Seattle passed an ordinance requiring owners of certain multi‑family properties to provide advance notice to the City prior to listing the property for sale (the “Ordinance”). This Bulletin outlines the Ordinance and provides information on brokers’ disclosure obligations arising from the Ordinance.
 
The Ordinance requires owners of multi-family properties containing five or more units, where at least one of the units is affordable to a household earning 80% or less of area median income, to notify the City of their intent to sell their property at least sixty (60) days prior to advertising the property for sale or listing it with a listing service. A penalty of up to $500.00 may be assessed against owners who fail to comply. Information about whether a property is subject to the notice requirements in the ordinance and where to send the required notice is available at www.seattle.gov/housing/intent-to-sell. The Ordinance is codified at Seattle Municipal Code Sections 29.907.030 and 29.907.100.

Brokers should provide their sellers with written notice of the Ordinance’s requirements, and should refrain from offering to pay the fine for non‑compliance. Ignorance of the notice requirement will not immunize a broker from a potential claim for failing to notify a seller of the Ordinance. While it is ultimately the seller’s choice to comply with the Ordinance, it would be best for brokers to have written confirmation of the disclosure to the Seller and imprudent for a broker to advise against compliance.

 Brokers should provide their sellers with written notice of the Ordinance’s requirements, and should refrain from offering to pay the fine for non‑compliance. Ignorance of the notice requirement will not immunize a broker from a potential claim for failing to notify a seller of the Ordinance. While it is ultimately the seller’s choice to comply with the Ordinance, it would be best for brokers to have written confirmation of the disclosure to the Seller and imprudent for a broker to advise against compliance.

“There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters”

 

Negotiating a commercial lease with a large national company as the tenant

For most landlords when negotiating a lease with a tenant the procedure is routine.  A broker calls with a potential tenant, the landlord does some due diligence and sends over its fine-tuned landlord/attorney-drafted lease, the parties negotiate and the lease is signed with some modest modifications. When a national retail or service company comes calling, the rules of the game can change.  A national tenant brings with it instant name recognition and the prospect of increased foot traffic for the landlord's other tenants.  Many landlords may find themselves willing to do whatever it takes to sign a lease with this national tenant, even one who essentially wants to play by its own rules.  Unfortunately, along with these potential benefits, a national tenant also brings with it a tenant-drafted and tenant-slanted lease. If the decision is made to work with the national tenant's lease, careful reading and creativity are required.  Although it is unlikely that landlords will be able to completely re-work a national tenant's lease to the point where it is pro-landlord, keeping key negotiating provisions in mind should help landlords minimize the risks inherent in reaping the benefits of leasing to a national tenant.

We are here to help you and your clients with all aspects of the commercial property management market. Please contact us for further assistance!  

There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters

Buying A Commercial Building?

Regardless of your reason, if you choose to be a landlord, there are resources available to you, including those provided by local real estate boards, real estate networking groups, and property management software.  If you are purchasing commercial property - especially of a type with which you are either somewhat or completely unfamiliar, and/or if you are looking to manage a large portfolio of properties, you are likely better off employing the services of a property manager or property management firm in order to reduce potential liability. 

We are here to help you and your clients with all aspects of the commercial property management market. Please contact us for further assistance! 

There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

COMMERCIAL LEASES - TENANTS RIGHTS

In general, the rights of commercial tenants are inscribed in the lease.  Courts tend to decide cases based on adherence to lease terms even if the terms seem to violate aspects of basic fairness.  Residential tenants have far more protections than commercial tenants do under the law.  For example, there are protections for residential tenants in instances of foreclosure, lack of landlord maintenance, and entry to the property by the landlord.  To facilitate a positive landlord-tenant relationship, spell out lease terms clearly.  Regarding entry to the property by the landlord, define what constitutes “adequate notice” clearly in your lease.  This is especially important for tenants whose businesses require some level of confidentiality.  Make sure that you ensure more than adequate notice in cases of invasive maintenance that may affect your tenant’s business operation.

We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance!

There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

 

LOST INCOME – LOST TENANT

It can take up to two years to make up for the income lost when a tenant vacates instead of renewing the lease.  The chance of lease renewal by a satisfied tenant is triple the chance of lease renewal by a dissatisfied tenant.  To ensure that your commercial real estate tenants are satisfied with their residence in your property, it is important to develop a strategic plan for tenant management.  The plan should include an assessment of, and a plan to meet, their real estate needs.  You should develop a regular communications program with a single point of contact as well as an assessment program to measure the level of tenant satisfaction.

We are here to help you and your clients with all aspects of the commercial property management. Please contact us for further assistance!

 There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

 

 

Engineering Repairs

Engineering repairs can cost up to tens of thousands of dollars.  Preventive maintenance is key to ensuring building mechanicals (heating and air conditioning systems, chillers, fan motors and variable air volume boxes, etc.) don’t break down unexpectedly.  Create a preventive maintenance schedule to make sure everything runs smoothly.  If properly inspected and lubricated, most equipment should last 25 to 35 years.

We are here to help you with all aspects of commercial property management.  Please contact us for further assistance!

There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

 

energy efficiency

One of the common challenges of maintaining a commercial facility is energy efficiency.  With so many tenants to manage, it’s difficult to make energy efficiency a priority.  Watch out for energy eaters.  Try having your cleaning crew come in during the day when less artificial light is needed and consider using occupancy sensors to ensure lights are not being used unless someone is in the room.  In addition, you can investigate whether electronic equipment throughout the building offers an “energy savings” option. 

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.



AS-IS

In a commercial lease, does “as is” really mean that the tenant takes the premises “as is”?  Even though that may be the intention of the parties, there may be laws that preclude a landlord from completely passing the buck on certain issues, such as environmental cleanup and hazardous waste.  Also, the law sometimes requires mandatory disclosure of defective conditions or other problems with the premises or property.

We are are to help you and your clients with all aspects of commercial property management. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

LAWSUIT INSURANCE

Besides insuring a property for destruction caused by natural disasters, a landlord should insure a property against lawsuits brought by a tenant. If a landlord illegally evicts a tenant, makes an illegal entry, or if a tenant or a person legally on the premises is injured because of a dangerous condition, insurance will cover the cost of litigation and will pay the damage award, if any. Landlords could possibly be sued by a tenant for many reasons. Inadequate insurance on a property can be costly.

We are here to help you and your clients with all aspects of commercial management. Please contact us for further assistance.

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

COMMERCIAL LEASE COMPLIANCE

The "Compliance with Laws" provision of a commercial lease typically requires the tenant to perform potentially expensive replacements, alterations, or improvements of the leased premises.  It may require the tenant to comply with existing or future laws relating to the leased premises such as earthquake retrofitting, asbestos abatement, or compliance with the Americans with Disabilities Act.  In some instances the landlord agrees to bear the burden of compliance with these laws. If the tenant is to be responsible for compliance with laws, the landlord should represent and warrant to the tenant in the lease that the building is in compliance with all presently existing laws.  A tenant should try and place a cap on its annual exposure to this provision.

We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance.

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

"Repairs and Maintenance"

A landlord and tenant must pay particular attention to the "Repairs and Maintenance" provision of a commercial lease.  Landlords may try and to this provision to require the tenant to repair and maintain areas located outside the leased premises.  A typical commercial lease will define tenant's repair and maintenance obligations with reference only to the interior of the premises.  However, depending on the definition of the premises, this may result in the tenant having to repair and maintain such things as fire sprinklers, heating and cooling ducts, and the building’s structural elements.  It is important that the lease be specific about who is responsible for the repair and maintenance of specific items so that there is no doubt as to which party has responsibility.

 We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

What Is Damage And Destruction?

The Damage and Destruction provision in a lease specifies what will happen if the leased premises or the building housing the leased premises is damaged or destroyed.  It typically provides that the landlord may elect, in its sole discretion, to continue the lease or to terminate it.  In the case of continuation, it usually provides for an abatement of rent (reduction) in the same proportion that tenant's use of the leased premises is impaired.  

The tenant must make sure that the abatement of rent language is fair.  Some leases base it on the amount of square footage of the leased premises that is damaged or destroyed.  This is unfair since sometimes the entire leased premises may not be useable even when the damage is to a small area.  For example, if the entry is blocked, it does not matter if the rest of the premises is not damaged; no one can enter.  In the case it landlord's responsibility to repair damage, make sure the tenant retains the right to complete improvements following the landlord's repair or reconstruction before rent obligation resumes. 

 We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters

Termination, Relocation or Expansion Rights

One of the pitfalls for a commercial tenant regarding their lease is the "Termination, Relocation or Expansion Rights" provision.  Although reading a commercial lease can be difficult and time-consuming, the consequences of not reading can be more unpleasant or potentially disastrous.  A tenant who has not had their lease carefully read may be surprised to learn that the landlord has reserved the right to unilaterally terminate the lease or relocate the tenant.  An expansion provision may give another tenant the right to expand into the tenant's premises and/or may allow the landlord to terminate the tenant's lease.  Ideally, a tenant should not agree to such clauses. 

We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

LIABILITY - THE SLIP & FALL ISSUE

Some of the top legal/liability issues impacting landlords and commercial property managers include debt collection and frivolous lawsuits.  "Slip-and-fall" accidents and frivolous lawsuits rank high in top causes of disputes.  Some suggest that the economy has lead more people to try to cash in on slips and falls.  As in debt collection, it is beneficial for a landlord to have a properly trained property manager to handle these type of issues.

We are here to help you and your clients with all aspects of the Commercial rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

 

INCREASE INVESTMENT VALUE

Did you know that commercial property management services could increase the value of your investment?  Preventative maintenance is achieved by putting systems in place that catch and deal with maintenance and repair issues early on, before they grow into larger more costly problems.  A quality maintenance plan requires a written maintenance check program, coupled with detailed maintenance documentation and regular maintenance visits.  The management firm can also offer suggestions and feedback regarding upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.

We are here to help you and your clients with all aspects of the commercial rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

WHO NEEDS TO SIGN A COMMERCIAL LEASE?

Just as in other legal contracts, corporate authority and the enforceability of the signatories must be considered when negotiating a lease.  The question of who must sign a lease in order for it to be enforceable is a question of state law and the terms of the governing documents of the business leasing the rental.  Unless a tenant can provide proof that the person signing the lease is in fact authorized to do so by proper action, a landlord is at risk of a claim that the lease was not dully authorized and is therefore not binding.

It is also important to confirm that the tenant entity is in good standing in the state where it was formed and is qualified to do business in the state in which the premises are located. Commercial Property Management is just a click our call away!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.

TRIPLE NET - WHAT IS IT?

What does NNN (Triple Net) mean in commercial leasing?

In commercial leasing rents are often quoted as being NNN or Triple Net.  In a Triple Net lease, in addition to the quoted rental rate, the tenant is responsible for a specified percentage of the operating expenses and real estate taxes associated with the property.

NNN refers to Maintenance, Insurance and Taxes.  Maintenance generally covers the maintenance of the property, including landscaping, common area utilities and property management.  Because different landlords might include or exclude certain expenses from their definition of NNN, it is important to ask the for a specific list of included expenses in order to be able to accurately predict operating expenses.  

We are here to help you and your clients with all aspects of commercial property management.  Please contact us for further assistance.

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.