Commercial Real Estate Attorneys in Tonawanda, New York
Are you looking to lease or own commercial real estate property in Western New York? Do you know your rights as a tenant or property owner/landlord?
There are many crucial decisions in buying or leasing commercial property, and leasing and financing agreements for commercial property pose several different challenges.
A person or couple can easily navigate the market to purchase a primary residence, obtain financing and enjoy several protections under the law. In contrast, a person or business setting out to lease or purchase commercial real estate property must seek the professional help of our commercial real estate attorneys.
The terms involved in commercial leases and purchase agreements can make or break a deal, and to protect your interests, you want to make sure everything has been reviewed and negotiated by our attorneys.
If you’re looking to buy or lease commercial real estate in Tonawanda, New York, as well as in Wheatfield, Amherst, and throughout Niagara and Erie counties, contact The Law Office Of Corey J. Rossi, PLLC. We can help represent you through the opening and closing of your transaction and seek to protect your rights.
Commercial Lease Basics
Unlike a residential lease that requires a landlord to keep the property in livable conditions, a commercial lease is a beast of another stripe. Unless specified otherwise in the lease, you as the tenant will have to make repairs and upkeep on the property yourself. Additionally, when a commercial lease ends, the landlord/property owner can increase the rent, or even end tenancy.
Commercial leases are more involved than residential leases. Terms can vary from lease to lease, but terms are generally negotiable. It is essential to know the different variations of leases because some require the lessee to pay for more than just occupying the space.
Here are the most common lease types:
Gross Lease: A gross lease, which is for office or retail space, means the landlord, or owner, pays for everything (gross = everything) associated with the space you’re leasing, including taxes and maintenance. The extra expenses are included in your lease amount.
Net Lease: The net lease requires the tenant to pay rent and the “usual costs” of operating and maintaining the property, the expenses are for taxes, utilities, and property insurance.
Triple Net Lease: A Triple Net Lease (NNN), often used for single standing structures, requires the lessee to pay all real estate taxes, building insurance, and property maintenance, in addition to a rental fee (a Doublet Net Lease differs in that the lessee pays only a portion of all expenses, plus rent).
Percentage Lease: Often used in retail spaces and malls, the lessee is required to pay not only a monthly rental fee but a percentage of revenue earned.
Some leases also contain use clauses restricting what the space can be used for. You may want to open a storefront to sell products, but the use clause might limit use to office space. A lessee, in turn, can seek an exclusivity clause that bars the property owner/landlord from leasing space nearby for the same use. If you were to open a salon, you can seek an exclusivity clause to prevent another salon from being located nearby in property owned or managed by the same entity.
Other matters to consider in a commercial lease are signage, permits, zoning restrictions, and relocation guarantees.
For instance, you may want to put a neon sign out front, but the lessor may object and forbid it in the lease.
Likewise, zoning restrictions may prevent altogether the use for which you want the space, or permits may be required. Unless you have a relocation clause in your lease, the property owner can ask you to relocate to another of their properties, so they can use your space to accommodate a better-paying lessee.
Buying Commercial Real Estate
There are generally five types of commercial real estate: multifamily housing, office, retail, industrial, and hospitality. Regardless of which type you’re pursuing, you will want and need the guidance and help of our commercial real estate attorneys to complete the purchase process.
Just as there are different types of commercial property, there are also distinct investment strategies to consider. The most common investment strategies are:
Land Banking: You purchase large tracts of land in the path of development. Then, as the development moves your way, your land value appreciates, and you can sell for a profit.
Fix and Flip: Just as with residential property, you buy the commercial property, fix it up and resell it for a profit.
Wholesaling: You find a property, put it under contract, and then sell the contract to another investor or owner-occupant.
Owner-occupied: You purchase a property to use as the space for your business.
Passive Investing: You team up with another investor or group of investors and provide funds for a later return, but you are not directly involved in managing the property.
Financing a commercial real estate property is different in many ways from financing a residential property, where you put up a down payment and then go to a bank or mortgage lender for financing. In commercial real estate transactions, that model – down payment, find financing – is similar, but due to the large sums involved, the list of lenders and types of loans vary.
Commercial real estate lenders include banks, private lenders, insurance companies, pension funds, and the U.S. Small Business Administration (SBA). The SBA loans generally require a lower down payment, charge lower interest rates, and have guarantees built-in. Bank loans are similar to residential mortgages but generally require higher down payments and interest than the SBA.
Other sources for financing include what are called hard money loans and soft money loans. Hard money lenders offer short-term loans at higher interest rates, meaning you will have to sell or refinance soon. Soft money loans are offered online and are short-term like hard money loans, though rates are generally better. These loans can expire in as little as six months or two years. Lenders in all categories retain the commercial property as collateral and can take the property back should the borrower default.
Commercial Real Estate Attorneys Serving Tonawanda, New York
Leasing or buying commercial real estate presents many more challenges than similar transactions in the residential marketplace. You need the guidance and oversight of our experienced, knowledgeable commercial real estate attorneys. There is too much at stake and too many ways you can find yourself in a legal bind if you’re not careful. If you’re looking to lease or purchase commercial real estate property in Western New York, including Tonawanda, Wheatfield, and Amherst, and throughout Niagara and Erie counties, contact The Law Office Of Corey J. Rossi, PLLC. Our team provides comprehensive services from the start to the finish of your transaction to help make sure you’ve exercised full care.