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Some basic tips on commercial leasing

Commercial leasing has been the subject of our most recent posts, and we would like to follow up the previous posts by pointing out some rules of thumb in real estate negotiations, beginning with the lease agreement itself.

First of all, it is clearly important to have a basic understanding of real estate terminology. This includes the distinctions in classes of commercial property and the difference between rentable and usable space, as well as the contract terms dealing with issues like subletting, early termination and expansion. It is also important to have an understanding of those things which are incorporated into a lease agreement, such as maintenance and operating costs, insurance, utilities, and real estate taxes. 

More on letters of intent in commercial real estate negotiations

In our last couple posts, we briefly spoke about the issue of letters of intent within the context of commercial leasing negotiations. The issue is an important one, particularly when a lot of money is at stake, because parties may not necessarily understand what they are getting into when they sign a letter of intent and may end up more committed to a real estate transaction than they thought they were, or not getting as much commitment from the other party as they had assumed.  

As we noted last time, state law on the enforceability of letters of intent does vary. There are a limited number of types of outcome, though. In some cases, parties are bound by the entire agreement, while in other cases the letter of intent is not binding at all. In some cases, the parties are only bound by certain provisions, and in still other cases, the letter of intent is not binding at all, but it is still treated as such. Generally speaking, the central question is whether the parties intended to be bound.

Letters of intent in commercial leasing: can they be binding? P.2

In our previous post, we began discussing a lawsuit recently filed by a New York real estate company against Amazon for the online retailer’s failure to follow through on promises made in an allegedly binding letter of intent. We left off discussing the potentially binding effect of letters of intent.

Because of the possibility of entering into a legally binding contract with a letter of intent, parties to such a letter need to be aware of when they may be taking on legal obligations prematurely, or conversely, how to obligate a party to make a greater commitment to the negotiation process, as the case may be. Parties who are in the latter category can sometimes obligate another party by including in the letter of intent a statement that all materials terms of the deal are included in the letter. Doing so can end up binding both parties, whether or not a formal contract is executed later on.

Letters of intent in commercial leasing: can they be binding? P.1

A lawsuit recently filed by a family-operated real estate company in New York highlights an important question: when does negotiation of a commercial real estate transaction become binding? The lawsuit has to do with an alleged agreement to negotiate the rental of office space from New York real estate company The Durst Organization. That agreement, as expressed in a letter of intent, was apparently later tossed aside by Amazon, which had engaged in talks with the company about entering into a potential lease agreement.

Durst claims that it spent $1.6 million on renovations in reliance on Amazon’s promise to negotiate a lease of over 310,000 square feet of office space. According to Durst, Amazon failed to deliver on its promise to engage in “good faith” negotiation when it entered into discussions with another real estate company for a potential deal. 

City contemplating bill to fund lawyers for tenants in housing court

In our last post, we spoke about the importance of working with an attorney to obtain the appropriate remedy in court. In the context of housing court, having an advocate can help tenants navigate their way through the system and ensure their rights are protected. A recent article in the New York Times highlighted some of the problems tenants face when they go without representation.

The problem of unrepresented tenants is significant enough that there has been a growing movement to ensure tenants are able to have representation in court. For example, court records show that the number of evictions has increased nearly every year since 2005. How many of these evictions could have been avoided if the defendant was assisted by an experienced attorney? 

Work with us to obtain appropriate legal remedy in court

Last month, we wrote a series of posts on the topic of housing court. As we noted in those posts, there are a variety of actions which can be brought to housing court by both tenants and landlords. We spoke about the ability of landlords to sue a tenant in housing court for nonpayment and for holdover disputes, and the ability of tenants to sue a landlord for illegal evictions and failing to abide by the warranty of habitability. These are common types of disputes, anyway.

What kind of relief can a tenant, or a landlord for that matter, expect to receive in housing court? Each case is different, and it is important to work with an attorney in determining the appropriate legal remedy to be sought. In some cases, the appropriate relief will be damages, as in cases where a tenant has been subjected to an illegal lockout. As we’ve previous noted, a tenant may be entitled to treble damages in such cases. In other cases, injunctive or declaratory relief may be appropriate. 

Work with an experienced attorney in purchasing luxury real estate, P.2

In our last post, we began speaking about the importance of working with an experienced real estate attorney when purchasing real property, particularly luxury real estate. In the latter case, the increased amount of money at stake is a good enough reason to work with an attorney for many buyers, though there may be other reasons to do so as well.

As we noted, in addition to ensuring that the purchase agreement and all documentation are accurate and meet legal requirements, an experienced real estate attorney can also ensure that the agreement represents the interests of the buyer. This is especially the case with respect to specialized legal matters like tax, zoning, and title issues. 

Work with an experienced attorney in purchasing luxury real estate

At the beginning of December, the luxury real estate market in Manhattan was in a really good spot, having witnessed $1.1 billion in new contracts, a significant increase from the same time last year and the highest volume since 2006, according to Olshan Realty. The state of the market could in some ways be seen partly in the fact that almost half of the luxury apartments that received new contracts since September were purchased without having been seen in person.

Looking back at the year as a whole, the luxury real estate market in Manhattan saw a total of $11.3 billion in sales, even as prices increased for all types of property. Luxury real estate, of course, involves significantly more money than ordinary real estate, and because of this, there is greater responsibility for parties handling the transaction, and a greater need to get an attorney involved.  

What is the warranty of habitability and what remedies are available in housing court? P.2

In our previous post, we began speaking about the concept of breaching a warranty of habitability. As we noted, all landlords are bound to keep leased properties in safe and livable conditions, and failure to do so can open them up to legal action from the tenant. Two types of proceedings are commonly used by tenants in such situations, and we’ll discuss both of them in this and the next post.

The first is known as a Housing Part (HP) Proceeding. These actions involve cases where a tenant’s apartment is not currently being maintained in a safe and livable condition, despite the landlord having been given notice about the issue. Typically, it is a good idea for tenants who are dealing with a habitability problem to first contact the Department of Housing Preservation and Development’s Tenant Assistant Unit, or to pursue some other out-of-court avenue for help. Doing so ensures that they don’t proceed to litigation when doing so isn’t really necessary.

What is the warranty of habitability and what remedies are available in housing court?

We've been presenting a series of posts on this blog dealing with New York City Housing Court, particularly with common cases brought by landlords and tenants. In our last post, we spoke a bit about illegal lockout proceedings, which tenants are able to initiate when their landlord attempts an illegal eviction. In this and the next couple posts, we’ll look at two other proceedings which tenants are able to bring to housing court when their landlord fails to abide by something called the “warranty of habitability.”

The warranty of habitability makes landlords responsible for basic upkeep of leased properties, which must be kept in safe and livable conditions all the time. The types of things that can be considered a breach of the warranty of habitability include: lack of hot water and heat; leaky pipes; no running water; pest and rodent problems; lack of electricity; mold, leaking gas; unrepaired holes in walls and floors; lead paint; leaky windows; poor ventilation; and broken locks. In public areas, other problems can be considered a breach of the warranty, including poor lighting, dangerous stairs and out-of-repair fire escapes. 

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Gary J. Wachtel, Esq.
450 Seventh Avenue,
Suite 1905,
New York, NY 10123
Phone: 917-503-9616
Fax: 212-371-7722

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