Real Estate Transactions Exam

What happens in the Schematic Design Phase?

It is where the discussion mostly takes place, because the architect has to tell the owner realistically what can be built based on what the owner wants.

Is the commencement date the same date that the lease is executed?

It may be but it does not need to be.

What are some of the operating expenses that one has in a commercial property?

Management company, super(s), porter, water, electric, etc.

Prior to preparing and sending out the contract of sale, what should the seller's attorney do?

Meet with or have a discussion with the seller to review the terms of the proposed transaction.

Once all the terms of a contract of sale have been agreed upon, what should the purchaser's attorney do?

Meet with the purchaser to review the contract, execute the contract, and provide the down payment in approved funds.

What markets is the triple net lease usually found in?

Midwest and West Coast markets.

What is escrow?

Money held by a third-party on behalf of transacting parties.

When does an attorney's involvement in a residential real estate transaction typically commence?

Once the seller has accepted the purchaser's offered price for the property.

What is a motion for summary judgment?

One that alleges that there are no disputes as to material facts in the case.

What is an incomplete request for consent of structural alterations?

One that basically doesn't have all the full details in it such as removing a wall but not specifying which wall.

What is a surrender obligation?

One that clarifies if the tenant has to restore the premises or if the landlord wants to keep the alterations with a wear and tear or casualty excepted provision.

In what type of account should the security deposit be put in?

One that is interest-bearing.

What is a hard deposit?

One that is not refundable.

How often is title insurance paid?

One time with the expectation that there will never be a claim (which expectation is usually met) because of the underwriting process that gave rise to the policy.

What is the difference between the length of the term of a commercial lease and a residential lease?

Commercial leases tend to be much longer and often are a minimum of ten years, where residential leases tend to be for one year.

In what type of leases are good guy guaranties found?

Commercial leases.

In what type of transactions are special warranty deeds found?

Commercial purchase and sale agreements.

What type of purchasers tend to still go through with the transaction and accept a property as is even if there is a problem with it in the due diligence period and why?

Commercial purchasers, because sometimes the problems are worth it in light of the potential return on investment business-wise.

In what type of purchase and sale agreements are there a hugeeeee amount of adjustments that take place at closing?

Commercial purchases and sales.

In what types of transactions are further assurances common?

Commercial purchases and sales.

On what types of sales are data rooms/war rooms usually used?

Commercial purchases and sales.

In what type of properties is a letter of intent used?

Commercial real estate properties.

How is a commercial real estate property of any significant size's survey different from most residential property surveys?

Commercial transactions of any significant size typically require an ALTA (American Land Title Association) extended coverage title insurance policy to show boundaries of land, locations of buildings, easements, paved areas, driveways and sidewalks, utility structures and other info.

What are conditions precedent to closing?

Conditions that the buyer wants to exist before it is obligated to close and that the seller wants to minimize so the buyer doesn't back out of the deal.

Prior to the purchaser signing the contract of sale, what should the purchaser's attorney do?

Conduct a due diligence investigation of the subject property.

Outside of the lender, architect, owner, and contractor, who do some of the basic services also require?

Consultants.

What distinct phrase can be found in an exclusive agency (lease) agreement?

"Owner hereby appoints Broker as its EXCLUSIVE AGENT and grants Broker the right to LEASE the Property during the Exclusive Listing Period."

What distinct phrase can be found in an exclusive agency (sale) agreement?

"Owner hereby appoints Broker as its EXCLUSIVE AGENT and grants Broker the right to list and SELL the Property during the Exclusive Listing Period."

What distinct phrase can be found in an open listing agreement?

"Owner hereby lists the Property with Broker and grants Broker the NON-EXCLUSIVE right to solicit offers to PURCHASE OR LEASE the Property in accordance with the provisions of this Agreement."

What is language typically found in a merger clause?

"The agreement supersedes all prior agreements and understandings between the parties."

What four things do building codes determine?

1) Fire exits, 2) sprinklers, 3) occupancy limits, and 4) safety.

What are the three types of rates on a loan?

1) Fixed, 2) Variable, and 3) Balloon.

What are the four types of deeds?

1) General warranty deeds, 2) special warranty deeds, 3) bargain and sale deeds, and 4) quitclaim deeds.

After the owner finds the architect, what two steps does the architect take?

1) Gets an idea of the budget the owner has and 2) looks into the zoning laws of that area.

What are the three types of commercial leases?

1) Gross lease, 2) net lease, and 3) base year/expense stop lease.

What are the three types of residential properties that have improvements on the land?

1) House, 2) Condo and 3) Co-Op

What are the four types of residential property?

1) House, 2) apartment, 3) condo, and 4) co-op.

What are the four different ways notice can be given?

1) Personal delivery, 2) certified delivery, 3) Fedex/UPS/mail, and 4) internet/email.

In the beginning, what four things does the mortgage ask for?

1) Personal information, 2) financials, 3) collateral property possibly, and 4) background check.

How long do you have to identify the replacement property(ies) you want to purchase to avoid paying capital gains?

45 days.

How long is a due diligence period usually?

45 days.

What is a notice to tenants form?

A form that lets the tenants know who the new landlord is and where your rent is going to go.

What is the Guaranteed Maximum Price (GMP)?

A not-to-exceed ceiling price that is set on construction contracts that includes the cost of work and the contractor's fee (has a profit element to it).

Why can an evergreen agreement be beneficial for an owner and property manager?

If the property manager is doing a good job they have a job guaranteed and the owner if satisfied with their work will want to keep them.

What is the warranty of habitability?

A warranty that ensures the basic rights and guarantees of an apartment are insured.

What is a letter of intent (LOI)?

A written expression of the important terms of a proposed transaction, generally signed by both parties, that forms the basis for negotiation of a final, definitive agreement.

What is a promissory note?

A written promise to repay a specified sum of money in the mortgage plus interest at a specified rate and length of time to fulfill the promise.

In commercial purchase and sale agreements, where do defined terms tend to be?

In the body of the agreement as well as in the back in an appendix.

When tenant termination options are made available, when do landlords and tenants almost always negotiate?

In the letter of intent stage.

Who does the gross or full service lease tend to favor?

The tenant because extra costs fall on the landlord.

What is true of assignment and subletting in co-ops?

The tenant is under a co-op sublease and so to assign or sublet to someone else the proposed sub-subtenant would need the cooperative's approval.

What do tenants usually want in the notice period section of the Good Guy Guaranty?

The tenant wants to minimize the length of the notice period.

What are entity representations for?

They are intended to give the other party adequate assurances that the seller has the ability and authority to sell and that the buyer has the ability and authority to pay.

Are gross leases used often?

They are seldom used.

What other job title can an attorney have that is real estate related just because they are a member of the Bar?

They can act as a broker and legally collect a commission for doing that job in many states.

Because property managers have such a big job and do so much, what risk do they take on?

They can be found liable for a lot of things and are highly at risk for litigation.

What can the home inspector do to the purchase price and why?

They can change the purchase price because they can find bad things in the house that will mean the buyer has to pay more to fix these things.

If a non-recourse debt/loan is defaulted on by the borrower, what can the lender do?

They can only go after the entity/property itself (as collateral) and not the borrower.

What is the difference between a condo and a co-op in the deed documents?

With a condo you have a recorded deed but with the co-op you get a share certificate and proprietary lease.

What is the difference between commercial and residential property in how much the loan amount is for?

With commercial property, the loan is typically a lot higher.

What weird requirements do some places have in order to purchase property?

Writing a letter about why you are the best candidate (like in Portland).

What should all agreements for real estate brokerage services be in?

Writing, a copy of which is delivered to the client promptly after execution by all parties.

Is it still beneficial to give someone "power of attorney" to make someone an agent to execute documents? Why or why not?

Yes, because it is a clearly defined right of agency.

Can you negotiate the letter of credit?

Yes, even with big banks.

If you get timely notice about errors or bad things in the inspection, can the buyer terminate?

Yes, for any reason whatsoever since it is timely.

When a landlord gives consent to an assignment and the new assignee defaults, is the original tenant liable?

Yes, they are secondarily liable for the full and faithful performance of all terms and conditions of the lease.

At an open house, can you make an offer?

Yes.

Do property managers have to have a license?

Yes.

Does NYC and NYS charge a transfer tax?

Yes.

In condos, do you pay the real estate tax?

Yes.

In some jurisdictions, what is true of the licensing requirements if you work with another broker and you are not licensed in that jurisdiction?

You are allowed to as long as that broker is licensed in that jurisdiction.

If you don't have a further assurances clause in the commercial purchase and sale and don't negotiate for it, what does this usually mean?

You are not a good attorney.

What can you do if you are a real estate attorney representing a client, and there are provisions that deal with other topics like the financials or insurance provisions?

You can seek outside help to assist your client in knowing this information.

As a landlord, what regarding critical service failure would you want to include in the lease?

You want to include that it is not your fault and that you can avoid lawsuits as a result of damages or inconveniences that result from the failure.

As a tenant, what regarding critical service failure would you want to include in the lease?

You want to negotiate that the landlord is liable and that they have to pay for damages and inconveniences that result from the failure.

Where are some places that a business would want signage/postings/advertisements?

Your office, the lobby, building's director, possibly elevators, and the door right outside the office (such as an entry sign).

What is a non-monetary default?

One where you fell through on things like maintenance and repair, did not give notice, made assignment/sublet without consent from the landlord, use the space for a non-permitted use, etc.

What should landlords be required to reconcile promptly after the end of each calendar year?

Operating expenses, taxes, and insurance.

What is the additional rent usually charged for?

Operating expenses.

Who drafts purchase agreements?

Owner's/Landlord's attorney

Who are subcontractors?

Parties that work under the main contractor that do specialized services.

What are some of the "other" fees that property managers collect?

Payment penalties, parking fees, laundry fees, gym services, and fees for the side of the building for advertising.

What is a percentage rent?

Percentage rent is extra rent paid based on a percentage of gross sales. The idea behind percentage rent is the shopping center is a natural draw for customers, who will tend to walk among the various shops. The owner also creates an advantage for all of the retailers by selecting what businesses are placed in the same space, e.g. having a coffee shop, dry cleaners, restaurant, and a general store all being neighbors. This advantage and ability to attract customers can enable the owner to negotiate a percentage of sales.

How often does the Building Owners and Managers Association (BOMA) update the standards for measurement of office space?

Periodically.

In a disability provision, what does the disability tend to have to be?

Permanent or physical that really is limiting to the buyer's use of the property.

What are structural alterations?

Physical changes that include systems like heating/AC than can affect the entire building.

With structural alterations, what type of consent does a landlord usually have and why?

Sole and absolute control because these alterations will affect the entire building.

What is true of change order and their cost for contractors?

Some contractors make more money off of the change orders than the actual building of the property because it is more expensive to change things after the fact than proactively.

When selecting a form of lease agreement, what is true of favorability?

Some forms are more favorable to the landlord's position while others are more favorable to the tenant's position.

What is a home inspector?

Someone that presumably has a good reputation that checks the construction, roof, foundation, boiler, etc. of the house.

What do you have to have if you want to do a pre-closing occupancy?

Something like an interim lease.

What is collateral?

Something that the lender/creditor can go after and claim/sell in order to satisfy the debt that is against them.

What is a change order?

Something that the owner wants to change that is either in their control (a change in the design template on the next building or renovation) or out of the owner's control (accidental damage, weather, etc.).

Why is an open listing (sale/lease) sometimes detrimental to sellers?

Sometimes real estate brokers working under an open listing agreement may be hesitant to expend too much time or money on marketing the property knowing that they may not be compensated, and so the broker may not apply its best efforts to procure a buyer.

In most jurisdictions, what is a remedy offered for damages by courts in real estate and why?

Specific performance, because real property is so unique and has such a high value where we can force a seller to sell eventually.

What do we want to do regarding parking in a commercial lease?

Specifically speak into the lease how many parking spaces the person gets.

What do purchase and sale agreements frequently provide?

That the agreement may not be assigned without the consent of the seller, but not unreasonably withheld, conditioned or delayed.

What would a tenant want in a residential lease renewal provision?

The option to renew its lease of the premises so they can have another term.

Because there is now a binding written agreement after a contract is signed and delivered to the other side, what has to happen and why?

The other side has to sign it because of the Statute of FRauds.

In the A201 form, who are the parties?

The owner and architect (project is mentioned).

If there are changes in the work, what two parties have to approve it?

The owner and the lender.

Why can an evergreen agreement be negative for an owner and property manager?

The owner might be stuck with a property manager they don't want or the property manager out of a job months ahead of when they have to stop working because notice has to be given ahead of time.

In the B101 form, who are the parties?

The owner, architect and project.

Who are the parties in the AIA Document B101?

The owner, architect, and project.

Who are the four most important parties in a construction project?

The owner, architect, contractor, and lender (bank).

In the A101 form, who are the parties?

The owner, contractor, and project (architect is mentioned even though not a party).

In addition to base rent, what is the tenant of an office lease usually responsible for?

The payment of some portion of the operating expenses, insurance, and real estate taxes associated with the operation of the building or mixed-use project and utilities.

Even though property managers run the building, who really runs it?

The people that the property manager hires/supervises, including the super and support staff like the doorman, elevator attendant, etc.

What is the contract period?

The period between the execution of the purchase agreement and the closing.

What is the due diligence period in a commercial purchase and sale?

The period of evaluation and inspection of the property by the buyer before its obligation to purchase is irrevocable where the buyer can typically terminate and their earnest money deposit will be returned.

What is a period of early occupancy?

The period of time prior to the commencement date when the tenant is allowed access to the space to prepare it for occupancy.

Who is the contractor?

The person who is doing the physical work/labor and construction.

What is a hatched out area?

The plae that you can use within the premises.

What are the two types of bidding?

Closed and open bidding.

What distinct phrase can be found in an exclusive right to lease agreement?

"Owner hereby appoints Broker as its EXCLUSIVE AGENT and grants Broker the SOLE AND EXCLUSIVE RIGHT to list and LEASE the Property during the Exclusive Listing Period."

What distinct phrase can be found in an exclusive right to sell agreement?

"Owner hereby appoints Broker as its EXCLUSIVE AGENT and grants Broker the SOLE AND EXCLUSIVE RIGHT to list and SELL the Property during the Exclusive Listing Period."

In a commercial real estate transaction, often what will the sell want the property sold as?

"As is" basis, requiring the buyer to conduct its own inquiry without reliance on any matter of information provided by the seller.

As a general nature, what will the seller want to limit representations to?

"Material" matters and qualify them to "actual knowledge" or "to the best of seller's knowledge."

What is an important phrase to include in a notice provision and why?

"Upon receipt or refusal" because you want notice to be acknowledged either when the person receives the notice or when they refuse it, so it covers people that claim not to have anything to do with it.

What are the two kinds of closings?

1) A NY style sit-down closing and 2) a mail/escrow closing.

In a residential lease, what are the two documents a landlord's attorney will typically prepare?

1) A boilerplate lease form (the "Form Lease") and 2) a rider to the Form Lease (the "Landlord's Rider").

Name two material adverse effects.

1) A major casualty in the building and 2) a lot of tenants who aren't paying rent.

What are three forms of dispute resolution that Article 8 - Claims and Disputes of the B101 form allows?

1) Arbitration, 2) litigation, and 3) negative covenants prohibiting the use of the designs.

What are the two ways that rent could be agreed on as to amount?

1) At the lease signing or 2) at a price calculated based upon the fair market rent in the Consumer Price Index (CPI).

To avoid paying capital gains under a 1031 exchange what are your two options?

1) Buy a replacement property above the cost of the previous sale or 2) buy multiple individual properties that all add up to exceed the cost of the previous sale.

What are three examples of adjustments that would take place with a residential lease?

1) Common charges, 2) real estate taxes, and 3) assessments of the property.

What three things do you have to do to become an architect?

1) Complete educational requirements (degree), 2) get certifications from the state, and 3) take exams.

What three events are not anticipated but should have provisions included about them?

1) Condemnation, 2) Casualty, and 3) Default.

What are three binding provisions that tend to be present in letters of intent?

1) Confidentiality, 2) Exclusivity, and 3) Expiration Date.

In regards to leases, name 9 hot button provisions.

1) Consent, 2) alterations, 3) removal of alterations, 4) insurance and indemnification, 5) damage/destruction - relocation, 6) recapture, 7) default, 8) mitigation of damages, and 9) subordination.

What are a lawyer's three roles?

1) Counseling, 2) Drafting, and 3) Negotiating

What are the 8 standard closing documents?

1) Deed, 2) stock certificate, 3) tax forms, 4) brokerage invoice, 5) payoff letter, 6) affidavit for the title company, 7) power of attorney and right of first refusal, and 8) RESPA form (Settlement Agent on Uniform Settlement Statement.

What are the two prongs to title insurance?

1) Defense costs and 2) loss payment.

In three words, what is the order taken by the architect?

1) Design, 2) bid, and 3) build.

What are the three reasons/situations that a landlord might include in a provision that allows them to enter the apartment?

1) Emergency, 2) to let other people see the property that are going to move in after you (open house), and 3) to confirm that the tenant is maintaining the premises as required under the lease.

What are the seven steps that should be taken prior to purchasing a property?

1) Engage the broker(s), 2) see the property with a meeting of the minds, 3) have an inspection, 4) figure out how the property is going to be paid for (loan, cash, mortgage, etc., 5) pre-approval, 6) determine monetary things such as property taxes, co-op fees, etc, and 7) appraise the property.

What are the three basic forms of agreements used by sellers/ landlords and real estate brokers in connection with the sale or leasing of property?

1) Exclusive right to sell listing agreements, 2) open listing agreements, and 3) exclusive agency agreements.

What are five key roles of property managers?

1) Facilitate lease signings 2) Supervise the super 3) Deal with issues the tenant has 4) Collect the rent and manage the finances 5) Begin the legal process if a tenant needs to be kicked out

When giving a tenant a provision for cosmetic alterations (a cosmetic alterations carveout), what three things will a seller usually consider and what limitations will they impose and then draft into the lease?

1) How much will it cost (it tends to be capped at a certain amount also based on how much of the building that tenant has), 2) a timeline (one cosmetic alteration may be allowed per year), and 3) "and provided it doesn't need any governmental consent" (permit, sign-offs, etc.).

With rent rolls in due diligence, what are 2 things as a buyer that we are concerned about?

1) If tenants are on time with payments and 2) if tenants are in default.

What are the three advantages to a co-op over a condo?

1) If you want to take a mortgage out for your co-op, you don't have to pay a mortgage recording tax, because the property already has a mortgage, which saves you a lot of money. 2) Because people have to be accepted by a co-op board, determining a person's neighbors can make the building more homogenous. 3) Co-op is more obligated to make repairs for all the apartments/units in the building as a communal matter, whereas with condos they tend to have you do it on your own since you technically own it.

For a residential closing, what are the three reserves they take out at closing?

1) Insurance premiums, 2) escrowed funds for real estate taxes, and 3) common charges/maintenance.

What are the three disadvantages to a co-op as opposed to a condo?

1) It is easier to discriminate against someone because the co-op board has to approve the person in a purchase after an interview and they can arbitrarily and capriciously deny him. 2) The co-op has a lot of power to determine who your neighbors are, which reduces diversity. 3) Co-ops have a lot more control over structural or building renovations/decisions than condos.

In terms of maintenance and repairs, what are the two general things a landlord has to do regularly?

1) Keep the common areas like the stairway, lobby, etc. clean and 2) make sure there are no safety hazards.

What four benefits are obtained by having a contractor on the scene early?

1) Keeps the timeline realistic with the architect, 2) helps keep the design realistic, 3) helps to explain things to the owner to make him/her more sophisticated, and 4) helps with negotiations.

What are three things that sustainable development and building might include?

1) LEED, 2) green globes, and 3) living building.

What are the four categories of costs and expenses that should be prorated as of the closing date?

1) Lease rents (if tenants occupying the property are paying rent and rental income is being made), 2) taxes (property taxes currently due and payable), 3) utility expenses, and 4) reconciliation.

What are the 11 things from class discussion that we care about most as a buyer in a due diligence list for commercial property?

1) Leases, 2) rent roll, 3) service contracts, 4) air rights of the building, 5) real property rights, 6) title report, 7) survey, 8) SNDA, 9) zoning report, 10) environmental phase I, II, and III, and 11) area events/information/news.

What are three examples of boilerplate provisions that are not heavily negotiated?

1) Limitations on assignment, 2) notice requirements, and 3) 1031 exchange provisions.

What two documents are issued by lenders to borrowers in anticipation of the making of a loan by the lender to the borrower?

1) Loan term sheets and 2) loan commitment letters.

For what two reasons may a borrower agree to a non-recourse loan?

1) Lower rates, because the lender has something they can surely go after (property as collateral), and 2) if the borrower has a polluted property (such as one with a gas station) that the lender would never want, so they want to go after something else instead.

What four diverse roles do property managers do for the property?

1) Manage, 2) clean, 3) repair, and 4) maintain the property.

At a residential closing, what are five other things they may have to pay for (reserves at funding)?

1) Mechanic's lien, 2) pending litigation, 3) payment for the brokers' commissions, 4) tenant improvements, and 5) legal fees.

What are the two types of default?

1) Monetary and 2) non-monetary.

What are the two main reasons for termination of a brokerage agreement?

1) No cause and 2) termination for cause (bad dealing).

What are the three types of consent that leases speak to?

1) No consent, 2) Not to be unreasonably withheld (conditioned or delayed), and 3) Sole and absolute.

What are five guidelines the landlord would want to address in the rules and regulations section?

1) No rollerblading/biking in lobby, 2) after-hours activity, 3) roof space activity or when you can be on the roof, 4) guest policies in things like common areas, and 5) signage/political postings in front of the buildings.

What four issues should the tenant's counsel consider when reviewing the Good Guy Guaranty?

1) Notice period, 2) additional rent, 3) non-monetary obligations, and 4) the condition of the premises at the vacate date.

What are the three types of commercial leases?

1) Office, 2) retail, and 3) industrial/warehouse (like one Amazon would have to store their products).

What two advantages does the Good Guy Guaranty provide for the tenant?

1) Often, a start-up does not have the cash necessary to provide the many months of security required by a landlord when leasing to a risky tenant. 2) In addition, the limited personal guaranty embodied by a good guy guaranty is a vast improvement over an unlimited personal guaranty, where the guarantor is liable for every default of the tenant, monetary and nonmonetary, until the lease termination date.

Who are the three parties involved in construction of a property?

1) Owner, 2) architect, and 3) contractor.

What are two ways around having to have guarantors?

1) Paying more money up front and 2) higher security deposit.

What are three major examples of concerns the buyer would want the seller to disclose in the representations and warranties section?

1) Pending litigation, 2) defaults, and 3) outstanding violations.

If the purchaser is financing the transaction, what four lender's documents will be included?

1) Promissory note, 2) mortgage, deed of trust of security agreement, 3) condominium rider to mortgage or deed of trust, and 4) AZTEC recognition agreement (for co-ops, which provides for the lender to have a first priority lien over the lien that a co-op would have if the shareholder defaults in payment of maintenance charges).

What are three important reports that a lender would want done?

1) Property conditioning report, 2) zoning report, and 3) environmental reports.

Name the 10 real estate parties in order of importance.

1) Property owner/landlord, 2) real estate attorney, 3) real estate broker, 4) insurance broker/consultant, 5) building design professional, 6) contractor, 7) property manager, 8) property service vendor (pest control, elevator maintenance, porter, etc.), 9) lender, and 10) buyer/tenant.

Who are the 6 parties typically at the closing if the purchase is being financed?

1) Purchaser, 2) seller, 3) purchaser's attorney, 4) seller's attorney, 5) bank's attorney, and 6) representative of the title company/cooperative managing agent.

What are the two benefits of a green roof?

1) Reducing the heat island effect and 2) Preventing water discharge.

What are the three ways to split the escrow account and why are they done/beneficial?

1) Release it as a check/cash/wire transfer, which is the best way since it is instant, 2) keep it in the account because the closing does not occur, 3) pay it into court if there is a dispute until the two parties reconcile because if there is disagreement the seller's lawyer/escrowee has a conflict of interest.

What are the three options that a purchaser has if there is a problem with the property in the due diligence period?

1) Renegotiate for maybe less money, 2) still go through with the transaction and accept it as it is, and 3) terminate and walk away.

What are four reasons a tenant may not be able to move in on the commencement date?

1) Repairs on the apartment still need to be made, 2) the previous tenant hasn't left yet, 3) they don't allow people to move in on weekends/weekdays, and 4) there is still litigation going on the apartment.

What are the three categories of the seller's representations and warranties?

1) Representations about the seller, including its authority to enter into and perform the transaction, 2) representations about the property, and 3) representations about the operations of the property.

What are three frequently negotiated provisions in a contract of sale on a residential property?

1) Representations and warranties, 2) closing schedule, and 3) mortgage contingencies.

What six categories do representations and warranties generally include?

1) Requirements of performance including if board approval is needed, 2) seller representations regarding absence of any litigation/defaults/compliance issues, 3) seller representations that the info/documents provided are truthful and accurate and the property is free from condemnation, 4) seller warranty to maintain the property until the closing, 5) seller warranty that no new leases will be entered into, and 6) other appropriate representations depending on the nature of the property and transaction.

What are the two main agreements in property management?

1) Retail leasing, and 2) Multi-family agreements (not too important).

What are the five phases of an architect's services?

1) Schematic Design, 2) Design Development, 3) Construction Documents, 4) Bidding/Negotiation, and 5) Construction.

What are the five sequential phases usually undertaken by an architect?

1) Schematic design phase, 2) design development phase, 3) construction documents phase, 4) bidding and negotiation phase, and 5) construction phase.

What are the two types of wall?

1) Sheetrock/external part (aesthetic) and 2) structural wall (foundation).

When getting financed and putting it into a legal document, what are the three legal requirements to be filed?

1) Signed by the grantor, 2) legal description, and 3) acknowledgement with a signature.

What three things must be done for a real estate document to be considered valid?

1) Signed by the parties, 2) legal description, and 3) acknowledged before a notary.

What are nine property characteristics that a tenant would be concerned about in a commercial lease?

1) Square footage, 2) rent, 3) make-up of building, 4) other tenants, 5) location/neighborhood, 6) legality (business purpose), 7) building amenities, 8) security, and 9) occupancy availability.

Name six types of consultants that might be requested in constructing the building.

1) Structural, 2) mechanical, 3) electrical, 4) fire protection, 5) plumbing, and 6) lighting.

What are the three types of tenants?

1) Tenants by entirety, 2) tenants in common, and 3) joint tenants.

With leases in due diligence, what are 5 things as a buyer that we are concerned about?

1) Term, 2) length, 3) how much the tenant is paying, 4) options to purchase, and 5) other conditions.

What are four factors that influence a lender on whether they will provide a loan commitment or a loan term sheet?

1) The internal requirements of the lender, 2) the level of vacancy at the property, 3) the creditworthiness of the existing tenants at the property, and 4) the customs and practices in the marketplace where the loan will be made.

At a minimum, what 5 terms should be included in a letter of intent?

1) The parties, 2) subject property, 3) purchase price, 4) other material economic terms, and 5) other terms that might be material to a party.

Typically on a letter of credit from a bank what are two provisions?

1) The reason why you are requesting the letter of credit and 2) an evergreen.

What is the usual amount of notice that a property manager gets before being fired?

30 days.

What are 9 key issues that will be discussed in the Architect's Agreement?

1) The scope of basic services, 2) what constitutes an additional service, 3) the owner's responsibilities, 4) obligations relating to construction cost, 5) ownership and rights of the parties in connection with intellectual property created by the architect, 6) insurance, 7) fees and reimbursable expenses, 8) scheduling issues, and 9) dispute resolution.

What are four reasons why a landlord would request guarantors?

1) The tenant does not want to give a huge amount of money up front, 2) tenant's salary/income does not indicate that they can alone afford to pay the rent, 3) the landlord wants to be made whole, and 4) they need a tenant with deeper pockets.

Why is a deed in lieu better than foreclosure (three reasons)?

1) There is less drama, 2) the bank doesn't want to own property like it would have to in a foreclosure, and we don't have to worry about being in a jurisdiction that has the right of redemption and losing the property back to the original borrower.

What are two major benefits of making a letter of intent?

1) They save time because if there are certain terms that are critical to one of the parties and the other party does not want to meet it there is no need to waste time proceeding with a large complex transaction; and 2) time spent and costs incurred in negotiating a definitive agreement can be kept down with a detailed letter of intent, because instead of negotiating the terms themselves, the parties will only have to negotiate their expression.

What are the four areas of investigation generally undertaken by a buyer?

1) Title and survey, 2) environmental, 3) structural, and 4) financial.

What three things does the quitclaim deed have?

1) Title, 2) Signature, and 3) Notice to the world that you own the property.

What three things is the bargain and sale deed usually used for?

1) To resolve potential claims or boundary issues, 2) to transfer title from one family member to another, and 3) in some jurisdictions to avoid transfer taxes that are imposed on warranty deeds.

What two situations are quitclaim deeds usually used in?

1) To transfer title from between family members or 2) in situations where there is a relationship between the grantor and the grantee.

What three categories will office leases typically fall in?

1) Triple net lease, 2) Gross or full service lease, and 3) Modified gross lease.

What are the two types of parking spaces in a garage that can be provided in a lease?

1) Unreserved, where you can park anywhere in the garage, and 2) Reserved, where you must park in a specific place.

What 7 things will be included in a tenant estoppel certificate?

1) When the lease started, 2) when the lease expired, 3) does the tenant have options to purchase, expand, renew, etc., 4) is the landlord in default under any obligations, 5) has the tenant defaulted under the lease, 6) has the landlord or will the landlord owe the tenants any reimbursements, and 7) any other outstanding obligations.

What are three difficulties/inconveniences of transfers of letters of credit?

1) You need to have the bank involved, 2) it takes a lot of time, and 3) there are bank fees.

What are your two hats as an attorney?

1)Counselor/advisor and 2)Attorney-at-Law

What percentage do work expenses usually equal?

10%

How long does a landlord tend to have to respond to a request for alterations?

15 days.

What is the usual fee rate for a broker (whether solo or a co-broker relationship) on a property in NYC?

15% of the annual rent price.

How long do you have between the first sale and buying the replacement property(ies) to avoid paying capital gains?

180 days.

What is the usual annual percentage increase in the base rent of a commercial property?

2%.

What is the standard down payment rate for a house?

20% of the purchase price (in equity) by the closing time.

What percentage of brokerage agreements tend to be negotiated?

5%

What is the typical rate for a broker's commission?

6% of the final/sale price of the property after concessions (such as reducing the price because the property needs a new roof) as opposed to the listing price.

At the closing, how many parties are typically in attendance if the purchase is being financed.

6.

What are/were two exceptions to the 180 day rule to buying the replacement property(ies) to avoid paying capital gains?

9/11 and a 10-day grace period very rarely given by the IRS in special circumstances.

What is a ₋↓(T)↓₋CO (CO with a little capital T in front of it)?

A Certificate of Occupancy that is temporary, where we have to finish the rest, which is find for most tenants because tenants can start moving in or the business can start being done there.

In regulated states, who typically is the authority with respect to licensing real estate professionals and the provision of real estate brokerage services?

A Real Estate Commission.

What is a stipulated sum?

A "stipulated sum" is the specific amount set forth as the total payment for performance of the contract. A stipulated sum is sometimes also referred to as a "lump sum" or a "fixed price.".

What happens in a physical inspection?

A walkthrough is done as well as a detailed look by certified specialists.

In due diligence, what is the SNDA?

A Subordination and Non-Disturbance Agreement (SNDA) that your landlord asks its lender to provide. The agreement says that if the building goes bankrupt and the lender takes control of the building from the landlord, the lender will honor your lease. As long as the tenant hasn't defaulted in what they are required to do under the lease, then they won't be dispossessed (this is made for bigger tenants like ones with four stories in the Empire State Building).

What is an SP form?

A Sustainable Project form.

What is a UCC 3 form?

A UCC 3 form, also known as a Financing Statement Amendment, is a document tracking changes to the UCC 1 such as the termination, the continuation, and the transfer of the Financing Statement. Other amendments are also filed, such as amending the names of the two parties or amending the collateral.

What is a UCC 1 form?

A Uniform Commercial Code 1 or a UCC 1 Financing Statement is a legal document created when some property is used as collateral at the time a loan is secured. A UCC 1 indicates that the bank has an interest in the property. Thus, if the borrower decides to sell the property before the loan is paid off, then the new owner is liable for the outstanding balance. At the same time, the document gives the lender the right to seize the property in case the borrower defaults on the payment.

What is a balloon rate loan?

A balloon payment is a large payment due at the end of a balloon loan. A balloon rate loan typically features a relatively short term, and only a portion of the loan's principal balance is amortized over the term. At the end of the term, the remaining balance is due as a final repayment.

What is a 1031 exchange?

A benefit where the IRS says if you own an investment/commercial property and you sell it you have to pay capital gains on it unless you buy a replacement property above the cost of the previous sale.

What is a loan commitment letter?

A binding agreement by the lender to make a loan to the borrower on the terms set forth in the loan commitment.

What is an advantage to the variable rate loan?

A borrower may be able to start the loan at a lower rate.

When buying commercial real estate, what are we really buying?

A business.

What can a tenant usually negotiate in regards to an increase in operating expenses?

A cap on the increase.

What is a capital gain?

A capital gain is a profit that results from a sale of a capital asset, such as stock, bond or real estate, where the sale price exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price.

What will the tenant typically want in the casualty provision?

A casualty provision that is broad enough to address a casualty event that damages the building and results in the tenant's inability to operate its business but does not damage the leased premises.

What is a rent abatement clause?

A clause that is commonly included in rental leases that allow the tenant to reduce or even eliminate a portion of the rent if the property has become affected or uninhabitable because of a certain problem.

What is the Acceptance of Non-Conforming Work found in the beginning of A201, what party does not like it, and why not?

A clause that mandates that the owner has to accept work that does not exactly conform with what they wanted. The owner does not like this because they only want what they requested.

What clause should property managers include in their project so they don't do too much work?

A clause that says it is not for "any services," because that is far too broad and all-encompassing.

What is a merger clause?

A clause that states all of the previous thoughts or agreements merge into this one.

What is something drafted into the assignment and subletting provision in a residential lease that limit's the landlord's sole and absolute discretion?

A clause that states the landlord's consent is "not to be unreasonably withheld, conditioned, or delayed."

What is a relocation concept?

A concept where the landlord can move you for a significant reason.

What is an exclusive agency agreement (lease/sale)?

A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker if the property is sold through the efforts of any real estate broker. If the property is sold solely through the efforts of the seller(s), the seller(s) is not obligated to pay a commission to the listing broker.

What is an open listing agreement (sale/lease)?

A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker only if the property is sold through the efforts of the listing broker.

What is an exclusive right to sell/lease listing agreement?

A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker, regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else.

What is the right of first refusal?

A contractual right that gives its holder the option to enter a business transaction with the property owner, according to specified terms, before the owner is entitled to enter into that transaction with a third party.

What does a co-op stand for and what are the two key elements of it?

A cooperative cooperation, where 1) you don't own the building but own shares as a part of the interest in the building and 2) a proprietary lease, where you don't get a deed or anything recorded in the county clerk's office unless the property is financed.

What is a negative covenant?

A covenant preventing certain activities.

What is a deed in lieu?

A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

What is a bargain and sale deed?

A deed that is a conveyance that makes no warranties that the seller has any interest in the property or that the property is free from the claims of others.

What is a special warranty deed?

A deed that limits the warranty with respect to claims or encumbrances arising by, through, or under the seller. The seller is making no warranty with respect to title matters arising prior to the seller's period of ownership of the property.

What is a general warranty deed (three prongs)?

A deed that provides full warranties from the seller to the buyer that (i) the seller has good title to the property, (ii) the seller has the right and power to convey the property, and (iii) the property is free from claims or encumbrances.

What is a "Little D"?

A default where you still have the chance to cure.

If in a lease there is a provision that says "Landlord has X number of days to respond to the tenant's request to make alterations," and the landlord doesn't respond, what is that considered?

A default.

What form provides guidance to attorneys in understanding their client's needs?

A detailed client questionnaire.

What is a deed?

A document provided at the county clerk's office that says to the world that you own a piece of property.

What is a satisfaction of the mortgage?

A document signed by a lender (mortgagee) acknowledging that a mortgage has been fully paid and that the mortgage is no longer a lien on the real property.

What is a bill of sale?

A document that confers ownership of an object or personal property in exchange for a certain amount of money or services.

What is a deed of trust?

A document that embodies the agreement between a lender and a borrower to transfer an interest in the borrower's land to a neutral third party, a trustee, to secure the payment of a debt by the borrower. It is essentially a mortgage.

What is the administrative fee on a security deposit? Provide an example.

A fee the landlord is entitled to where they charge and obtain a percentage of the interest that the security deposit makes. For example: A tenant pays a security deposit of $1,000. The landlord places the deposit in an interest bearing account paying 1.1%. At the end of the year the account will have earned interest of $11. The tenant is entitled to $1 and the landlord may retain $10, 1% of the deposit, as an administrative fee.

What do landlords of larger office buildings often have regardless of the tenant?

A form lease they use for a specific office building or mixed-use project.

What is a deal sheet and what 5 things does it tend to contain?

A form that contains the most basic terms and conditions of the sale such as 1) purchase price, 2) property address, 3) names and addresses of the parties, 4) closing date, and 5) mortgage contingency time period (if the sale is subject to financing).

What is a good guy guaranty?

A good guy guaranty is a commonly utilized form of limited personal guaranty that originated in Manhattan and is now nearly ubiquitous in New York metropolitan area commercial leases. It is common for New York City landlords to insist, in instances where the tenant is either a start-up company or a business entity without an established track record, that the tenant's principals or investors supplement the security deposit with a good guy guaranty. In its simplest form, the individual or individuals guarantying the lease warrant to the landlord that they will be liable for all rent payments which accrue until the tenant vacates the leased premises. Upon the tenant's surrender of the premises and the landlord's receipt of these payments, the personal liability of the guarantor ends. The discharge from personal liability of the guarantor does not affect the continuing liability of the tenant, who remains liable for damages that accrue to the landlord as a result of the tenant's failure to pay rent until the end of the lease term.

What is the tenant considered when they fail to vacate the leased premises at the expiration of the term?

A holdover tenant.

What would a landlord want in the permitted use provision of a commercial lease?

A landlord would prefer a narrow permitted use so that they know what you are doing, the premises can be safely used with it, and it protects them from liability.

What is the Local Law 11?

A law the requires certain standards are upheld with the facade and physical external structure of a building (property manager makes sure these laws are complied with).

What is a proprietary lease?

A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.

What is a hybrid lease?

A lease made because In actual practice, commercial leases frequently combine concepts from many of the three basic lease types. For example, a lease may treat some expenses as included in base rent under a gross lease, designate others for allocation to the tenant as in the case of a net lease, and further designate others for inclusion in base rent with increases in expenses being passed through to the tenant on a proportionate share basis as in the case of a base year lease.

To ensure that money from a lien waiver will be paid, what might you create?

A lien waiver escrow.

What is a punch list?

A list of things you want checked off that you need done in your property (things like light fixtures placed in, cement laid, walls painted, etc.) and you tend to do walkthroughs as the owner to make sure these things are done.

What is a mortgage contingency?

A mortgage contingency clause is a provision in the home purchase contract saying that if the prospective buyer cannot get a mortgage within a fixed period of time with the specified terms, the buyer can call off the whole deal and get back his deposit. The agreement with the seller is therefore conditional on the buyer being able to obtain a mortgage on the property. If the borrower is unable to obtain a firm commitment from a lender for the loan to buy the property in a set time period, the buyer has the option to not close the sale and is entitled to a refund of his full down payment.

What is the big difference between a promissory note and a mortgage?

A mortgage is filed at a county clerk's office on record like a deed where the promissory note is not.

What is another name for a promissory note?

A mortgage note.

What is a legal, non-conforming use?

A non-conforming use means the existing land use somehow does not fit in with the zoning ordinance. The non-conformity may be the use of the property, such as a commercial use in a residential zoning district.

What is a licensed real estate brokerage company?

A partnership, limited liability company, corporation, or other legal entity which is affiliated with a licensed real estate broker (through employment or ownership) who acts as the principal broker and personally oversees and directs all operations of the real estate brokerage company that relate to the performance of real estate brokerage services.

What is an open house?

A period when people are able to come view the property either at specific time blocks or for an entire day.

What is retainage?

A portion of the agreed upon contract price deliberately withheld until the work is substantially complete to assure that the contractor or subcontractor will satisfy its obligations and complete a construction project.

What two documents are delivered at the closing of a co-op?

A proprietary lease and a stock certificate.

What is a gross-up provision?

A provision found in a typical office lease that allows a landlord to gross-up or overstate certain operating expenses for the office building that vary as the occupancy level of building increases and decreases.

What is a holdover provision?

A provision in a lease that governs those situations when the tenant fails to vacate the leased premises at the expiration of the term.

What is a due on sale provision?

A provision in every mortgage that makes it so that if a property is sold then the mortgage has to be paid in full by the sale.

Because a title search probably would not pick up if a default is looming because defaults are under the mortgage as opposed to the deed/title, what would a purchaser want to include in the purchase and sale agreement?

A provision like l of the Purchaser's Rider to Contract of Sale for a Condominium that is a catchall for any defaults. ("Seller is not in default on any mortgage on the Unit and this transaction is not a "short sale" as that phase is customarily used in the industry; Seller has no notice of any default in keeping, observing or performing any term, covenant or condition on Seller's part to be observed or performed under the Condominium's By-Laws or House Rules and to the best of Seller's knowledge no condition or event exists or has occurred which constitute, or which after notice or lapse of time or both would constitute such a default;")

What is a permitted use provision?

A provision of the lease that should be broad and allows the tenant to operate its business as anticipated through the duration of the term of the lease.

What is beneficial to both parties regarding default and remedies to include in the lease?

A provision that addresses defaults by the landlord.

What is a casualty provision?

A provision that allocates the rights and responsibilities of the parties following a casualty event such as a hurricane, earthquake, or fire.

What is recapture?

A provision that allows a landlord the option of taking back the space.

What is the surrender provision?

A provision that details the condition in which the premises must be surrendered to the landlord upon expiration of the lease.

What is a surrender provision?

A provision that dictates how the premises should be returned to the Landlord and what procedures to follow when the lease ends. The clause defines: 1) The Tenant's obligations. 2) The Landlord's rights. 3) What happens to any property left behind.

What is the alterations provision?

A provision that governs the tenant's ability to make changes to the leased premises during the lease term.

What other remedy does a tenant sometimes get if a landlord does not come through on their agreement and have everything done by the commencement date?

A provision that is drafted in stating the landlord has to cover damages that were caused as a result of the late start date.

What is the Access Provision?

A provision that lets people view a property legally before you buy it, like if you have relatives or friends or architects or repair people that want to see the apartment too before you buy it.

What is an evergreen?

A provision that means the document automatically renews, where unless notice is given the letter of credit will renew again.

What is the disability provision?

A provision that says in the case of a disability that won't allow the buyer to use the apartment as it was built, the purchase can be terminated.

What typically will constitute an offer in a commercial real estate purchase and sale agreement?

A purchase and sale agreement signed by either the buyer or the seller.

What is an adjournment?

A putting off or postponing of proceedings.

What is a variable rate?

A rate that will or can change in certain periods of time throughout the length of the mortgage that is typically tied to an index and with a cap on high the interest can go.

What is a fixed rate?

A rate that will stay the same throughout the length of the mortgage.

What are the two important types of real estate licenses?

A real estate broker and a real estate sales agent.

In most states, what is true of real estate brokers/sales agents in respect to licensing and mortgage brokerage services .

A real estate broker or sales agent may also act as a mortgage broker without additional licensing requirements.

What is true of real estate professionals and dual agency?

A real estate professional may also be permitted to act as a "dual agent" meaning that the real estate professional (typically one or more real estate professionals employed by a real estate brokerage company) is acting as an agent for more than one party in a transaction.

What is true of a real estate broker licensed in one regulating state and working in another.

A regulating state may permit a real estate broker licensed in another state to perform real estate brokerage services within such regulating state, provided the out-of-state commercial real estate broker works in cooperation and under a written agreement with a real estate broker licensed in the regulating state.

What is the point of the security deposit?

A remedy for the landlord if the tenant defaults under the lease.

What should the tenant ask the landlord to provide in terms of maintenance and repair provisions?

A representation that the leased premises is in good condition and repair and in compliance with applicable laws, including the Americans with Disabilities Act.

What can issues that arise prior to and even on the date of closing cause?

A requirement for the parties to enter into a post-closing agreement.

What does the financial aspect of an investigation by a buyer of a commercial real estate property entail?

A review of seller's books and records, leases, and possibly estoppel certificates of tenants.

What will the buyer generally want if there is a condemnation, casualty, or default?

A right of termination.

What would a landlord want in a residential lease renewal provision?

A right to renew where the landlord can increase the rent as they desire.

What is a sight letter of credit?

A sight letter of credit is payable once it is presented along with the necessary documents. An organization offering a sight letter of credit commits itself to paying the agreed amount of funds provided the provisions of the letter of credit are met.

What should an open house always have to track attendance?

A sign in sheet.

What is an SPE?

A single purpose entity that is typically used by commercial real estate owners to isolate the entity owners from individual financial risk. Special purpose entities are also commonly used to hide the true ownership of a property.

What is a soft deposit?

A soft deposit, also called a good faith deposit or earnest money, is a deposit made to a seller showing that a buyer is serious about purchasing a property. This type of deposit is fully refundable should the buyer elect to terminate the contract at the end of the due diligence period.

What type of clause is the further assurances clause?

A standard "boilerplate" clause in most sophisticated commercial agreements.

Upon receipt of the deal sheet, what does the seller's attorney typically prepare?

A standard form pre-printed residential contract of sale along with a seller's rider.

What is a mechanic's lien?

A statutory right that allows a contractor to file against the property in order for them to get their payment for services.

What are liquidated damages?

A sum of money specified in a contract as compensation to be paid to one of the parties if the other defaults.

What is a green roof?

A sustainable building component.

What is a mansion tax?

A tax imposed on properties over $1,000,000.

What is a mortgage recording tax?

A tax that one has to pay because of the benefit of getting to take out a mortgage.

What would a tenant want in the permitted use provision of a commercial lease?

A tenant would prefer a broad permitted use that says it can be used for any legal purpose, in case they want to use the space for a different purpose now and to avoid any type of liability/trouble.

How does a deemer related to a default if the landlord does not respond to a tenant's request to make alterations?

A tenant's attorney can argue that the default (lack of response by the landlord) is a deemer (deemed consent) because they didn't say no (where silence here is implied consent).

In the acquisition loan agreement, what is an acceleration event?

A term that fully matures the performance due from a party upon a breach of the contract.

What would a tenant want in a residential lease with regards to the return of the tenant's security deposit?

A time limit in which the landlord must return the security deposit (in some jurisdictions it is statutory).

What is a transfer tax?

A transfer tax is essentially a transaction fee imposed on the transfer of title to property.

What is this escape to the mortgage recording tax similar to?

A transfer tax.

What is a waiver of subrogation?

A waiver of when typically, an insurance company which pays its insured client for injuries and losses then sues the party which the injured person contends caused the damages to him/her. A landlord's insurance will cover their building and then sue a tenant for the damage they caused.

What is a lien waiver?

A waiver that eliminates any mechanic or construction or other liens.

Which document has the most substantial terms (meat of the contract (A101, A201, or B101)?

A201.

What is the AIA Document B101?

AIA Document B101-2007 is a one-part standard form of agreement between owner and architect for building design and construction contract administration.

What is another name for the "due diligence" section in the commercial purchase and sale agreement?

Access and Inspection; Examination by Buyer; Seller's Consents.

In the base year of a commercial lease, what are you not charged?

Additional rent.

When do the three binding provisions in the letter of intent become officially binding?

After both parties have signed the letter.

When should the broker usually receive commission?

After the deal closes.

What does the bank record the mortgage against?

Against the property.

What are service contracts?

Agreements with people that work in/with the business such as porters, exterminators, and other employees.

In commercial purchase and sales what do bills of sale usually cover?

All of the personal items/belongings of the building that are being sold, especially anything not attached to the building (not a fixture).

What is true about the flexibility in negotiation of terms of a purchase agreement?

All of the terms of a purchase agreement are negotiable, to some extent.

In the acquisition loan agreement, what are obligations?

All present and future debts and liabilities of Borrower to Lender arising pursuant to, or on account of, the provisions of this Agreement, the Note or any of the other Loan Documents.

What do almost all multi-tenant office buildings have in terms of rules and regulations?

Almost all multi-tenant office buildings have a standard set of rules and regulations that are usually attached to the lease agreement as an exhibit.

What is the Architect's Agreement?

Also known as the Owner-Architect Agreement, it is a written document covering the professional services to be performed by an architect in connection with the design and construction of a building project.

In terms of mortgage brokerage services, how do they differ from real estate brokers in terms of licensing?

Although most states regulate mortgage brokerage services and require mortgage brokers to be licensed, these professionals are not generally regulated within the same licensing framework as real estate brokers.

What is accelerated rent?

An acceleration of rent clause provides that upon specified events rent for the entire remainder of the lease terms becomes due immediately. The triggering event may be failure to pay rent or tenant insolvency. Some rent acceleration clauses are broadly worded to include any tenant default of the terms of the lease.

In the acquisition loan agreement, what is a cash management account?

An account held with a financial institution (in our case the loan/mortgage lender) that allows you to manage your cash transactions through one portal. Think of it as an umbrella or main cash hub under which all of your investments flow in and out.

What are you getting when you pay premiums to an insurance company?

An affirmative assurance that you will be protected.

What is a letter of credit (LOC)?

An agreement from a bank guaranteeing that the tenant will be able to disburse funds to the seller up to the stated amount if it does not meet its obligations under the lease. It is irrevocable and maintains that they have the rent in credit as if it was cash in the bank.

What is the exclusivity clause in a commercial letter of intent?

An agreement of the seller to refrain from marketing the property for some period of time while the parties negotiate a definitive agreement.

Who is one of the first parties to be engaged by a project owner or developer?

An architect.

What is ad nauseum?

An argument or discussion that has continued so much to the point of nausea.

Who should review every contract?

An attorney.

What is an endorsement?

An endorsement is a rider attached to a Mortgage or an Owner policy from a title company to expand or limit the policy coverage, such as providing access to a property in the middle of other properties.

In the acquisition loan agreement, what is Section 3.27 - Leases essentially?

An estoppel certificate.

What type of agreement is a property management agreement?

An evergreen agreement, which means that unless a party terminates, it renews automatically.

Even though letters of intent typically are non-binding, what helps to keep parties in check?

An implied agreement to negotiate in good faith.

What is a licensed real estate broker?

An individual who meets the minimum experience and educational requirements for real estate brokers and passes the applicable broker examination.

What is a licensed real estate sales agent?

An individual who meets the minimum experience and educational requirements for real estate sales agents and passes the applicable sales agent examination.

What is the preliminary title report designed to provide?

An interim or preliminary response to an application for title insurance that is intended to facilitate the issuance of the title insurance policy at closing.

If you work with another broker who is licensed in another jurisdiction and you are not licensed there, what must you have?

An intrastate agreement where it is permitted based on that state/jurisdiction's licensed laws.

What does the structural aspect of an investigation by a buyer of a commercial real estate property entail?

An investigation of the physical aspects of the facility being acquired by a professional.

Which agreement is least favored by real estate brokers and why?

An open listing agreement is not favored by real estate brokers as the real estate broker may expend time and money marketing the property and negotiating with buyers or tenants and never receive a commission on the sale or lease of the property if it is not sold/leased to a buyer/tenant procured by real estate broker.

Under the Statute of Frauds, in real estate/property law in New York, what is not binding?

An oral agreement.

What is a loan term sheet?

An outline of the material terms and conditions to guide the lender and borrower in the negotiation process but does not bind either side to such terms and conditions (although, as a practical matter, the parties typically try to adhere to such material terms and conditions once these are set forth in a term sheet).

What do some states also prohibit a licensed real estate broker to share its fees with?

An unlicensed real estate professional.

What is open bidding?

An unsealed bid that is available for all other bidders to see and possibly act upon.

What other philanthropic charge do we knot want to impose on the tenants when we charge them operating expenses?

Any charitable he company makes.

In the acquisition loan agreement, what is a material adverse effect?

Any effect that materially and adversely affects the ability of any party to the Loan Documents to perform its obligations under any Loan Document to which it is a party.

In the acquisition loan agreement, what is a governmental authority?

Any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, service, district or other instrumentality of any governmental entity.

What will the buyer want the seller to provide concerning the condition of the property in the representations and warranties section?

Any information as to any known conditions of the property that would affect the buyer's decision to purchase the property, especially a representation regarding any matter that could not reasonably be discovered by a search of the property records or an inspection of the property.

In the acquisition loan agreement, what is an affiliate?

Any person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the business.

When courts are litigating issues, what do they look to?

Anything within the four corners as well as the intent of the parties.

Who drafts the A101 and B101 documents?

Architects.

Why did the Good Guy Guaranty arise?

As a reaction to the perceived difficulty of dispossessing nonpaying commercial tenants in landlord-tenant court.

What is an independent contractor?

As distinguished from an employee, an independent contractor offers its services on an on-going basis to the general public and maintains control of the way it performs such services.

How long do notice periods tend to range from?

As little as three months to 18 months or more.

At what time would the buyer's lender require estoppel certificates?

At or before closing (or in extreme cases in a certain timeframe post-closing).

When does the landlord have to let the tenant know about whether they want them to restore the premises or if they can leave it with wear and tear or casualty excepted and why?

At the time of consent so that the tenant doesn't have a surprise at the end of the lease for budgetary reasons and to have time to get the work/repairs done.

Who should expect to make entity representations?

Both the seller and the buyer.

What other informative devices do open houses also tend to have?

Brochures that list certain basic information about the property, where they tend to try and blow-up the amenities and positives of the property.

Who drafts brokerage agreements?

Broker/Broker's attorney

What are the two components of rent?

Base rent and additional rent.

Most of the time, how is the property manager's compensation paid?

Based on a percentage of the rent they collect, so they want to do the best job they can and have a good system that works.

Why would a title search probably not pick up if a default is looming?

Because a looming default is under the mortgage as opposed to the deed/title.

In a commercial property, even if it is drafted in the agreement, why can a landlord not always have entry access?

Because certain rooms or parts of the property are for the business regulated by other agencies like the SEC, where there is utmost confidentiality on the clients' information.

Why is it so important to ensure that the letter of intent accurately reflects the parties' mutual intent not to be bound or to be bound to certain provisions?

Because claims can be brought on a letter of intent alleging that a contract was created by promissory estoppel or reasonable reliance.

Why are common elements included for the tenants in what they own and have to pay for?

Because if a building wants to do something like a $4 million renovation on the lobby, we use the split percentage (such as .05%) that each owner owns in order to determine how much of it they have to pay for.

Why must an attorney have a higher level of due diligence in condo and co-op sales?

Because it is important to look into the finances of the co-op or condo since the owner does not just own their own apartment but also a part of the cooperative or the condominium. The financial health of the cooperative or condominium has a direct effect on the apartment owner.

Why don't we list the contractor in the A201 form?

Because it is like an addition to a lease like a rider, since it is incorporated, so you don't have to list the contractor again.

Why is the special warranty deed common in commercial purchase and sale transactions?

Because parties rely on title insurance rather than the representations and warranties of the seller, which may be a single purpose entity that is dissolved after sale.

How is the stipulated sum like the guaranteed maximum price?

Because subject to change orders, they are both how much total cost that is planned to be paid.

In the acquisition loan agreement, why is Section 3.8 - Financial Statements so important?

Because the lender wants to see the financials of the borrower regularly since buying commercial property is like buying a business and they want to see the status of the business to make sure they can pay off the loan in time or as an early indicator if they are going to default.

What do property managers do regarding paying bills/invoices?

Because the property manager takes in all the money, they also pay for all of the bills and invoices too.

Why is this notice of problems regarding maintenance and repair in their specific personal areas an obligation for the tenant?

Because there are things the landlord cannot see or doesn't have access to, and things that seem small or are in the tenant's apartment could spread and affect the other tenants.

Why is conducting due diligence in a commercial real estate transaction so important?

Because there is a large amount of money at stake in a commercial real estate transaction and the buyer needs to know if the property is a sound investment and if the purchase price is fair and reasonable.

Why are co-ops sometimes not considered real real estate?

Because they are not truly owned property, but instead are considered shares.

Why is it important that property managers develop operating budgets every year?

Because things change like what things need to be upgraded (boiler, heat, etc.), apartments in the building are sold and bought, and changes need to be made so the building complies with local laws like Local Law 11.

What is the point of Article 5 - Owner's Responsibilities in the B101 form?

Because you want some security in case the owner doesn't respond or hold up their end of the bargain. If the owner takes too long to respond it will take things off schedule and it affects the contractor and the lender.

When are lien waivers usually requested?

Before paying the person doing the work so that you are not liable for mechanic or construction loans.

How long does the brokerage agreement usually last?

Between 6 and 9 months.

What is the best time to construct a building?

Between April and October for weather purposes, to avoid things like snow, the cold, potential delays, and safety mishaps.

When is the home inspection typically performed?

Between the acceptance of the offer and the contract being sent to the purchaser's attorney by the seller's attorney.

For commercial properties, how often is real estate tax paid?

Bi-annually.

What types of terms and conditions are not usually heavily negotiated but are essential?

Boilerplate provisions.

How are property managers paid?

By a percentage of the rent that they take in.

How do sellers draft their representatives and warranties section to limit their liability?

By limiting the representations themselves or the period that the representations and warranties survive closing.

How does a property manager enforce the landlord's (LL) rights?

By moving on behalf of the owner and giving penalties to or evicting tenants that don't pay rent.

What does the Consumer Price Index (CPI) measure?

Changes in the price level of consumer goods and services used as a measure of inflation.

When is a real estate professional an employee?

If a real estate professional is employed by a real estate brokerage company or by a company that owns real estate.

What are common charges?

Charges that cover "common services and amenities" shared by other condo residents, including the management fees and operating expenses for a condominium building.

What is reconciliation?

If allocation or proration items are not determinable at closing and the parties need to estimate such amounts.

Why will a lender sometimes cancel the mortgage or change the amount they are lending you?

If the appraisal comes back with a very different value on the house than the purchase price.

In the Purchase's Rider to Contract of Sale for a Condominium, what can happen concerning common charges that can allow a buyer to terminate?

If the common charges exceed 10%.

What are further assurances?

If a seller is needed for a certain period after a closing, such as for filling out more documents, then the seller has to be available or have an agent available to fulfill these services.

What is a deemer?

Deemed consent.

What is something done in real estate to avoid legislation since judges in NY state are mostly elected and some judges don't make great decisions where the results of cases may vary?

Documents are drafted up front to avoid legislation and apportion risk and responsibility beforehand.

What are consensus docs?

Documents that organizations like the AIA give out, that set standards for the architecture industry.

When are tenant estoppel certificates usually requested?

During the due diligence period and then again within 30 days of closing.

When do parties usually agree upon options to renew or options to extend the term of the lease?

Early on in the lease negotiation process, often while negotiating the letter of intent or term sheet.

For a residential HOUSE in New York (NOT CONDOS, CO-OPS, OR COMMERCIAL PROPERTIES), what happens concerning the issues of the house at closing?

Either the seller fills out a disclosure form of issues with the property or at closing a $500 credit is given to the purchaser in lieu of the form.

What is condemnation?

Eminent domain, or when the government comes in and seizes property like they did during 9/11 for buildings nearby. It is essentially a governmental taking because the property is dangerous or the government needs/wants to use the property.

Currently, which are the preferred closing?

Escrow closings.

What is true of the obtainment of estoppel certificates from tenants in commercial transactions as opposed to multi-family housing deals?

Estoppel certificates are typically not used in multi-family housing deals, but are common in all other commercial transactions that involve leases.

To find out information about current tenants in a commercial purchase and sale agreement, what should the purchaser request?

Estoppel certificates from all the tenants (or at the very least any major ones).

Why are all-cash deals seen as better?

Everyone wants the least impediments to close, and all-cash deals have no chance of not qualifying for a mortgage because the purchaser does not need one.

If you own a house, what part of the land do you own?

Everything down to the core of the earth and above to the heavens in the form of air rights (without conflicting the airplanes and air territory of the government).

If you own a condo what do you own?

Everything within the four walls and a percent of the common elements.

Which agreement is most favored by real estate brokers and why?

Exclusive (sole) rights to sell/lease because no matter what even if the broker does nothing for the sale they still get paid the commission.

Which agreement is most commonly used between landlords/sellers and real estate brokers?

Exclusive right to lease/sell agreements.

Prior to negotiating the actual office lease, what do the parties often do?

Execute a letter of intent or lease proposal laying out the key terms that will be incorporated into the lease.

What happens in an escrow closing?

Executed documents in recordable form are delivered in escrow to the title company together with a direction letter setting forth the required conditions for their release. Funds are wired and once all necessary funds and documents are received, escrow is broken and the closing has occurred.

What are work letters?

Extended documents that document what the landlord is going to do for the tenant (repair-wise), such as before they move in or rent a space for an event, that can be a few paragraphs or multiple pages.

What is a good personal way to make negotiation easier?

Find something you have in common with your adversary to make the person more comfortable.

Beyond the standard home inspection, what pre-contract home inspections also can be included?

Fireplace/flue and structural inspections.

During the due diligence period in a commercial purchase and sale transaction, for what reason do most contracts provide can a purchaser terminate the contract?

For any reason whatsoever.

Why are the tenant, purchaser, or borrower the first ones to sign the lease?

For business reasons, the landlord, seller, or lender may not want to obligate themselves at the outset and a better offer may come along before they sign the lease.

How do commercial and residential lease differ in terms of how many people are allowed on the premises or in common areas?

For residential leases the amount of people allowed will be regulated where most commercial leases don't speak to how many people you can have in your business.

What would a landlord want in a residential lease notice and provision?

For the provision not to be included and for the landlord to have the option to terminate without providing notice or giving the tenant a chance to cure.

What are estoppel certificates and why are they so beneficial?

Forms that confirm the terms of the leases that have been provided by the seller, and ensure that there are no unknown issues such as unpaid tenant allowances or landlord defaults.

From what point in time is the title insurance giving you affirmative title?

From the beginning of time, not just what they arbitrarily researched.

What type of forms tend to reflect a compromise position between the parties (landlord and tenant)?

Fully negotiated forms.

When will the tenant want the base year to be?

Generally speaking, the tenant will want the base year to be as late as possible, typically no earlier than the first year of occupancy, because expenses tend to go up and they want the operating expense amount to be based on the highest amount of expenses possible so there is not as much of a chance of an increase.

What is the first thing to obtain when getting a commercial loan?

Getting a term sheet.

Who common uses bargain and sale deeds?

Governmental entities.

What are some examples of common charges?

Heat and hot water, Gas, Electric for common areas, Decorations, Plants and flowers in common areas, Bike room or storage room, Gym, Pest control, Plumbing, Parking spots, Trash, Snow removal, and Employee fees.

What does Article 7 - Copyrights and Licenses of the B101 form do?

Helps to protect the architect, because the architect owns the intellectual property rights and this helps to prevent the owner from stealing the design.

What is the term of a broker agreement?

How long it lasts where the seller and broker are obligated to deal with each other.

As lease negotiations progress, what should the attorney representing the landlord confirm?

How particular issues are typically handled at the office building or project or how the landlord anticipates handling such issues.

What else is typically negotiated in regards to covenants?

How the seller will be restricted in its ongoing operation and maintenance of the property during the contract period.

What type of accounts do most people put the money of escrow in?

IOLA (NYS Interest On Lawyer Account fund), which are non-interest bearing accounts.

Why is having defined terms good for commercial agreements?

IT reduces ambiguity, provides clarity, and makes the document more brief.

What is the bad thing about a time of the essence clause/language?

If you miss that date there will be a lot of problems.

What is the only type of change that does not require the owner or lender's approval?

Immaterial changes, such as paint color changes or using granite as opposed to marble on countertops

What are tenant improvements?

Improvements or alterations that will need to be completed within the lease premises to make the space usable by the tenant.

Where is the modified gross lease common?

In NY and East Coast markets.

How does a green roof prevent water discharge?

In NY when it excessively rains, the sewage gets run off into rivers or discharge points like the Hudson or East River, but with a green roof, some of this water is absorbed.

Besides lowering the property price to below $1,000,000, what is another way to avoid the mortgage recording tax and where can it be done?

In NY, the tenant's lender can have a deal with the next owner, where the existing mortgage from the old tenant is consolidated with the mortgage from the new lender so the only part taxed is the difference between what the new lender owes on the mortgage and now the entire mortgage.

In order to collect commission on a real estate transaction in NY, where do you have to be licensed?

In NY.

In what jurisdiction are operational/work expenses paid on a different timeline?

In New York, where operational/work expenses are based on a base year.

What is commissioning?

In a green building when someone is going in and making sure things are working the way they were intended to work, and to make sure that the certifications the buildings get for energy are fair and that energy efficient buildings are not really energy hogs.

In what type of property is it more likely for an inspection to be conducted?

In a house as opposed to an apartment.

If there is a security deposit requirement, what should be required in terms of where the funds should be held?

In a segregated account for the duration of the lease term (e.g., in a savings account) to protect the tenant in the event of a landlord bankruptcy.

What is true of the real estate professional and agency relationships?

In a typical real estate transaction, the real estate professional represents a specific party in a transaction and is therefore an agent for that represented party, such party being the buyer or the seller (in a buy/sell transaction), the landlord or the tenant (in a leasing transaction), or the property owner (in a property management relationship).

Why is the death provision included in the agreement?

In case one party passes away and the deal cannot be completed.

What is the difference between commercial and residential property in how much the interest/fees are for?

In commercial loans there are typically a lot of extra fees and interest.

In what types of transactions are bills of sale usually found?

In commercial purchase and sales.

In what types of property must an attorney have a higher level of due diligence before the sale?

In condos and co-ops.

With lending law, how are you paid as an architect?

In installments.

If there is a default what additional remedies would the parties want and why?

In order to avoid protracted and expensive litigation, they would want specific remedies where the prevailing party pays the costs of litigation and either a return or getting to keep the earnest deposit and/or specific performance.

In which phase are the agreements and contracts first created?

In the Construction Documents phase.

What is another heavily negotiated provision in most office leases?

The interruption of services provision.

What is the difference between commercial and residential property in how much the lender will typically cover of the purchase price?

In the residential world, the lending ratio usually covers 70-80% of the property, but it is much less in commercial lending.

In what situation may a buyer's lender also require estoppel certificates?

In transactions where the buyer is using financing for all or a part of the purchase price.

What is title insurance?

Insurance against the risk that the title analysis performed by the title underwriter on the property that is the subject of the transaction has not identified all recorded or filed judgments, liens, taxes, and agreements affecting the property and against the risk that the transaction has not been duly authorized.

What is business interruption insurance?

Insurance that covers when there is a problem such as a fire or flood, etc. where the person cannot stay in business any longer and so the insurance company will cover the business expenses/profits for a certain amount of time.

What is IPD?

Integrated Project Delivery is where you try to get the contractor/builder in as quickly as possible. It is a collaborative alliance of people, systems, business structures and practices into a process that harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction.

What is the least preferred method of notice?

Internet/email.

What other problem does the right of redemption still going after the sale of a property cause?

Issues with determining who has to maintain the property.

What does the assignment of rents and leases do in a mortgage/loan acquisition?

It assigns the leases and rents from the borrower to the lender, yet grants to the borrower the right to collect rents prior to an event of default.

What are the downsides to a sit-down closing?

It can be both costly and time consuming.

If the deal does not close, where does the interest go (DOUBLE CHECK THIS WITH PROFESSOR OR SOMEONE)?

It goes back to the buyer (DOUBLE CHECK THIS WITH PROFESSOR OR SOMEONE)?

What is true of change order and their cost for owners?

It is costly for owners whether it is in their control or out of it.

What does it mean when something is cost prohibitive?

It is difficult to obtain because of its cost.

Is due diligence done before or after the contract is signed and why?

It is done after the contract is signed because it is a lot of work and can be expensive so you want a signed contract as some sort of guarantee on the deal.

What is true of acting as a broker and attorney on a deal in New York state?

It is prohibited in NY because of ethical violations (broker + attorney carve-outs) since the attorney will be thinking more about the large commission fee as a broker as opposed to lower attorney fees.

To protect a purchaser, what is recommended concerning condition of property and repair obligations?

It is recommended that an inspection period be included in the contract of sale for the first two weeks after execution of the contract and that if the inspection discloses any material deficiency in the property, the purchaser shall have the right to terminate the contract and receive its down payment promptly.

What is the property description and why is it one of the most important aspects of the agreement?

It is the written description of what is and is not being conveyed, including any personal property, and it is so important because it is what the whole deal is about!

What does the clause/drafting tool that says "this agreement may be executed in counterparts" mean?

It means that people can sign it in different places or on different papers or at different times, but we will still look at is as a signed completed document if the contract speaks to counter parts and people each sign their respective lines.

If a client's form of lease is used, what must be done to the document?

It must be modified to address the specific terms of the proposed transaction.

How does the business Judgment Rule affect condos and co-ops?

It protects the boards of condos and co-ops that make certain decisions, because when they decide to do things like a $4 million renovation to the lobby, we are hoping that they acted in good faith and in the best interests of the property.

At closing, pursuant to the terms in the contract, how should the property be delivered?

It should be delivered broom-clean, free of all tenancies, and other rights of possession.

What is HVAC?

It stands for heating, ventilation, and air conditioning, and it is a service sometimes provided.

Where will a tenant's rights to expand the leased premises typically be written?

It will be included in a separate section of the lease.

In NY, what is the real estate fiscal year?

July 1 - June 30

What would a landlord want in a residential lease pet provision?

Landlords may say absolutely not or permit only certain kinds of pets under a certain weight/size and/or be hypoallergenic.

What types of premises are typically delivered "as is"?

Leased premises.

What provisions do leases typically contain regarding default and remedies?

Leases typically contain provisions detailing which acts or omissions of the tenant will result in a default under the lease and the remedies a landlord has in the event of such default.

What essentially are hard money lenders?

Legal loan sharks.

Who drafts loan agreements?

Lender's attorney

What is the LTV?

Loan to value ratio.

What are acquisition loans?

Loans entered into by purchasers and investors of interests in real estate to acquire land or the land and the improvements located thereon.

What causes there to be different types of deeds?

Local law and custom and the warranties being provided from the seller to the buyer.

What is a springing lock box?

Lockbox banking is a service provided by banks to companies for the receipt of payment from customers. Under the service, the payments made by customers are directed to a special post office box instead of going to the company. The bank goes to the box, retrieves the payments, processes them and deposits the funds directly into the company's bank account.

What action by the purchaser can sometimes lower purchase prices?

Making an all-cash deal, where the purchaser is able to pay for the entire property at closing.

What is a tenant improvement allowance?

Money the landlord may agree to pay in order to induce a tenant to lease space in the landlord's building that is usually a lump sum that they make available to a tenant to customize the space being leased to the tenant's specifications.

If the landlord does not have a preferred form, who typically does?

Most attorneys and law firms have their own preferred form of lease.

What three jurisdictions say that a broker either gets their full commission or nothing at all (no finder's fee)?

NY, DE, and NJ.

Who charges more in transfer taxes, NYC or NYS?

NYC, much more.

What details are usually on the sign in sheet?

Name, contact information, do you have a broker, etc.

What happens before a trial in discovery?

Necessary documents are obtained and you can question witnesses and the opposing side (deposition), which is essentially like a trial before the trial.

If a tenant's payment of operating expenses is limited to increases over a base year, what should the base year be adjusted to account for?

New expenses or services.

Does a person have to be in title (own the property) in order to be in a contract to sell the property?

No, as long as the owner gives consent and there is a contract made for the person to be able to sell the property.

Do you get a mortgage recording tax for a co-op? Why or why not?

No, because in NYS it is not considered a mortgage.

Do you need the "power of attorney" to make someone an agent to execute documents?

No.

If there is an incomplete request for consent of structural alterations does the 15-day period start?

No.

In NY for residential sales, is it typical to have a good faith/earnest deposit and a down payment?

No.

Are the letters of intent or lease proposals typically binding or non-binding?

Non-binding.

What is a non-recourse debt/loan?

Non-recourse debt or a non-recourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.

Does the failure to record a real estate document invalidate the document?

Not necessarily, it is decided by the courts.

What payment does the seller's attorney get for being an escrowee and holding the money?

Nothing.

What is defective notice?

Notice that is incorrect for reasons including if you are demanding an incorrect amount; if the notice includes late fees, but your lease agreement makes no mention of such fees; or if the notice fails to give the tenant proper grace period.

What are tenants liable to do regarding maintenance and repair?

Notice to alert the landlord to problems in their specific personal areas (and common areas if they desire).

What is the difference between retable square feet and usable square feet?

Office space is generally listed with a rentable square footage rate, which includes more square feet than the actual space the tenant will occupy. Usable square feet includes the specific area the tenant will occupy in order to do business.

What is true of personal property in commercial real estate transactions?

Often commercial real estate does not have much tangible personal property that is included in the agreement, unless it is a commercial building like a hotel.

What is a desk-sharing concept?

Often, a tenant will attempt to negotiate into the lease the right to assign or sublet the premises without the landlord's consent under certain circumstances, which might include a sale of the tenant's business, a merger or consolidation of the tenant's business with another business, or, in some cases, a "desk-sharing" arrangement.

In most jurisdictions, on what timeline are operational/work expenses paid?

On a calendar year basis (Jan 1 to Dec 31)

What intellectual property of the architect does Article 7 - Copyrights and Licenses in the B101 form include?

Plans, specifications, blueprints, and any of the creative work (even if the owner came up with some of it and inspired the picture and design).

What is the remedy that is put in the contract for a purchaser if the seller does not follow through and terminates the deal without good cause?

Possible litigation and then specific performance. The next remedy might be consequential damages and other fees to be made whole.

What is the most important defined term and why?

Premises, because it provides the limitation and broad extent to which the tenant can use a certain area.

What is the landlord's counsel in an office lease customarily responsible for?

Preparing the initial draft of the lease.

What is the first step in drafting the commercial purchase and sale agreement?

Properly determining the names of the parties.

What is the second step in drafting the commercial purchase and sale agreement?

Properly identifying the property.

What two types of insurance does a landlord want a tenant to have?

Property and liability.

What do many states also include to the real estate brokerage service that requires a license?

Property management, even though certain aspects of property management may be excluded from such requirement.

What are the two types of records that property managers keep?

Property records (long-term things like elevator inspections, the deed, boiler servicing, etc.) and financial records (dollars in and dollars out; day to day fees for things like rent, garbage bags, etc.).

What does the recording of legal documents do?

Provides public documentation of interests affecting real property and gives third parties notice of their existence of these interests.

What do we want to avoid when drafting concerning litigation for a seller and why?

Provision j of the Purchaser's Rider to Contract of Sale for a Condominium, which states under the seller's representations that if there is threatened litigation the buyer wants to know and this could prevent them from purchasing. This is bad for the seller because it is very broad and in the US there is always threatened litigation even if nothing has been filed.

What is a frequent subject of negotiation in a commercial real estate purchase and sale agreement?

Provisions governing the circumstances under which a seller is entitled to retain the deposit or the buyer is entitled to get it back.

What are some of the frequently negotiated provisions in a residential lease?

Provisions on renewal, assignment and subletting, pets, return of the security deposit, landlord's right to show the property to potential tenants/purchasers/lenders, surrender condition, and tenant's default notice and cure period.

What are the assignment and subletting provisions?

Provisions that outline who the tenant can assign the lease to or sublet part of the premises to.

What are hot button provisions?

Provisions that that tend to get looked at more when negotiating a lease because more issues tend to arise from these topics.

For residential properties, how often is real estate tax paid?

Quarterly.

If an owner wants to build something, what is the first step he or she should take?

Reach out to find a professional licensed architect that can help me build what I want.

Who initially guides residential real estate deals?

Real estate agents, realtors, or brokers.

Before drafting a purchase agreement, what is it important to understand as an attorney?

The objectives of the party you represent.

What is a recourse loan?

Recourse debt is a debt that is backed by collateral from the borrower. Also known as a recourse loan, this type of debt allows the lender to collect from the debtor and the debtor's assets in the case of default as opposed to foreclosing on a particular property or asset as with a home loan or auto loan.

What are entity representations?

Representations about a party to the real estate transactions including their existence and authority to enter into and perform the contemplated transaction.

Regardless of the type of property or complexity of the transaction, what does the buyer's due diligence investigation typically involve?

Review of leases and other assignable agreements; a physical and environmental inspection of the property; title, survey and zoning review; and review of financial info relating to the property.

What is an attorney representing a tenant typically responsible for?

Reviewing and commenting on the initial draft of the lease from the landlord.

What is the biggest expense that employers usually have in their commercial business?

Salaries for their employees including insurance for the property, workers, emergency, etc.

For work done above the ground level in apartments, what is there in place at the street level to protect pedestrians?

Scaffolding and sidewalk bridges.

Who drafts purchase and seller agreements?

Seller/Seller's attorney

After a seller has accepted the purchaser's offered price, what does a broker do to attorneys?

Sends both attorneys a deal sheet.

What are common elements and some examples?

Shared spaces in a building that include non-dwelling spaces like the lobby, hallways, basement, or a backyard essentially that are present in the building (even though the tenants can't necessarily use them, such as an inaccessible roof or a boiler room where we don't want the tenants to be).

What are some of the basic appliances that an apartment must have under a warranty of habitability?

Shower/bath, toilet, sink, stove, oven, and fridge.

What is a quitclaim deed?

Similar to a bargain and sale deed, a quitclaim deed makes no warranties that the seller has any interest in the property or that the property is free from the claims of others and typically states that the grantor "quitclaims" or "remises, releases and quitclaims" to the grantee, the real property.

In the acquisition loan agreement, what is the optional "green provision" at the end of Section 4.3 - Maintenance and Repair of the Property?

Since NY now has green laws and requirements, these are regulations the lender would want the borrower to follow, and green buildings have lower operating costs and can lead to certain tax credits and benefits from the government for being green.

What do property managers do regarding reviewing bills/invoices?

Since the property manager handles the services of the building, they receive the bills for things like the landscape architect.

Why are negotiations about the length of the contingency/inspection/due diligence period frequent?

So that the property is not kept off the market for too long.

What is the escrowee?

The one holding the escrow.

What does the assignment of leases and rents document essentially do?

States that the lender has the right to receive all of the tenants' rents directly without going through the borrower (the borrower is in effect assigning the rights of those rents).

What are the two types of alterations?

Structural and non-structural (cosmetic).

What do 1031 exchange provisions deal with?

Tax dealings.

What type of communication is not considered notice and why?

Telephone, because we want things in writing.

As lease negotiations progress, what should the attorney representing the landlord discuss with his client?

Tenant comments.

What is rare in office leases?

Tenant termination options.

Is the housing market in NY landlord-friendly or tenant-friendly.

Tenant-friendly.

If the landlord can't deliver the premises by a certain date, what should the tenant be able to do?

Terminate the lease.

Since architects draft the A101 and B101 forms, what should we as attorneys look out for?

Terms that are biased towards architects.

What does a further assurances clause usually state in a commercial agreement?

That a party shall provide cooperation and assistance to the other party in executing duties under the contract.

What should the purchase and sale agreement in a commercial property provide concerning the costs and expenses of the property as of the closing date?

That all of the costs and expenses are prorated and allocated as of the closing date.

What do tenants usually want in the additional rent period section of the Good Guy Guaranty?

That its obligations be limited to the payment of fixed rent and specified items of additional rent such as operating expense escalations and real estate tax escalations.

In the acquisition loan agreement, what does the Use of Proceeds section maintain?

That the borrower shall use the proceeds of the Loan to (a) to pay the acquisition costs for the Property, (b) to fund any upfront reserves or escrow amounts required hereunder, (c) to pay any Loan closing costs and (d) to reimburse Borrower for funds expended for leasing commission costs and the construction of tenant improvements. Any excess will be available to Borrowers (and appointed at Borrower's request) and may be used for any lawful purpose.

What does the Good Guy Guaranty typically provide regarding additional rent?

That the guarantor guaranties the payment of fixed rent and additional rent due under the lease through the date the tenant vacates the premises.

What do Good Guy Guaranties often require in the condition of premises at the vacate date section?

That the guarantor guaranty that the tenant will leave the premises "in the condition required by the lease" as of the vacate date.

What is the common practice in NY for the seller to deliver the house to the purchaser in (specific conditions)?

That the house's plumbing, heating, and electrical components are in good working order and the roof and basement, if any, are free from leaks, and the appliances in working order.

If you are a tenant, what would you want to draft in regards to a relocation provision?

That the landlord can move you for a significant reason but will cover moving costs and damages that result from the time it takes to move.

If there is a security deposit requirement, what should the lease require in terms of its return to the tenant?

That the landlord return such funds promptly after the expiration of the term.

What does the property management subordination agreement state?

That the lender can terminate the property management agreement if the owner defaults and doesn't pay for the property.

If the property is being sold subject to existing tenancies, what should the buyer in a commercial purchase and sale contract require in the due diligence list?

That the seller deliver a current rent roll and copies of all current leases.

What do landlords usually want in the additional rent period section of the Good Guy Guaranty?

That the tenant have to pay all additional rent, including late fees, interest, cure costs, and the landlord's attorneys' fees.

When you represent a landlord in a commercial transaction what do you want to be the case in regards to the letter of credit?

That there are no restrictions on the letter of credit and that the person can truly pay what the letter is asserting.

In a commercial lease when they list the square feet what does it usually include?

The "rentable" space, where the business is, including common areas like the roof, bathrooms, hallways, etc., even if you don't have access to them.

What is the A201 Form?

The 2007 General Conditions of the Contract for Construction.

What is the AIA?

The American Institute of Architects is a professional organization for architects in the United States that drafts the forms and agreements that set standards for the industry.

When a construction project is being started, what is one of the first documents to be prepared and negotiated?

The Architect's Agreement.

How does an incorporation by reference apply to the A101, A201, and B101 documents?

The B101 incorporates the A201 document by reference.

Who promulgates the standards for measurement of office space?

The Building Owners and Managers Association (BOMA).

What is FIRPTA

The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) that imposes income tax on foreign persons disposing of United States real property interests.

What is the A101 Form?

The Standard Form of Agreement Between Owner and Contractor (A101 2007) commonly used for many projects for which a property owner is retaining a general contractor to perform construction contracts.

What should the tenant insist on if the increase of rent for the renewal term is to be determined after the exercise of the option?

The ability to object to the calculation.

If the interruption is for a prolonged period of time, what should the tenant have?

The ability to terminate the lease.

In the acquisition loan agreement, what are the loan documents?

The acquisition loan agreement, note, mortgage, assignment of leases and rents, the Environmental Indemnity Agreement, Recourse Guaranty, Repayment Guaranty, Cash Management Agreement, and all other documents that any other party has executed and delivered to evidence, secure or guarantee the Obligations.

What is the contract of sale?

The agreement that governs the terms and conditions of the sale of a residential property.

What issues is it important for the attorney to determine?

The ones that are particularly important and relevant to the deal.

What is the office lease agreement?

The operative document setting forth the terms and conditions of a tenant's lease of office space from a landlord.

What is a condemnation?

The taking of all or a portion of the property.

Which deed is the best for a buyer and why?

The general warranty (full warranty against grantors acts) deed, because it provides full warranties from the seller to the buyer that (i) the seller has good title to the property, (ii) the seller has the right and power to convey the property, and (iii) the property is free from claims or encumbrances.

When getting financing, what two documents get recorded?

The mortgage and assignment of leases and rents.

What do landlords and landlords' lenders prefer to limit so that the building or project is easier to manage?

The number of changes to the standard language in a lease form.

What advantage does the Good Guy Guaranty provide for the landlord?

The good guy guaranty served as an inducement for the tenant not to prolong the eviction process and to minimize the landlord's legal costs. The quicker the tenant vacates the premises after it realizes it is incapable of paying the rent, the lower the guarantor's liability.

Which type of lease is the simplest form of lease?

The gross lease.

Who are the two parties that a tenant is subordinate to in a commercial lease?

The ground lessor and the lender.

What would a landlord want in a residential lease with regards to the return of the tenant's security deposit?

The freedom to negotiate a time period in which to return the security deposit.

What happens if you sell the property to a third party and the right of redemption is still going?

The have bought the property but they don't have full rights to everything.

What are among the most negotiated provisions in an office lease?

The assignment and subletting provisions.

Why does the seller not get the full amount of the purchase price from the bank?

The bank has their own expenses and charges including application fees, appraisal fees, flood insurance, miscellaneous fees, and legal fees that they take out.

Which rent is typically increased every year in a commercial lease?

The base rent.

Who makes a lot of the executive decisions in a co-op?

The board of directors.

Who makes many of the executive decisions in a condominium?

The board of managers

What can sometimes occur that causes the termination for cause (bad dealing) reason for termination of a brokerage agreement?

The broker didn't do what he/she needed to do, such as listing the property.

What happens when a property is tied up in litigation and we want to get around this in a construction project?

The building stops so this affects the contracts. You can add in language and terms that outline what to do in the case of this, with words like "subject to litigation by third parties."

What happens in a foreclosure?

The buyer defaults under the mortgage's agreement.

If the 180 days are exceeded, what will happen?

The buyer loses the 1031 exchange benefit.

What do buyers typically want in an assignability provision?

The buyer wants, at a minimum, the ability to assign the agreement to a special purpose entity formed to own and operate the property.

Who are the tenant estoppel certificates usually given to?

The buyer's counsel.

If a party that is paying the legal fees is not the one contracting to purchase/rent the property (such as a parent paying for the child), who is the client?

The child or the person contracting to purchase/rent the property.

How are leases for co-ops different than the other residential leases?

The co-op lease is a sublease, because the co-op apartment is under the "Proprietary Lease" from the entire co-op, and so the only form that could be used is a co-op sublease.

If a co-op's mortgage defaults or a co-op unit owner defaults, what takes precedence/priority on getting paid?

The co-op's mortgage.

What is rent?

The consideration paid by the tenant for the use and occupancy of the leased premises.

What are two other names for the due diligence period?

The contingency period or the inspection period.

What is the rent commencement date?

The date that rent has to be paid.

What marks the culmination of a purchase and sale of commercial real estate?

The delivery of a deed at closing.

What is the difference between a line of credit and a mortgage?

The difference between a line of credit and a mortgage is that a line of credit is like a blank checkbook where you can keep taking out funds, as opposed to a mortgage, which has a specified amount you can borrow.

What will any ambiguity in a contract/document be skewed against?

The drafting party.

What position does the attorney who represents the seller also act as?

The escrowee.

In a commercial purchase and sale agreement, what should the definition of property include?

The land being conveyed as well as any improvements, fixtures, appurtenant easements, lease rights, mineral rights, personal property, and operating or service agreements that are to be conveyed or assigned.

What would a landlord want in a residential lease in the assignment and subletting provision?

The landlord may not want another party in the residence that they did not approve prior to occupancy and so would draft "in landlord's sole and absolute discretion."

What happens if a tenant defaults and fails to cure within the specified time period?

The landlord may terminate the lease.

Who does the modified gross lease favor?

The landlord where the risk of increased costs falls on tenants.

When will the landlord want the base year to be?

The landlord will want an earlier base year, which, in an inflationary environment, will result in the tenant being responsible for operating expense increases that occurred prior to the tenant's occupancy of the premises.

What would a landlord want in a residential lease with regards to the landlord's right to access the premises?

The landlord will want as much access as possible.

What would a landlord want in a residential lease surrender provision?

The landlord will want to ensure that the premises are in the same condition that they were in when delivered to the tenant with the walls, floors, fixtures, appliances any other amenities.

If you are a landlord, what would you want drafted in regards to a relocation provision?

The landlord would want a provision drafted in that gives the landlord the option to relocate you for a significant reason.

In the commercial world when there is occupancy and the business moves in, who pays the brokers' commissions?

The landlord.

Who does a triple net lease usually favor?

The landlord.

What will the landlord/seller want in the assignment and subletting provisions?

The landlord/seller wants a high quality tenant with the financial wherewithal to pay the rent and other obligations without assignment or subletting.

What is true of commingling and security deposits?

The law requires landlords not to commingle security deposits with funds of the building and put the security deposit in a separate account where it is not touched or spent.

In an acquisition loan agreement, regarding audits, what will the lender want to happen and why?

The lender will require audits from one of the big top 4 accounting firms so they have some security that the person doing the audits is reputable.

In the Leasehold Mortgage Assignment of Leases and Rents, what is the purpose of Section 3.2 - Lien Status?

The lender writes this in so that they are first in line and get their money before anyone else.

What does a commencement date help to define?

The length of the lease and provide documentation of when certain obligations should be met.

What is the term of the lease?

The length of time that the tenant will occupy the leased premises, which begins on a commencement date and ends on an expiration date.

What is true of the amount of material/terms that should be included in the letter of intent?

The letter of intent is not intended to include all of the terms of the purchase and sale transaction, but it should include enough material terms so that the parties have some assurance that they will ultimately be able to arrive at a deal.

Which one is more detailed, the loan term sheet or the loan commitment letter?

The loan commitment letter.

What are open house attendance and conversation based on?

The market and demand for the property.

What drives real estate prices throughout the world?

The market.

What is the revenue stream?

The money that is going to pay the mortgage/lender back, such as the tenant's rent.

How does one identify the leased premises?

The premises is usually identified by a suite number, which sometimes includes a floor number as well as the building address.

What are usually the most significant closing costs?

The premium for the buyer's title insurance and the county/city transfer taxes.

Who brings problems to the owner, such as if there are issues with the super?

The property manager.

Who do title insurance endorsements benefit?

The purchaser and the lender.

Who typically drafts the letter of intent and then sends it to the other party?

The purchaser drafts the letter of intent and then sends it to the seller.

With a contract of sale, what two things will the purchaser's attorney sometimes do (if not one then the other)?

The purchaser's attorney will sometimes include an additional rider (the Purchaser's Rider) or they may simply mark up the contract and rider prepared by the seller's attorney rather than prepare a separate Purchaser's Rider.

For what party do we typically only have a death provision for?

The purchaser.

Who pays for the home inspection and any additional inspections requested by the purchaser?

The purchaser.

Which deed is the worst for a buyer and why?

The quitclaim deed because it makes no warranties that the seller has any interest in the property or that the property is free from the claims of others.

What can happen if the real estate broker in an exclusive agency agreement (lease/sale) works with another broker?

The real estate broker can cooperate with another broker who represents or even procures the ready and willing buyer, where the original broker will be paid by the seller and the commission can be shared with the cooperating broker.

As an agent, what duty does the real estate professional have to its client?

The real estate professional has a fiduciary duty to its client to perform the real estate brokerage services in the sole and best interests of its client, which is generally not waivable by the parties.

What can happen with the rent as a result of a holdover tenant in a holdover provision?

The rent may escalate up to 200% of the rent payable prior to the holdover period.

Once the closing has occurred, what generally terminates?

The representations, warranties, and obligations in the contract of sale for both parties.

What is the primary concern of lenders?

The revenue stream.

Does the seller or the broker decide what price to accept after a purchaser presents a price?

The seller does, where they can deny the price for no reason or justification the price even if the broker says it is good.

What is the remedy that is put in the contract for a seller if the buyer does not follow through and terminates the deal without good cause?

The seller gets to retain the down-payment as liquidated damages.

Why is it not necessarily fair for a buyer in a Purchaser's Rider to Contract of Sale for a Condominium to be able to terminate if the common charges exceed 10%?

The seller typically does not have control over what happens with the common charges.

What are the differing desires between the seller and buyer under the access provision?

The seller wants a limit on the number of people that can view the property and the buyer wants reasonable access for as many people as possible.

Who drives the contract process between the seller and purchaser and why?

The seller's attorney, because they draft the contract and initial rider.

Which party tends to not want the disability provision to be included and why?

The seller, because it could possibly allow someone who had a nervous psychiatric breakdown when picking the wrong apartment to get out of the purchase of the property.

If there is a huge risk of loss or casualty, such as extreme flood or fire, who has the obligation to cover it and why?

The seller, because they still have the insurable interest on the property.

For who is the transfer tax a negative?

The seller, since the client is not walking away with the full amount of the purchase, but instead they have an expense fee that is removed from their total.

In commercial sales, who pays the broker?

The seller.

What is a holdover tenancy?

The situation when a tenant of real estate continues to occupy the premises without the owner's agreement after the original lease or rental agreement between the owner (landlord) and the tenant has expired. The tenant is responsible for payment of the monthly rental at the existing rate and terms, which the landlord may accept without admitting the legality of the occupancy. A holdover tenant is subject to a notice to quit (get out) and, if he/she does not leave, to a lawsuit for unlawful detainer.

Who is the sponsor?

The sponsor is the person who converts new buildings to condos whose name is on the application to NYS, who can pass along the transfer taxes and their legal fees to the purchasers.

What would a tenant want in a residential lease surrender provision?

The tenant will not want to repaint the walls or polish the floors or do any excessive cleaning, and should therefore attempt to negotiate that the premises will be surrendered "in a broom clean condition" and "subject to normal wear and tear."

What would a tenant want in a residential lease with regards to the landlord's right to access the premises?

The tenant will want to limit the landlord's access by requiring "reasonable" notice prior to any access (except in emergency), and a limit of showing the premises to prospective tenants to only a certain number of months prior to the expiration of the lease term.

What would a tenant want in a residential lease pet provision?

The tenant would want a right to have a pet at the premises.

What would a tenant want in a residential lease in the assignment and subletting provision?

The tenant would want the right to assign or sublet due to changed circumstances, where the tenant may wish to move prior to the term's expiration and rather than pay rent until the expiration of the lease, they want to assign the lease or sublet the premises to get help with rent.

What would a tenant want in a residential lease notice and provision?

The tenant would want their attorney to negotiate for the provision to be included. In the provision they would want the landlord to be required to (1) give the tenant notice of the default and (2) specify the period of time within which the default must be cured.

In a tenant-landlord, purchaser-seller, or borrower-lender relationship, who signs the lease first?

The tenant, purchaser, or borrower.

In an apartment lease, who pays the broker's or brokers' commission?

The tenant.

In places like NYC on residential transactions, who usually covers the broker fees?

The tenant.

What will the tenant/purchaser want in the assignment and subletting provisions? What will the landlord want?

The tenant/purchaser wants flexibility to assign or sublease its interest to who it desires.

What is the right of redemption?

The time period when the person getting foreclosed on has the right to stay in the property.

What happens in a sit-down closing?

The title insurer, the parties, and their counsel convene in a conference room and documents are exchanged for funds and the issuance of one or more title policies.

What is an appraisal?

The valuation of a property.

What is a title report?

The written analysis of the status of title to real property, including a property description, names of titleholders and how title is held (joint tenancy, etc.), tax rate, encumbrances (mortgages, liens, deeds of trusts, recorded judgments), and real property taxes due.

What should attorneys understand with respect to the leased space?

Their clients' needs and expectations.

In New York, when you sign a contract for real estate and you deliver it to the other side, what is true?

There is a binding written agreement.

What is true of privity between groups of owners, contractors, and subcontractors?

There is privity between owners and contractors and contractors and subcontractors, but not typically between owners and subcontractors.

Even though letters of intent are typically non-binding, what is true of certain provisions of the letters of intent?

There may be one or more provisions that the parties agree will be binding.

What does it mean for a place to be "broom clean"?

There's no universal definition but reasonable wear and tear are ok, you do not have to repaint, nails should be removed from the walls, and the floors and appliances should be cleaned.

How are the common elements split up among the tenants/residents of a property?

They are divided by an equal split between all of the owners in the building/property that the condo is in.

In terms of closing date and time of the essence closings, in many jurisdictions what are both parties generally entitled to?

They are generally both entitled to a reasonable adjournment of the closing date.

What are some examples of conditions precedent to closing?

They can range from matters largely within the seller's control (seller performed its obligations) to matters over which seller has no control (material adverse changes in the physical or economic condition of property).

What can the landlord resist in terms of maintenance and repair provisions and why?

They can resist providing representations that the premises is in good condition and repair and complying with applicable laws in order to limit potential liability.

What tends to happen or be written in a brokerage agreement with a no cause termination?

They can sometimes say the no cause termination is allowed, but the seller has to pay for the fees/labor that has already been charged/done.

What is sometimes a reason that a seller would fairly terminate without cause?

They can't afford to sell right now or it is not an opportune moment.

Financially concerning tenants, what other role do property managers have?

They collect rents, security deposits, and other.

What happens in the environmental aspect of an investigation by a buyer of a commercial real estate property?

They do a Phase I site inspection to make sure there are no potential environmental liabilities and then if necessary a Phase II invasive testing with samples to see if further investigation/remediation is necessary.

What do tenants usually want in the non-monetary obligations period section of the Good Guy Guaranty?

They don't want the guarantor to warrant the tenant's performance of non-monetary obligations like repair and maintenance obligations.

Why are most lenders like banks so willing to sell property quickly and/or cheaply under foreclosures?

They don't want to own or hold on to real estate, and would rather make money on it with things like mortgages.

What do property managers do regarding procuring utilities/insurance?

They enter into services like Con Ed/electric, and try to find the best insurance for the building.

What is the order of the fiduciary duties of the seller's attorney/escrowee?

They first and foremost represent and have a fiduciary duty to the seller, but they second are the one with a fiduciary duty as the person in charge of the escrow account.

What are the license requirements for an attorney who wants to open a brokerage firm?

They have to pay a fee to get the broker's license, but don't have to take the courses and do the educational requirement.

Why are defined terms beneficial?

They help make everything clearer, easier, and makes the document a lot shorter instead of defining what something is every time.

What do property managers do regarding entering into agreements?

They make sure to know about all the agreements with parties like the lender and material vendor agreements.

Rather than depositing a cash security deposit with the landlord, in an office lease what might the tenant want to negotiate to provide their security deposit?

They may want to negotiate to provide the security deposit in the form of a letter of credit.

What do some sellers do that avoids the mansion tax and entices the buyer?

They offer the property at $999,999.

Even if the landlord can't deliver the premises by a certain date, what leeway do they sometimes get?

They sometimes get a certain amount of wiggle room, like 90 days, even though this is usually shorter than the tenant will get.

What is one way to identify commercial purchase and sale agreements on the surface?

They tend to have a table of contents because they tend to be muchhhhh longer than other purchase and sale agreements.

What do landlords usually want in the notice period section of the Good Guy Guaranty?

They want a minimum advance notice period from which they must be notified of the surrender and vacating of the premises.

What do landlords usually want in the non-monetary obligations period section of the Good Guy Guaranty?

They want the guarantor to warrant the tenant's performance of non-monetary obligations like repair and maintenance obligations.

What do landlords usually want in the condition of premises at the vacate date section of the Good Guy Guaranty?

They want the tenant to have to remove the tenant's alterations and restore the premises at the termination date or earlier termination of the lease.

What do tenants usually want in the condition of premises at the vacate date section of the Good Guy Guaranty?

They want their liability to cease when the tenant vacates the premises in broom clean condition and removes its personal property.

In a red hot market, what do sellers in a commercial world want to do and how do they do it?

They want to close in 30 days and so they tend to choose tenants that can close in 30 days.

What would the seller prefer for a broker agreement to say and why?

They would prefer for the broker agreements to say that the broker will work with other brokers in the area because that will mean that there is a higher chance of the place getting sold (probably exclusive agency).

When negotiating property management agreements, what would a property manager's attorney want to negotiate in terms of notice?

They would want to get as much notice as possible before a property manager is being fired since the agreement would automatically renew if nothing was said. They would try to get them 90 days notice.

What are non-structural (cosmetic) alterations?

Things like painting a wall a different color or new carpeting.

Are base year leases used often?

This is the most common form of commercial lease in a multi-tenant building.

What is an incorporation by reference?

Where you include/discuss another form in an agreement which makes its rules applicable just by referencing it.

What is cross-default?

This is when you may be renting a space and a smaller space (such as a room in Fordham and a display case in the Fordham lobby), and if you default on one and don't pay or break a rule then it causes you to default on both.

When looking up the area events/information/news in due diligence, whose job does this tend to be and who tends not to do this?

This tends to be the developer's job as opposed to the attorney.

How is a contractor paid?

Through a stipulated sum.

What are some costs for the buyer during a sale?

Title insurance, legal fees, possible move in fee (common charge contributions), and a possible mansion tax.

Why wouldn't a property management company want to have the individual's name in the company name?

To avoid as much liability as possible and to make sure the individual is insulated.

What is the purpose of a deed?

To convey title to real property.

What are the buyer's goals during the inspection period in a commercial real estate transaction?

To determine whether the property is suitable for the buyer's intended purpose and to permit them to understand the risks, liabilities and opportunities it will inherit when it acquires the property.

Why do sellers typically want to restrict an assignment of the agreement without their consent?

To ensure the purchasing entity can perform its obligations and avoid a "flip" of the property to another buyer who would be willing to pay more.

What do loan term sheets and commitment letters intend to do?

To lay out the framework for the proposed loan transaction and describe the overall transaction and the material terms and conditions thereof..

Why do sellers want to limit their representations and warranties section either in representation?

To limit its post-closing liability for breach of representations and warranties.

What is the purpose of the Article 9 - Termination or Suspension form in the B101 form?

To make sure that just in case the property doesn't get finished that the architect is paid for his or her work. It also covers termination is the other party fails to perform, such as the architect failing to show up at the property or the owner not responding to emails or making decisions on the project.

What is commingling?

To mix or blend something.

What is the point of a notice and cure provision for a tenant?

To protect against a landlord's termination of a lease due to a default by tenant.

What do sellers typically want when it comes to assignability provisions?

To restrict an assignment of the purchase and sale agreement without their consent.

What does encumbered mean?

To restrict or burden (someone or something) in such a way that free action or movement is difficult.

If the deal closes where does the interest go?

To the seller.

What are some costs for the seller during a sale?

Transfer taxes, legal fees, possible move out fee, FIRPTA (Foreign Investment in Real Property Tax, common charges, and real estate tax.

When drafting a contract of sale, what will the seller's attorney usually prepare?

Two documents: 1) a boilerplate contract form (Form Contract) and 2) a rider to the Form Contract (the Seller's Rider).

What is the effective date?

Typically the day the contract is made/signed so that the terms can be applied immediately.

Are letters of intent binding?

Typically they are non-binding.

What is typical in office leases in terms of indemnification and insurance provisions?

Typically, a lease will contain an indemnity from the tenant and subject to the tenant's negotiating power, a more limited indemnity from the landlord, releasing them from certain liabilities.

What is a gross lease?

Under a gross lease the tenant's share of the operating expenses of the building are included in the tenant's monthly rental payment amount. Therefore, under a typical gross lease, the tenant's only payment obligation to the landlord is payment of monthly rent. Any increases in the costs of building operating expenses are absorbed by the landlord.

What is a net lease?

Under a net lease operating expenses are not included in the base rent, and are calculated and paid separately by the tenant. The tenant is responsible for some or all operating expenses (e.g., taxes, utilities, insurance and the like) incurred in connection with the premises. In addition, the tenant will typically be responsible for the repair and maintenance of the premises.

What is a base year lease?

Under this type of lease, the tenant is responsible for a portion of the operating expenses of the building during the first year of the tenant's lease, but this portion is deemed included in base rent (in the same manner as in the case of a gross lease). In addition, however, the landlord is permitted to pass through to the tenant a portion of any annual increase in such expenses. This is typically accomplished through the designation of a "base year," which establishes the baseline amount for each of the various categories of expense. In any lease year in which the landlord's operating expenses exceed those of the base year, the tenant is responsible for its proportionate share of the excess expense.

When does the buyer want the insurance of the previous tenant to last and why?

Until closing for risk of loss purposes because the buyer's insurance is started as of the day of closing, just in case something happens during this time.

When does a soft deposit become a hard deposit?

Upon the expiration of the due diligence period.

If the landlord has encumbered the property with a mortgage, what must they do with a lease?

Use a specific form of lease that was previously reviewed and agreed upon with the lender.

How long does notice usually have to be to prevent a letter of credit from automatically renewing?

Usually 90 days before the end date.

How long does a contractor usually have to file for a mechanic's lien?

Usually four months.

Since technology has become a very important art of the operation of any office, what is becoming more common for a lease to include?

Very particular parameters for the technology services.

When a term is defined in an agreement, what do we do to it throughout the body of the document?

We capitalize it.

What are benefits of a data room/war room?

We don't have to kill so many trees and photocopy all of the agreements/documents and it is much more convenient to quickly view the documents, which also saves time.

What operating expense of a building with a board do we want to exclude from operating expenses total and why?

We want to carve out top level executives' salaries because we don't want their high pay to come out of the 10% operating expenses cost.

What does it mean to appraise the property?

What a person sets a value upon property (determines its value).

What is an important component of a surrender provision?

What alterations and improvements, if any, that will be required to be removed upon expiration of the lease.

What is an important aspect of the alterations provision?

What alterations, if any, the tenant is required to remove upon expiration of the term.

What is a sale leaseback?

What happens when in a commercial property a person wants to sell the property but still reside/work/inhabit there (one continues to be able to use the asset but no longer owns it).

What does the permitted use provision of a commercial agreement discuss?

What the tenant is allowed to use the premises for.

What do all home inspection agreements limit the home inspector's liability to?

What you pay them.

What is critical service failure?

When a critical service like the elevators or the AC shuts off.

What is a co-broke relationship?

When a landlord's broker and the tenant's broker split the fees on the transaction.

What is a time of the essence clause/language?

When a specific date for closing is given in the contract.

What is a right of redemption?

When after the foreclosure, the borrower can after years come back and pay the debt off and reclaim the property.

What is a gross up concept?

When calculating a tenant's share of operating expenses for an office building that is less than fully occupied, the landlord first increases - or "grosses up" - those operating expenses that vary with occupancy (e.g., utilities, janitorial service, etc.) to the amount that such expenses would have been if the building were fully occupied. (In practice, "gross up" provisions are typically negotiated to reflect only 90-95% occupancy). In reality, the "grossing up" of operating expenses is a fair and necessary mechanism to ensure that the intended reimbursement is fully paid and, in some circumstances, to protect the tenant from overpaying operating expenses.

What is closed bidding?

When one bidder gets all the projects from different people and picks the project that will be used based on price and details of the proposed project.

What is a gross or full service lease?

When rent payable by a tenant is all-inclusive (includes estimated taxes, insurance, and operating expenses).

What is the exception to brokers getting paid after the deal closes?

When the brokerage agreement specifies that before the deal closes they are entitled to the pay.

What is substantial completion in construction?

When the building is done enough to the point that it is allowed for permitted uses, where minor things are not an impediment for people to be able to live/do business there.

What is indemnification?

When the insured is restored to his or her approximate financial position prior to the occurrence of the loss.

What is self-help?

When the landlord makes the repairs for the tenant, but they bill the tenant for the price of these repairs.

What is the date of the lease?

When the lease was signed.

What is the commencement date?

When the lease's promises are to be fulfilled.

When will most sellers permit an assignment to a newly formed entity (two conditions)?

When the newly formed entity is 1) an affiliate of the buyer and/or 2) under the buyer's control.

But in the real world, when does the broker commission tend to be earned?

When the seller gets paid their money from the purcahser.

When would a broker not earn full commission and only get a finder's fee?

When they only told the person about the property and did nothing else.

When is a real estate professional an independent contractor?

When they perform real estate brokerage services with a variety of clients and outsource their work.

In many jurisdictions like NY, when does a broker legally earn their commission?

When they present a buyer that is willing and able to buy the property.

What is a monetary default?

When you are not able to make payments and there is no valid excuse for missing the payment.

What is a gut renovation?

When you keep the structure but you take out the inside parts and redo the inside to scratch.

What is corporate housing?

When you put an employer/employee in a furnished apartment for a few months as opposed to a hotel, which is cost-prohibitive.

What is a pre-closing occupancy?

When you want to live in a place before you close the deal.

Even though you don't need a broker's license in many jurisdictions, including NY, to be a broker, when would you as an attorney need a broker's license?

When you want to open a brokerage firm and have people work as brokers under you.

What is the interruption of services provision?

Where if the tenant cannot operate in the leased space because of an interruption, rent should abate during the period of interruption.

What is the tenant blacklist?

Where if you as a tenant have filed an action before, you are in the housing court's database and it less likely that a landlord will want to deal with you.

What is a data room/war room?

Where important documents can be accessed online.

In terms of interest, what may the escrowee decide?

Where the interest may go.

How does a green roof reduce the heat island effect?

Where the temperature of a regular building without a green roof heats up 7-10 degrees because the sun is hitting the tar/asphalt roof and the AC is turned on as a result to cool things down but it has to work overtime (HVAC system works overtime, so then the people operating it have to work overtime). In a green roof building this doesn't occur.

What is a triple net lease?

Where the tenant pays base rent, separate costs of real estate taxes, operating expenses, and insurance.

What is a modified gross lease?

Where the tenant pays the base rent plus any increases in operating costs, real estate taxes, and insurance above a base year.

What is a "Big D"?

Where there is a default with no time left to cure so the landlord has the option to terminate.

What is mitigation of damages?

Where there is an obligation to try to reduce damages in money owed if possible.

What is a Home Equity Line of Credit (HELOC)?

• It is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house (akin to a second mortgage). Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses. HELOC abuse is often cited as one cause of the subprime mortgage crisis.

What are the minimum qualifications typically for a real estate broker's license?

• Minimum hours of classroom instruction at a post-secondary educational institution • Certain level of practical experience under a licensed real estate broker, including minimum hours of experience, number of transactions, etc. • Basic character requirements (honest reputation, no criminal record, etc.)

In determining whether a real estate professional is an independent contractor or an employee, what are some of the factors that courts have considered?

• Who controls the details, hours and quality of work and the personnel used • The length of the term of employment • The type of business • The process for payment • Any agreement evidencing the relationship

What are some things that real estate brokerage services include?

○ Advertising ○ Procuring prospects ○ Promoting ○ Referring ○ Negotiating ○ Facilitating ○ Advising and assisting ○ Obtaining an offer to purchase or lease ○ Auctioning

When drafting the contract, the seller's attorney should perform certain tasks and, when applicable, include certain provisions including (mention some because there are a lot):

○ Identifying information ○ Pre-printed contract terms ○ Closing date and location for closing ○ Condition of property ○ Lead-based paint ○ Personal property ○ Fixtures ○ Co-op, condo, or PUD documents ○ Third-party approval ○ Inspection contingencies and repairs ○ Broker commissions ○ Mortgage ○ Adjustments ○ Real property transfer taxes ○ New construction ○ Purchaser's authority to sign ○ Dissolution of the purchaser ○ All-cash transactions ○ Personal guarantee ○ Post-closing possession ○ Property condition disclosure act ○ Tax grievance ○ Heating and cooling bills