Negotiating a commercial property lease is a process you should be careful about as each party in the deal will try to get the best deal. The landlord or property owner is usually the first to offer their specific terms, but the terms are always open to change. As a tenant, you should always be ready to fight for what you want, stay firm, and get the better out of the negotiations.
Be aware that any legally irrevocable agreement, like the lease, ought to be prepared, negotiated, and reviewed by a professional like a Rochester New York realtor or an attorney. Even when you hire help with the lease, always be aware of your rights. Below is a list of the most important elements in a commercial property lease you should always negotiate.
Rent Payment Terms
This first and last thing will affect your business’ bottom line, so it should be the first and last negotiating item of any commercial property lease. Rental rate is a listing that provides a starting point for your negotiations, and it’s not set in stone. Some of the things that are likely to affect whether the property owner will lower their price include the current market vacancy, owner’s current financial situation, and the asset’s physical health.
If a commercial property has been on the market for a long time, you’ll get more room to negotiate. Every month an asset sits empty, the landlord gets no income and with passing months, this adds up and the landlord will likely be willing to do anything to fill up the space – including lowering the rental price.
Even if the landlord refuses your request for a lower rent rate, you can still negotiate on when you should start paying rent. It does not have to be the date when you move into the space. Many property owners are willing to defer or waive rent during the build-out periods or until the tenant actually opens the business to the public.
The Break Clause
Break clause helps mitigate landlord and tenant risk. The clause allows a tenant to completely break or leave the lease. Here, you can negotiate a one-time exit strategy tied to certain terms, in most cases time period and revenue; for example, if within Y days you have not realized Y% in sales, you can cancel the lease.
The Subletting Clause
No single individual or company can accurately predict the future. Just like no tenant will sign a 5-year commercial property lease when they know they will close the business within 2, they also cannot predict or know when a natural disaster is likely to strike. To mitigate risk, you can always negotiate to have a subletting clause added into the lease; meaning that in case you cannot afford to use the space, you can sublet it to someone who can.
Type of Commercial Lease
There are different flavors of commercial property leases, and several abbreviations that differ in usage and meaning, depending on who’s using them. When dealing with commercial leases, the basic structures address what you, as the tenant, are responsible for paying. Modified Gross and Full Service leases are the most common for multi-tenant buildings.
These types of leases have rent that does not increase as operating expenses increase; however, the rent will not decrease with reduced operating expenses. The biggest difference between these types of leases boils down to the meaning of gross in the agreement – different leases will either include or exclude some operating costs like janitorial services. The base rent is derived from a formula that determines the cost and types of operating expenses the tenant has to cover over the lease’s term.
Toughest Rentals Rules, Landlords on Notice
Just when Kiwi (New Zealand) landlords were coming to terms with tougher measures, the government has announced even stricter regulations. After passing the Healthy Homes Guarantee, ministers have enforced a series of stipulations, which are likely to make landlording more challenging than ever before.
The Healthy Homes Guarantee Act
What does it mean for landlords and tenants?
Private landlords in New Zealand have been given a deadline to ensure their properties meet the standards set out by the Healthy Homes Guarantee Act. This set of guidelines relates to minimum standards for heating, insulation, moisture control, ventilation, and drainage.
Landlords have until July 2021 to make sure their properties are compliant. NZHousing
What rental properties must have
The Healthy Homes Guarantee Act states that rental homes must have:
- Heating systems that can warm the main living areas to a minimum of 18°
- Floor and ceiling insulation that meets the 2008 Building and Code
- Kitchens and bathrooms with extractor fans
- A ground moisture barrier to prevent damp
- Suitable drainage and guttering
- Anti-draft measures
On the surface, the measures appear to hit landlords and benefit tenants, but the added costs of running rental properties will be passed on to tenants.
Moderate weekly increases are already in force, but landlords are facing additional costs, which could spiral into the thousands over the course of the next few years. When prices go up, this usually means one thing: tenants pay more.
While many landlords were considering weekly increases as a viable option for covering elevated fees, a new rule change is set to throw a spanner in the works. It has been announced that rent changes will only be permitted once a year. So, where does this leave Kiwi landlords, and are they facing a raw deal in comparison to property owners in other countries?
How does New Zealand stack up?
New Zealand is not the only country making changes to try and improve living standards and rental conditions. In the UK, the US, and Australia, there have been policy changes, which are designed to enforce a minimum standard.
Renting is becoming increasingly popular, and in many cases, people are signing long-term contracts, or even opting to rent for life.
Australia – Rental Properties Measures
To cater for the evolving market and emerging trends, Australian policymakers have introduced a raft of measures that will undoubtedly enhance life as a tenant. Landlords in Victoria, for example, will only be able to refuse pets through a tribunal, and tenants will have the right to make cosmetic changes, for example, hanging shelves, without written consent.
Fee changes, if applicable, will also be approved once a year, rather than every 6 months. Private rental properties will also be required to satisfy standards related to security, privacy, insulation, and energy efficiency. Any tenant that moves into a home that doesn’t comply has the right to order urgent repairs or modifications.
United Kingdom – New Rental Homes Regulations
In the UK, new regulations could pave the way for minimum terms of 3 years and the abolition of tenancy fees. Landlords will also be required to ensure their properties meet eco-friendly criteria that are designed to boost energy efficiency and save tenants money.
The majority of measures across the board are focused on heating and insulation. There’s no doubt that tenants in all countries will benefit from improved systems and advanced technology, but there is always a cost to bear when policies change.
By increasing running costs for landlords, there’s a risk that tenants will end up paying more, making renting less accessible and affordable. There’s also a very strong possibility of landlords selling up. While this may provide opportunities for first-time buyers, it could also contribute to a lack of affordable housing for those who are not in a position to buy.
Further misery for Kiwi landlords?
Many private property owners in New Zealand are people who have invested in bricks and mortar as a means of boosting their income on a long-term basis. Most have a small number of properties, rather than an extensive portfolio, and the consensus is that they won’t be able to continue to profit from renting out their properties as a result of the new healthy homes measures.
When life already seemed to be getting tougher by the day for those landlords, another potential hurdle was revealed. A decision on capital gains tax is imminent. At best, this will represent an extension of current ring-fencing rules, but there’s a risk the announcement will create much wider-ranging problems for landlords.
Being a landlord is undoubtedly tougher and more expensive than ever before. Recent changes in New Zealand reflect trends in other countries, but this won’t provide a huge amount of comfort for Kiwi landlords facing higher costs and an ever-growing list of demands and requirements.
8 Things to Know Before Becoming a Conservator of Someone’s Estate
When you hear phrases like durable power of attorney, guardianship, or conservator, you may instantly think of your elderly grandparents or even your parents. If for any reason, they become mentally incapacitated, they would need someone to make decisions on their behalf.
However, you may never consider yourself in the equation. Yet, it is frightening to realize how vulnerable everyone is to situations where they can quickly become mentally incapacitated.
For example, one lady whose story made the media was incapacitated through a fall on the stairs. She was only 50 years old. A court-appointed guardian made decisions that, in the end, led to the guardian being sued.
Here are eight things you need to know before becoming a conservator of someone’s estate.
1. Guardian or Conservator?
The first thing you need to clarify is whether you are going to be appointed as a guardian or conservator of the estate. What is the difference? Depending on where you live, the definitions could be slightly different. The fact is, both roles overlap to some degree.
As a general rule, a guardianship is appointed for a child whereas a conservatorship is appointed for an adult. In some places, a conservatorship is referred to as an adult guardianship.
Once again, as a general rule, a guardianship is focused on making decisions for the principal (the incapacitated person) that are not money based. These decisions tend to focus on day to day matters, healthcare, and anything relating to the illness or disability the principal may be suffering from.
In contrast, the conservator makes decisions that include how the principal’s finances are used. Bear in mind that both these roles are appointed by a court after considering all the facts. If they deem appropriate, the court can appoint the same person to be both guardian and conservator.
2. Durable Power of Attorney
This is not a reactive legal mechanism. It is a proactive mechanism designed to help people plan ahead for a time when they foresee they may become mentally incapacitated and need someone to make decisions for them. At the time of applying for the durable power of attorney (DPA), they need to be in full control of their mental faculties.
If someone has already planned ahead with a DPA, it may not be necessary to apply for guardianship or conservatorship. These legal provisions are primarily for situations where a DPA does not exist.
3. Legal Speak
There are different types of conservatorships. Here’s a list of the main types and responsibilities below:
i. Probate Conservator
This is the type of conservatorship that most people would expect. The conservator is the person appointed by the court to make decisions and manage the financial affairs of the conservatee. In the event a person becomes mentally incapacitated, the family of that person can petition the court to appoint someone in the family as the probate conservator.
ii. Conservator of the Person
This involves making decisions that are usually not financial but involve the person themselves, such as where they live, their clothing, and food. It also includes the medical care they receive. Each year, the conservator of the person is responsible to the court by submitting a report that shows they are executing their role responsibly and legally.
iii. Conservator for the Estate
This person is appointed by the court to handle the legal and financial affairs of the person. Overall, the conservator has great freedom to use the assets of the conservatee as they see fit and in the interests of the conservatee.
This is legally supervised through the submission of annual reports to the court. Further, the conservator must seek approval from the court for major transactions. This type of conservator should not be confused with property guardianship.
iv. Lanterman-Petris Short (LPS) Act
This type of conservatorship is designed to give the power of decisions and care to someone else when the conservatee is greatly incapacitated through things like the abuse of alcohol and drugs. This cannot be initiated by the family but must come from the local court.
4. The Good and the Bad
The advantages to using a conservatorship are self-evident. It is a legal process that potentially allows the family to make sound decisions on behalf of a relative that has become mentally incapacitated in a way that was not expected.
Disadvantages are that the conservator may not be family and may not make decisions that truly reflect the best interests of the conservatee. Or, alternatively, they may be a family member who abuses the legally appointed privilege.
Furthermore, the process can be time-consuming and potentially expensive. There can be ongoing court hearings, and legal assistance must be used in an ongoing manner. There may even be the requirement of paying a bond that acts as a protection against the abuse of the legally appointed power. However, if there is no DPA, then you will need a conservatorship attorney.
5. Legal Process for Conservator
How does all of this work in reality? The process follows the basic steps below:
- File an application/petition for conservatorship with the court
- Collect a ‘Notice of Hearing’ from the Probate Division
- Within three days, make sure the ‘incapacitated’ person receives this document
- Step three is called ‘serving the papers’ and is essential
- After this, you complete an affidavit and get it notarized
- You must file the above with the court
- The judge will appoint a team to begin an investigation
- A date will be issued for a court hearing, which you will need to attend
These are the basic steps, but they may vary in detail depending on where you are filing your petition.
As mentioned already, the process can be expensive as legal help needs to be employed throughout the process and ongoing according to need. The costs for this come from the estate of the conservatee. That said, the conservator may be entitled to some compensation on an hourly basis. This is a practical measure.
7. Ending the Process
There may be several events that end the need for a conservatorship. The primary reason may be the conservatee dies. It could also be that the conservatee recovers their mental capacity and no longer needs the help. A further reason to end the conservatorship is that the assets of the conservatee are finally consumed and there is nothing left. It is also possible to resign from a conservatorship.
8. Is It for Me?
Finally, you have to ask yourself if this is right for you. Please know that being a conservator is not easy. It is a big responsibility, and it will come with its own stresses and pressures. This is true when the conservatee is a member of the family. It can be emotional and tiring. In the end, it is your decision which you need to make carefully.
Conservator – Final Thought
You are now in a much better position to know whether you should take on the responsibility of being a conservator or not.
Whatever you do, you will need excellent advice and support from experts in the field. Don’t delay in discussing this with those who have much more experience.
In the meantime check out our other articles with excellent legal advice here.
3 Ways Your Tenants Can Hurt You (and What to Do About Them)
Your tenants are central to your rental property investment. Without paying tenants, you can’t profit from your property! But tenants can hurt you, which is why you need to be careful. Vet your potential tenants and build professional relationships with your renters so that you can avoid these three big problems!
Non-payment of rent
Your tenants make your properties profitable by paying rent. So there’s one very obvious way in which they can hurt you: they can just stop paying rent! If they do that, your income property will stop generating income fast.
When tenants don’t pay rent, you have some options as a landlord. You can evict them or take them to court over the payments, for instance. But those are rough options, and the costs associated with these processes will cut into the money you get back. Plus, some states have laws that favor renters over their landlords.
Sometimes, it’s better to cut a deal with the tenant and agree on a payment plan or move-out date. Best of all, of course, is avoiding such bad tenants in the first place! Fortunately, that’s not too hard: with quality online landlord software, you can usually get a tenant screening report free.
Damaging the property
Making money with a rental property comes down to a pretty simple equation: you need to make more in rent than you spend maintaining the property. When you add up taxes, repairs, maintenance, insurance, and the costs of running your business, they should be less than you’re taking in as rent. Makes sense, right?
Of course, this means that failing to pay rent isn’t the only way a bad tenant can hurt you. They could continue to pay rent—keeping your income the same—but then damage your space, resulting in higher repair and maintenance costs and more depreciation on the property. This doesn’t have to mean that your tenant is actively destroying the space, by the way: simple neglect is enough to cause real damage. If your tenants aren’t telling you when there’s a leak or a problem with the heat, then you’re going to see small issues become very large (and very expensive to fix).
To keep your property looking its best, you need to maintain a good relationship with your tenants and set the expectation that they will clean and care for the space—and let you know right away if repair or maintenance work needs to be done. You can hold up your end of the bargain by responding promptly to maintenance requests, which will endear you to your tenants and encourage them to keep reporting any issues to you.
Annoying the neighbors
Nobody likes obnoxious neighbors. You don’t actually have to live with your own tenants, of course, but others do—and if your tenants are making enemies in the neighborhood, it could come back to haunt you.
Repeated complaints could lead to legal issues. Problems in the neighborhood could lower property values. And if you’re renting to multiple tenants in the same area, one bad one could cause you to lose multiple good ones. That’s no good!
Be careful with those background checks, and make sure you know whom you’re renting to. Set clear expectations and communicate with your tenants, building a good relationship that encourages them to treat you and their neighbors fairly.
Exposing you to criminal liability
Wait, really? There’s a lot that a bad tenant can do to you, but it’s hard to believe that any tenant could do something that could get you arrested.
But it’s true! In certain situations, a landlord can get in legal hot water over how tenants use their spaces. It’s your responsibility to be diligent and make sure that your tenants aren’t using your properties as crime headquarters. But you’re not a police officer, and investigating and shutting down such things can be dangerous. That’s why it’s so important to get a full background check on any potential tenants!
The key is to avoid problems like meth before they arise. If they do arise, call the police right away.
How to Choose the Right Conveyancer
When it comes to buying or selling your property, it is important to choose the right specialist conveyancer or solicitor. Conveyancing involves the transfer of the legal title of property from one individual to the other. It also deals with the granting of a mortgage. In competent hands, you can experience much less stress, lower cost and time in buying or selling your home. You should acquire the service of a conveyancer even before purchasing property or before making up your mind to sell. In the heart of this guide, we will look at how to choose the right conveyancer.
Difference between a Specialist Conveyancer and Solicitor
A specialist conveyancer is a professional that is only trained in practicing conveyancing law and in dealing with acquisition or selling of property and land. On the other hand, a solicitor is a legal practitioner who is licensed to provide other legal services coupled with conveyancing, based on their area of specialty. For instance, you might appoint a solicitor for conveyancing and also drawing up your will or representing you in a divorce.
Factors to Consider
When you are looking to acquire the service of a licensed conveyancer or conveyancing solicitor, what key factors should you focus on to ensure you’ve chosen a firm that is experienced, efficient, and reliable? Here are the things to consider:
Having seen a conveyancer, you should carry out a background check to make sure that they’re legally allowed to do your job and that there are no complaints about their service. The Australian Institute of Conveyancers (AIC) can be of help in this regard, but as the profession operates under strict rules of conduct, poor experiences are not so common.
To do some background check on your conveyancer, you could ask them the following questions:
- Do you operate under the AIC?
- What are the types of property that you primarily specialize in?
- What are the timeframes on settlement day? This question is vital if you need furniture removalists and similar parties.
The answers you receive for these inquiries will tell you more about the service of the conveyancer.
Price of Service
One of the major reasons prospects appoint a conveyancer is price … fair price. Some individuals seek the best deal; some are looking for a price that is neither too high nor low, and other persons would be willing to pay more for superior service. Whichever the categories you belong, the most important thing is to know relevant details about the package you’re paying for. You need to know if you will be expected to make payment for any extras, and when you are required to make such payments.
Though most people know payment has to be made for searches to be undertaken by the solicitors, other smaller charges, such as disbursements, are not often obvious. Make sure that you ask your conveyancing firm to break the quote down for you to know the things included and those that aren’t. If the conveyancer is recommended for you by an estate agent, you need to ask about the referral charge of the estate agent.
Reviews and Testimonials
Reviews and testimonials are still some of the best ways to know how good the service of a company is. When you read them, make sure that they are genuine. Try to go through different reviews for different solicitors and then be sure to observe and learn more about people’s keen perception of their service.
The process of property acquisition, no doubt, can be convoluted as well as confusing, particularly for first-timers. A conveyancer firm, which communicates with you as this process is going on, is certainly the type you need to choose. Great conveyancers communicate with you clearly at every step of the way, addressing your concerns in a friendly manner.
All in all, choosing the right conveyancer could be the single most important step you have to take toward getting your property sold or buying a house without hassle. A conveyance firm, which is accredited, well-qualified, communicative, and informed, can help reduce any additional stress, allowing you focus on other things, such as finding a removals service and settling down in your new house.
New Laws Make Landlording Much Harder
New Legislation in New Zealand, Victoria, and even the UK is targeting landlording and making it much harder. This new legislation seems to be about solely improving tenants rights, rather than making anything better for landlords, and this is leading people to believe that there is an ulterior, political motive.
New Legislation In Victoria
Tenants in Victoria are now going to be able to make minor modifications to rental homes without permission, to the dismay of landlords. They will even be able to own pets, after new laws were passed in parliament.
The introduction of “basic standards” has also been passed, and there is a limit in rent rises to once a year. People are calling this one of “the biggest reforms to renting in Victoria’s history”. However, these changes are not due to come into place until July 2020.
These changes are ‘strengthening renters rights’, and will ‘better protect vulnerable tenants’, allowing people to turn the house that they rent into a home. However, it appears that allowing renters the majority of the rights is robbing landlords the right to have a say in what goes on with their property at all.
In fact, many landlords are talking about pulling their properties off the rental market altogether, which could mean difficulty for tenants who want to find a property to rent in the first place.
The new legislation states that properties must have functioning stoves, heating, deadlocks and safety measures for gas, electricity and smoke alarms. Bidding for rental homes will be banned, no-reason evictions scrapped, rent increases limited to once a year rather than six months, and bonds capped at four weeks’ rent.
Nailing hooks on walls and anchoring furniture to prevent it from falling will also be able to take place without written consent from the landlord.
Landlords will only be able to refuse their tenants keeping pets by order of the Victorian Civil and Administrative Tribunal.
It’s clear that landlords in Victoria are about to have a much harder job compared to what they were doing previously, so it’s no wonder many are already considering selling up before the changes come into effect.
New Legislation In New Zealand
The new legislation in NZ almost mirrors the legislation in Victoria. It seems that legislation is no longer balanced and is giving tenants all of the rights, very similarly to what we have outlined above, with many of the same legislations discussed.
Many people are speculating that these changes are down to labour party advocates. More and more stories are cropping up all over the media that are inaccurate and designed to promote that party’s political agenda.
You may have noticed that before the last election, reports about homeless people and struggling families that were hugely critical of National, were on the news continuously, almost on a loop.
These stories were clearly designed to create the impression that the Government was failing this vulnerable group. As soon as the election was over, and the labour party won, these stories disappeared – although the problem is obviously still there.
It would not have simply disappeared when the Labour party was put into power, so why did they mysteriously stop showing us those stories?
It seems that now, the labour party is putting rental property providers in the spotlight.
Many bad landlord stories are being spouted all over the media, and if you look closely, you’ll realise that there is political capital to be made by demonising landlords and victimising renters.
It wouldn’t be the first time that news stories have been warped to support a political agenda.
In an ideal world, the government would be applauding New Zealand landlords for providing rental housing, rather than making things far more difficult for them.
There’s every chance that landlords will decide to sell up if the laws become too much to bear, and this would leave the Government and social housing providers having to fund additional rental housing stock.
It’s also worth noting that while the labour government talk about their ‘zero-carbon’ plans, they are planning to introduce measures that will significantly increase power prices, which will make tenant issues that already exist far worse.
It also seems unfair that landlords should get the blame for things that tenants are at fault for, such as diseases caused by overcrowding.
Labour is also signalling that they intend to increase a landlords’ notice period to 90 days in all cases, removing a landlords right to terminate tenants from their own properties with ‘no cause’.
Many landlords agree that this is a misguided decision and something that is going to reduce a huge number of rental properties from the market.
New Legislation In The UK
In a recent study, half of landlords in the UK felt positive about the current buy to let sector, in spite of changes that could have a big impact on their business.
52% feel positive about the market, while only 16% felt negative.
30% felt indifferent about being a landlord in the current economic and political climate.
The two most important considerations to landlords are ongoing maintenance and upkeep costs, cited by 83%, while 80% mentioned the potential to make a long term profit.
The least important factor was Brexit, with just 32% of landlords saying that it is a major concern. This was followed by 43% mentioning the upcoming tenant fee ban in England and Wales as a big concern
The research discovered that many UK landlords are going to keep going regardless of what these changes could mean, as 64% said they are unlikely to sell their property in the next year.
However, if the changes in Victoria and New Zealand are anything to go by, UK landlords will need to keep a close eye on the media and the motives of the labour party to ensure that the changes are being made fairly and that they are not being painted as villains.
If a similar story does play out, then UK landlords might be better off pulling their properties from the market before it’s too late.
6 Helpful Tips in Managing Construction Disputes
The construction industry is among the fastest developing sectors in the world. But it is regarded as one of the most conflicted industries due to the complexity of the construction contract claims. Therefore, being familiar with the sector is an added benefit as you get to know facts, documents required and the knowledge of the industry.
If you ever find yourself in a situation that you have to defend a claim in construction you can hire dispute solicitors who are experts in defending construction and building legal claims successively.
This article gives six tips that are helpful in managing construction disputes:
In negotiation, a negotiation clause is made stating that if the project owner and the contractor may enter into a dispute, the parties agree that they will resolve the dispute in a fair and a satisfactory manner before moving on to the next issues. The benefit of negotiation is that it helps build and maintain the relationship between the parties.
A mediation clause involves the inclusion of a third party who will help resolve the dispute among the conflicted parties. Although mediation is not legally binding, it can help resolve a dispute that would otherwise escalate causing more harm to the parties. This method of resolving conflict is less costly compared to litigation.
3. Expert determination
This is an alternative to mediation as expert determination requires a specialist to handle this kind of dispute, especially when dealing with critical issues to give opinions. This type of negotiation is also not legally binding, but it can save the disputed parties a lot of time which would be used to define the set procedures. The importance of choosing expert determination as a way to resolve conflict is that it is economical and the conflicted parties reach a resolution instantly.
Adjudication is a common way to come to find a solution by depending on the neutral third party decision regarding the dispute. It has become a well-known process where you ‘pay first’ and ‘argue later.’ The final decision of the adjudicator is binding unless it is argued and revised through litigation or arbitration. The significance of this way of finding a solution even though some parties have to go to court, the decision made by the adjudicator will often count and decide the fate of the dispute.
Whereas there are many other Alternative dispute resolution processes, the court still remains the popular method of resolving construction disputes. The importance of using court proceeding is that it is enforceable as it is legally binding.
Arbitration is another commonly adopted process of dispute resolution where the disputed parties agree to refer the dispute to the arbitrator, the third party. Arbitration is an alternative to litigation. The arbitrator uses presented documents, facts, and use the applicable law principles to find the solution to the dispute. It is mostly used in resolving international disputes, but can as well be used to solve domestic disputes.
All in all, it is up to the conflicted parties to decide what type of conflict resolution method to seek depending on the intensity of the dispute and the complexity of the claim. Some individuals may look at the cost, the speed of finding a solution or the level of the claim either domestic or international that’s why this article has covered all aspects of dispute resolution giving you a wide selection of the type of conflict resolution process that suits you.
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