Assembly Bill 1103 requires documentation of a building’s energy usage anytime there’s a sale, lease, financing or other change involving the building itself.

By Ben van der MeerStaff Writer- Sacramento Business JournalEmail

A new state law affecting any transactions on most commercial properties is causing headaches and delays for brokers, property managers and others.

The law, Assembly Bill 1103, requires documentation of a building’s energy usage any time there’s a sale, lease, financing or other change involving the building itself. Passed in 2007, implementation of the bill was delayed several times because of problems with a state website where building data is entered.

But in the last year, the bill went into effect, including on Jan. 1 for non-residential buildings of at least 10,000 square feet, then on July 1 for buildings of at least 5,000 square feet.

Heather Johnston, an attorney specializing in commercial real estate transactions with Trainor Fairbrook in Sacramento, said the implementation portion is proving difficult. Not only are those entering the data often frustrated by the unwieldiness of the state’s website – for example, it doesn’t have a way to record information when a building’s tenants pay separate utility bills – utility companies are balking at providing confirmation data, citing privacy concerns.

Johnston said there are ways to estimate the information, but a full report of a building’s energy usage has to be disclosed to all parties before a transaction is complete.

“In every single situation, there’s a handful of difficulties,” she said, noting the legislation has created delays in deals being finalized, as well as added costs for property owners who pay to get a full measure of energy usage.

The idea behind the law was to increase market interest in more energy efficient buildings, similar to posting projecting mileage on cars for sale. Johnston said those are noble goals, but the execution needs work, and many commercial real estate industry professionals still aren’t aware it’s in place.

“When it had gotten around implementation, it had just fallen off the radar for most people,” she said. “If I had a recommendation for the state, it would be to fix the website.”

Encon Commercial Real Estate Services – Los Angeles

The Benefits of Using a Foreign Trade Zone

From large manufacturers to individuals, any size importer or exporter can take advantage of a foreign-trade zone (FTZ). However, many companies are unaware of the sizeable cost savings and other benefits they can achieve by taking advantage of an FTZ program. Utilizing an FTZ can significantly reduce costs from customs duties, taxes and tariffs; improve global market competitiveness; and minimize bureaucratic regulations. Outside the United States, there are many other names for FTZs, including free, foreign, or export processing zones. Below are some benefits of using an FTZ.

1. Deferral, reduction, or elimination of certain duties. FTZs allow the most duty deferral of any kind of Customs program. Companies can bring goods into the FTZ without duties or most fees, including exemption from inventory tax.
2. Relief from inverted tariffs. In some cases, tariffs on U.S. component items or raw materials have a higher duty rate than the finished product, putting a U.S. manufacturer at a cost disadvantage to an importer. However, by participating in an FTZ, the U.S. manufacturer pays whichever duty is lower. In many cases the tariff of the manufactured good is zero, eliminating any costs associated with importing raw materials and goods. There is no way to take advantage of inverted tariffs without operating in an FTZ.
3. Duty exemption on re-exports. Since an FTZ is considered outside the commerce of the United States and U.S. Customs, a company importing components or raw material into the FTZ doesn’t pay Customs duty until it enters U.S. commerce. If the good is exported from the FTZ, no Customs duty is due.
4. Duty elimination on waste, scrap, and yield loss. Since a manufacturer operating in an FTZ doesn’t pay duties on imports until its goods leave the FTZ and enter the United States, it essentially is paying for the duties on the raw materials after they have been processed. Thus, duties owed do not include manufacturing by products, such as waste, reducing the amount of goods taxed.
5. Weekly entry savings. Instead of filing an entry every time a shipment enters the country, an importer operating in an FTZ only needs to file one Customs entry a week, reducing bureaucratic headaches and costs associated with entry filings. There is a 0.21-percent merchandise processing fee for every entry, with a minimum of $25 and a maximum of $485 per entry, which is for goods with a value of over $230,952. A company with 10 shipments a week, each of which are over $230,952, would save $226,980 annually with weekly entries. Weekly entries also save on customs brokerage fees.
6. Improved compliance, inventory tracking, and quality control. FTZs allow companies to more closely track their inventory. By bringing goods into an FTZ warehouse that you control, you can identify and classify goods at the warehouse instead of at the port at a Customs control location.
7. Indefinite storage. A company can hold its goods indefinitely in an FTZ until a port opens up, or if there are quotas on a good, until they can be entered into U.S. Commerce without falling under quota restrictions.
8. Waived customs duties on zone-to-zone transfers. FTZs can be used to manage transshipping operations, saving money on manufacturing processing fees. While most companies are focused on using FTZs for exports, FTZs can also be used to take advantage of crossdocking and transferring goods from one FTZ to another without paying Customs duties. Many mid-level companies, in particular, are using this capability to transfer goods to FTZs both within and outside the United States.

TAKING ADVANTAGE OF AN FTZ PROGRAM

To take advantage of an FTZ, companies need to be able to track their inventory; trace manufacturing and production orders; determine whether material came from domestic or international sources; and classify goods for duty deferrals and reductions. How much a company saves by using an FTZ depends on the size of the company and its business model. Reducing merchandise processing fees alone can save a company a substantial amount of money.

Larger companies may want to consider using automation to help alleviate the burden of managing the FTZ process, particularly since with high-volume operations it can be extremely difficult, if not impossible, to manage manually. The data needed for classifying goods, for example, is voluminous and frequently changes and must be pulled from country-specific lists. Software that has this information in a central repository with automatic updates can pull information from different systems, such as import/export and warehouse management systems, and use that data for Customs filing and inventory management.

Six in ten eviction notices have errors

Written by: Rosalind Renshaw | June 23, 2014

Over six out of ten legal notices served by agents and landlords on tenants are incorrect.

The claim comes from eviction specialists Landlord Action which looked at the last 200 instructions received from agents and landlords that had served their own legal notices on tenants (Section 8 and Section 21).

The findings reveal that 62% of these notices were incorrect, which meant they were invalid or posed a greater risk of being thrown out at court – resulting in the need for new notices to be served.

The study found the top five reasons for notices being invalidated are:
1.Incorrect expiry dates
2.Failure to comply with deposit legislation
3.Inaccurate schedules on rent arrears
4.The method of how the notice was served
5.Typing errors on the notice

Paul Shamplina, managing director of Landlord Action, said mistakes in eviction notices are among the most common reasons for delays and increased costs in trying to recover possession from a tenant who has an Assured Shorthold Tenancy.

Shamplina said he understood that some landlords serve their own notices to save expense.

He said: “I understand the need for landlords to consider every cost, but I can’t stress enough that the notice is the most important part of a possession court case and the slightest mistake can end up costing a landlord significantly more than the cost savings – in extra legal fees, delays and lost rent.

“Over the last year, we have encountered an increasing number of problems with notices served by landlords and agents.

“Unfortunately, some landlords and even agents are making classic errors when drafting and serving notices.

“The worst-case scenario for a landlord desperate to regain possession of a property is to be three months down the line and find they have to start the whole process all over again, costing them a small fortune in legal fees and lost rent.”

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U.S. commercial real estate market improving

Apartment rents could rise 4% this year, again in 2015, Realtors group says

by Jeb Bing / Pleasanton Weekly

The outlook for all of the major commercial real estate sectors is slightly improving across the country despite disappointing economic growth during the first quarter of 2014.

According to the National Association of Realtors quarterly commercial real estate forecast and its chief economist Lawrence Yun, the sluggish growth experienced in the first quarter is not indicative of the actual health of the economy.

“Gross Domestic Product should expand closer to 3% for the remainder of the year,”.Yun said. “The improved lending for commercial loans and continuing job gains we’ve seen this spring bode well for modest progress in commercial real estate leases and purchases of properties.”

However, Yun cautioned that with rising long-term interest rates on the horizon, consistent economic growth is imperative to solid commercial real estate investment in the years ahead.

National vacancy rates in the office market are forecast to decline 0.2 percentage points over the coming year, while international trade gains continue to boost use for industrial space, which forecasts a decline of 0.3 points.

The outlook for personal income and consumer spending is favorable for the retail market, likely leading to a vacancy decline of 0.2%.

“The multifamily sector continues to be the top-performer in commercial real estate with the lowest vacancy rates. However, tight availability, despite new construction, is causing rents to currently rise by nearly 4% annually in many markets,” said Yun. “Many renters who are getting squeezed may begin to view home ownership as a more favorable, long-term option.”

NAR reported earlier this month in its annual “Commercial Member Profile” that despite sub-par economic expansion, Realtors who practice commercial real estate saw an increase in sales transaction volume and medium gross annual income in 2013.

NAR’s latest “Commercial Real Estate Outlook” offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.

Office Markets

Office vacancy rates should decline from an expected 15.8% in the second quarter of this year to 15.6% in the second quarter of 2015. Currently, the markets with the lowest office vacancy rates in the second quarter are New York City and Washington, D.C., at 9.4%; Little Rock, Ark., 11.5%; San Francisco, 12.6%; and New Orleans, at 12.8%.

Office rents are projected to increase 2.5% in 2014 and 3.2% next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 39.7 million square feet this year and 49.8 million in 2015.

Industrial Markets

Industrial vacancy rates are anticipated to fall from 9.0% in the second quarter to 8.7% in the second quarter of 2015.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 3.5%; Los Angeles, 3.9%; Miami and Seattle, 6.0%, and Palm Beach, Fla., at 6.5%.

Annual industrial rents should rise 2.4% this year and 2.6% in 2015. Net absorption of industrial space nationally is seen at 107.8 million square feet in 2014 and 107.1 million next year.

Retail Markets

Vacancy rates in the retail market are expected to decline from 10.0% currently to 9.8% in the second quarter of 2015.

Presently, markets with the lowest retail vacancy rates include San Francisco, at 3.2%; Fairfield County, Conn., 3.8%; and San Jose, Calif., at 4.7%. Northern New Jersey; Long Island, N.Y.; and Orange County, Calif., all have a vacancy rate of 5.3%.

Average retail rents are forecast to rise 2.0% in 2014 and 2.3% next year. Net absorption of retail space is likely to total 11.5 million square feet this year and 19.6 million in 2015.

Multifamily Markets

The apartment rental market (multifamily housing) should see vacancy rates edge up from 4.0% in the second quarter to 4.1% in the second quarter of 2015, with added supply helping to meet growing demand. Vacancy rates below 5% are generally considered a landlord’s market, with demand justifying higher rent.

Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.3%; Ventura County, Calif., 2.4%; and New York City; San Diego; Hartford, Conn.; Oakland-East Bay, Calif., and San Diego, at 2.5% each.

Average apartment rents are projected to rise 4.0% this year and in 2015. Multifamily net absorption is expected to total 221,400 units in 2014 and 173,100 next year.

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thestreet.com – Rick Kahler

Want a good way to build wealth? Own commercial real estate. But only if you are willing to undertake due diligence that may not be readily available online, make a big hands-on commitment to mind the investment and exercise enormous patience.

Real estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And real estate makes up a significant portion of the net worth of many wealth accumulators.

Directly owning real estate is not an investment for the faint of heart, the armchair investor or the uneducated. Most wealth accumulators do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts instead.

Still, the lure of investing in a tangible asset such as real estate is enticing for high-risk tolerant investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path:

1. Don’t try to buy investment real estate without the help of a commercial property specialist who is a fiduciary, bound to look out for your best interest. Engage a Certified Commercial Investment Member with years of training and experience in analyzing and acquiring investment real estate to advise you. To find a CCIM near you, go to ccim.com and look under the “networking” tab, where you click on “find a professional.”

2. The broker you work with should be a member of the National Association of Realtors, which has a code of ethics. You must get a disclosure agreement that tells you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller or both parties.

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familyandfinances.com
Jacklyn Evans

If you invest in any commercial real estate, you will be able to make a big profit, though you will need to be patient, and do a lot of studying and research. Many people have become successful with it by reading and applying the tips below so that they can succeed in this lucrative field.

When dealing in commercial real estate, it is important to stay patient and calm. Do not be hasty about making an investment decision. If the property turns out to be wrong for you, you will regret your decision. You should be prepared to wait an entire year before a worthy investment becomes available to you.

Net Operating Income, or NOI, is one of the most important metrics used in commercial real estate. You must understand what it means, and how it’s used. Staying in the positive is what you need to do to succeed.

TIP! Negotiate, whether you are the buyer or the seller. Let people know what you want and make sure you are asking for a realistic price.
When having your real estate inspected (as you should), always ask for the qualifications of the inspectors. A lot of people have no accreditation, especially in pest control services. This can prevent larger problems from occurring after the sale.

Do your best to have your properties occupied at all times. If you have any open spaces, then you are losing money. If you have multiple unoccupied properties, try to determine the reasons why, and rectify the problems that are keeping tenants from renting the spaces.

Prior to listing your property for sale, you should first hire a reputable, professional inspector to go over the place. Repair any problems that the inspector finds immediately.

TIP! Take the time to be certain you are satisfied with a piece of real estate before you purchase it. Don’t rush to make an investment.
You need to advertise that your commercial property is for sale to both locally and non-local people. Do not assume that only local investors will be interested. There are a lot of private investors who like to buy properties that are not in their direct area if they are affordably priced.

Keep letters of intent simple by tackling large issues before sweating the small stuff. Doing it this way will allow the negotiations to be less intense and get them to agree faster.

You can find different kinds of brokers. Full service brokers work with both landlords and tenants and there are agents representing tenants only. Consider hiring a broker who only works with tenants. This type of broker may have more experience with helping tenants successfully enter the commercial real estate market.

TIP! One of the most critical considerations for valuing a commercial property is its physical location. Consider the neighborhood of the property.
Carefully peruse the disclosure statements issued by the real estate agency you intend to hire. Look for any disclosures regarding dual agency. In this sort of situation, the agency acts as both parts of the transaction. In other words, the agency is working for both tenant and landlord simultaneously. The fact that the agent is representing both parties must be disclosed to everyone involved and those parties must sign off on it.

The decision to invest in commercial properties can carry significant tax benefits. Investors may receive interest rate deductions as well as depreciation benefits. There is a chance that an investor may receive money that must be taxed, but does not come in the form of cash; this is known as phantom income. You have to keep all of this in mind before you start to invest in real estate.

Don’t choose a real estate broker until you learn about his or her preferred negotiation techniques. Ask them what specific training, expertise and professional experience they might have. In addition, you should ensure that the methods they employ are ethical and that they know how to go about obtaining the best deals. Ask them to show you examples of past negotiations, both successful and unsuccessful.

TIP! When choosing between two similar commercial properties, think large scale. Whether it be a twenty or ten unit apartment complex, you want to get adequate financing to back you up.
Use this article as a springboard for smarter real estate investments. When you take the time to use the advice that has been discussed, you can enjoy a lot of the same rewards as others have who learned how to make money from commercial real estate.

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This collection of general commercial real estate tips is a great place for beginners to start learning. The tips that follow will help put any beginning real estate investor on the road to becoming a pro.

Make sure that you invest some time researching local income levels and other factors, such as unemployment rates or local employers plans for expanding or contracting their businesses before you invest a large amount of funds into real estate. If you’re looking at a property that’s close to things like a university, employment centers, or a hospital, they’re likely to sell fast, and at a high value.

The Internet contains a lot of information for those interested in investing in real estate, whether they be experienced investors or novices. There is no such thing as having too much knowledge, so it is always a good idea to learn as much as you can.

Take plenty of pictures of the building. Be sure the photos capture any defects that exist in the unit, such as holes in the wall, and damaged or dirty carpets.

List your real estate at a realistic price. Your property’s actual value is influenced by many factors.

Every prospective real estate purchase should include thorough onsite inspections; it is equally important to verify the inspectors’ credentials. A lot of people have no accreditation, especially in pest control services. You’ll have less problems after the sale, as such.

Check a commercial property for access to electricity and other utilities; make sure there is good access. In addition to any needs specific to the business, you will surely need to have gas, electricity, sewer and water services, and so on.

Whether you want to rent or lease, you will have to deal with pest control. This is especially important if the region is known for certain types of pest infestations. If this is the case, ask specifically what the landlord will do with regard to pest control.

Try to decrease potential events of defaults before negotiating a lease. Decreasing these will prevent tenants from performing a default on the lease after your negotiations. That is not a situation you would want to encounter.

Advertise the commercial property to both locals and non-locals. Many sellers mistakenly presume that their property will appeal only to local buyers. There are many investors who are interested in financing properties which are outside their area as long as they are a great deal.

Do a walk-through and close evaluation of each property you are considering. Even better, have someone who knows commercial real estate tour the properties with you. Submit a first offer and solicit counteroffers. Think long and hard about the counteroffer before deciding to accept or decline.

An essential fundamental of commercial property is location, location, location. Consider how the neighborhood will affect business. Look at the growth of areas that are similar. What you are seeing now in terms of commercial potential might be very different a few years from now.

You may have to make some repairs or improvements to your property before you can move in. It may simply be cosmetic issues that need addressing, such as a fresh coat of paint or some furniture rearrangement. Normally, however, it may be something a little more involved like walls being moved. When negotiating, you should discuss who will pay for the improvements you’ll have to make, and should see if the current owner will cover some of your costs.

In commercial real estate, there are different kind of brokers. Full service brokers work with both landlords and tenants and there are agents representing tenants only. A tenant’s-only broker may serve your needs better than a full service broker.

Transactions for commercial property take more time, and are a lot more complex, than the process of buying a home. Keep in mind, though, that the complexity is required to ensure that your real estate investment gives you a high return.

To initiate a commercial loan, the prospective borrower must first request an appraisal. The bank won’t permit your use of it at a later date. Make sure you have all your paperwork in order before you even apply for your loan.

Be sure to deal with a company where customer care is important prior to buying. If you work with a company that only cares about its own profits, you might lose money on preventable mistakes.

Hopefully, the previous tips gave you enough information when talking about selling or buying real estate. Keep these tips in mind and you hone your skills and become successful at both buying and selling commercial property.

Ask any potential broker about what experience they have had with commercial property before choosing someone to represent your interests. Make sure you know that they actually specialize within the area you plan on selling and buying. Most brokers will require you to have an agreement to work exclusively with them.

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BY Bill McBride and From Roger Vincent at the LA Times: Southern California office rental market improves slightly

Office vacancy in Los Angeles, Orange, Riverside and San Bernardino counties was 17.5% at the end of the third quarter, Cushman & Wakefield said, down from 18.4% a year earlier. Landlords asked for average monthly rents of $2.33 per square foot, an increase of 5 cents from the same period last year.

“I don’t see a significant demand for additional office space and increasing rents in coming quarters,” [broker David Kutzer of Newmark Grubb Knight Frank] said. “We’re not turning the corner to what we consider really healthy markets, and we’re nowhere near the low vacancy that will result in new construction of office space.”
This is an important point – the vacancy rate for office buildings is slowly declining, however it is not close to the level that will lead to significant more investment (important for employment and GDP).
Note: Reis reported the national office vacancy rate (large cities) declined in Q3 to 16.9% from 17.0% in Q2. I’d post a graph comparing the office vacancy rate and private fixed investment in offices, but the data for office investment is currently not available due to the government shutdown.

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National CCIM Market Trends Report Shows Commercial Real Estate Gaining Momentum in 3Q13.

Deal flow among members of the CCIM Institute increased 57 percent year over year according to an August 2013 intelligence survey conducted by the National Association of Realtors® in conjunction with the CCIM Institute. Results of the survey and other commercial real estate market trends were published in CCIM’s 3Q13 Quarterly Market Trends report. Headquartered in Chicago, the CCIM Institute confers the Certified Commercial Investment Member (CCIM) designation, commercial real estate’s global standard for professional achievement.

The report, which features data collected from CCIM members across the country, shows property sale prices were higher or about the same as one year prior, and more than 65 percent of CCIM members said they received more serious inquiries from buyers than the same period last year. These strong indicators reveal that the economy is retaining positive momentum and commercial real estate fundamentals will continue to perform well through year-end and into 2014.

“The current pace of moderate gains in employment and consumer spending should provide enough lift for absorption in the office, industrial and retail sectors to keep vacancy rates on a downward trend,” according George Ratiu, director of quantitative and commercial research for NAR. “Demand for rental housing will remain solid for the rest of the year, although competition from residential rental stock and new construction is likely to add pressure on rent growth.”

With rising deals and investor confidence, more than 50 percent of CCIM members surveyed in each region (East, Midwest, South, and West) indicated that the economic climate is moderately positive. Property sectors that stood out from the pack based on CCIM members’ local and regional property market activity included office, industrial, and retail.

More specifically, CCIM members experienced:

Higher rental income (58 percent) and increase deal flow (61 percent) in the office market
Higher rents (55 percent) and higher property prices (44 percent) in the industrial market
An increase in retail deals (58 percent) and higher rental income (45 percent) in the retail market
Other notable property sector highlights included more than 75 percent of CCIMs reported higher asset prices in the hotel sector, and rental income in the apartment sector rose for 62 percent of CCIM members.

The complete report findings can be found at http://www.ccim.com/resources/qmt.

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blog.upcounsel.com
Matt Faustman

Commercial real estate law isn’t an easy thing to wrap your head around. There are laws at the federal level, laws at the state level, and regulations at the local level. In addition, real estate law encompasses everything from property law to insurance law and even contract law. In short, there is no one-stop-source to find everything you need to know about real estate law as a commercial property owner.

It’s always best in cases like this to seek professional help so you don’t find yourself in hot water after the fact—especially when there is a sizable investment at stake. However, the primer below will give 5 groups or areas of law that every commercial real estate owner needs to know about as well as a general overview of just how tangled the web can be.

Robert Freedman, senior editor and videographer for REALTOR magazine, says that any interested party should always consult a qualified attorney if they have any questions about the laws that govern property ownership, sale, and usage in their state.

Landlord/Tennant laws vary greatly by state, but generally they’re designed to protect the rights of both parties involved in any sort of rental or leasing agreement. Clauses in such laws often govern:

Payment of rental fees
Taxation
Rights of privacy
Necessary disclosures
Duration of tenancy
Rights to termination of tenancy
And much more.

Basically, these laws are a finely crafted legal definition of the relationship that exists between the commercial property owner and the individual or entity habituating the space. Understanding the laws within the state you’re operating in is an essential part of making sure you don’t violate your tenant’s rights. It’s also helpful to educate yourself on the laws should your tenants violate your contractual agreements.

To get an idea of how much an unwanted eviction case can cost a landlord, read this case study.

Disclosure laws are another set of laws that generally vary by state. These laws deal with the condition, location, and restrictions placed on the property itself. Generally, disclosure laws exist so that property renters understand what they’re getting into.

For instance, in many cases, owners are required to disclose the presence of known (or even unknown) toxic substances such as asbestos, lead paint, and radioactive materials. However, other less-shocking disclosures may also be required depending on the state in which you operate.

For instance, California just enacted two new disclosure laws that apply to commercial properties. These require that renters be informed of the necessity of accessibility inspections and aspects pertaining to the energy use of the property.

These laws are important for commercial property owners to understand—especially if they opt not to go through a realtor to facilitate the rental transaction.

Local or state legislation often dictates how the zoning and land use regulations are enforced. In addition to determining taxation, these regulations determine how a property (commercial or otherwise) can be used. Zoning regulations dictate whether a property can be used for retail operations and sometimes even what sort of retail operations can take place. For example, something as simple as a hot dog cart is covered under zoning laws, and the operator can be shut down if he or she infringes on the property rights of established businesses.

State legislation often dictates the process for changing any such zoning. Generally, the landowner must apply for rezoning and have the local board meet on the issue. However, it may be more complicated than that depending on local law.

Understanding your local regulations will prevent you from renting a commercial property to a business only to find out that the business can’t operate there without getting the property rezoned.

Leases and rental agreements are legally binding contracts drafted by one party or the other and accepted by both. As such, these documents must be specifically structured and contain very rigid verbiage in order to stand up to any challenges (either from one of the parties involved or outside entities).

Whereas the majority of contracts in the United States fall under the Uniform Commercial Code, generally, the sale of real estate is covered by the Common Law of Contracts. The common law is quite different to the UCC and as such, Brad Denton notes, “the common law follows the “Mirror Image Rule,” requiring an acceptance to be an exact mirror image of the terms of the offer for it to be a legally recognized acceptance. If any changes are made to the offer, there can be no acceptance because the offer has been changed. It then becomes a rejection and a counteroffer.”

You’ll want your investment covered—that’s why you’ll have insurance on the commercial property you’re leasing out. It covers your property and (to some extent) the property of your tenant should certain accidents occur. However, that same insurance policy is not intended to protect your tenant or the vast majority of their property. Indeed, they will need business insurance of their own in order to ensure that their property (such as equipment) is covered and to protect them against liability lawsuits.

Again, insurance laws vary greatly from state to state and there aren’t many overarching federal commandments. Therefore, it’s essential that you educate yourself and contact a qualified attorney to answer any questions you might have about commercial insurance law.

To learn about commercial property insurance rates, click here.

You should never attempt to navigate the tricky laws and local regulations that govern commercial property leasing. There are simply far too many variables on the federal, state, and local levels for a novice to keep track of. That last thing you want to do is enter into what you think is a legally binding contract only to find that you’re the victim of some legal loophole that ultimately leads to you losing your investment. Worse yet, illegal transactions could put you in a bad place with local and federal law enforcement. Always seek advice.

About Author Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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About the Author: Matthew Faustman
Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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