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Real Estate

Friday, December 20, 2019

What is an SNDA and Why is my Landlord's Lender asking me to Sign it?

As a condition of a mortgage loan, a lender may require that the borrower (or landlord) obtain a signed Subordination, Non-Disturbance and Attornment Agreement (SNDA) from the tenants. A SNDA is a tri-party agreement between the lender (the mortgage), the borrower who uses the proceeds to purchase the property (the landlord) and the tenant. 

A SNDA will reference the lease, lease parties and execution date.  The purpose of the Agreement is the provide that the lease (and any modifications to the lease) will be “subject to” and “subordinate” to the mortgage lien.  This is the “S” in SNDA.  In exchange for the tenant’s agreement to remain behind the lender’s rights to the property, the lender agrees to give tenant protections in the event of a foreclosure. 

A foreclosure of the property would occur if the borrower/landlord failed to pay its mortgage or breached the loan documents and lender could take possession of the property.   In this situation, the ender agrees to leave the tenants in possession and not disturb the tenancy, provided that they have not breached the lease.  The covenant of non–disturbance is the “ND” in the SNDA.  


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Friday, December 13, 2019

What is the Difference Between a Commercial Lease and a License to Occupy Business Space?

When one party agrees to let another party use its business space, they must agree on the terms of use, the fee, the term and how the occupancy will come to an end.  This is referred to as a license to occupy space, which is different from a commercial lease.  A commercial lease is an agreement between a landlord/lessor and tenant/lessee to lease real property.  The landlord-tenant relationship creates a leasehold interest.  A license to occupy real property, on the other hand, is merely a privilege to use the real property and no property estate is created.  

A license is generally revocable by either party upon notice, at will – with or without cause and is usually not assignable the way a lease can be assigned to another entity with the landlord’s consent.  A license to occupy is generally a personal right of the party to the license. The tenant and landlord have a relationship governed by the terms of the lease, and all the rights and remedies available under landlord tenant laws (including the eviction laws), whereas the laws of contract govern a licensee and licensor.  

Generally, a license is for a shorter term than a lease.  The parties may prefer a license agreement for an event to be held in business space for a seasonal duration (such as a Halloween store or a Christmas shop) or as a “pop up store” (which is test run to see if the business location works).  Also, in the retail context, a license for space in a larger department store is often called a “concession.” An example of a concession is a makeup counter in a retail outlet. 


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Friday, December 6, 2019

What is Title Insurance?

A new home is often the biggest financial investment for many individuals and families. With the down payment and all the costs of closing on a home, a buyer may seek to cut costs, however, title insurance is not the place to do this. Most consumers are familiar with health insurance and car insurance, but title insurance can be a bit confusing.

A Primer of Title Insurance

When a buyer purchases real property, the seller is conveying (i.e. transferring) title or legal ownership.  Ownership of real property can be held by a person, a husband and wife, two or more individuals or by a corporate entity, partnership or LLC.   A title company offers insurance that the title transferred is good and without defects. The amount of insurance taken is based on the value of the real property and is paid in one lump sum at closing.  It is not a continuing monthly payment like a mortgage. 

There are two types of title insurance policies -- a homeowner’s policy and a lender’s policy.  A bank will not want to give a mortgage to a borrower/buyer without the lender’s policy.  The bank wants to protect its interest in the real property, as does the homeowner. 


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Friday, November 29, 2019

What You Should Know About A Brokerage Agreement Before You Sell Your House

When engaging a realtor to list a home, the realtor will ask a seller to sign a listing agreement which will detail the broker arrangement and the terms of paying the commission.  You should consult an experienced real estate attorney before you sign a brokerage agreement  

Key Terms of a Real Estate Brokerage Agreement

A brokerage agreement should properly identify the property (by address or block and lot) and the price the home is offered for sale.  Additionally, the agreement should list a term and expiration date. If the house doesn’t sell during this time (usually 6 months or less then a year) the seller may want to engage a new broker to sell the home.  

In any event, a seller should not enter into a brokerage agreement with no end. In addition, there will often be a “grace period” whereby if anyone that the agent showed the property to buys the property within thirty (30) days after the termination of the listing agreement, the agent is entitled to the commission.  The agreement should provide the percentage of commission the listing agent will receive as well as the commission the buyer’s agent will receive. A total commission of 2-6 percent of the sale price is customary and varies from locale to locale.   


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Friday, November 15, 2019

What You Should Know About a Brokerage Agreement for the Lease of Commercial Space

A landlord and a broker typically enter into a brokerage agreement in connection with the leasing of commercial space. The best way to protect your interests is to consult an experienced real estate attorney before signing such an agreement. 

Key Terms of a Commercial Lease Broker Agreement

A broker who finds a tenant for a landlord of commercial space is entitled to a commission. The broker will want the agreement to be “exclusive” which means the broker gets paid the commission regardless of which party brings the tenant.

The landlord should verify that the broker is licensed in the state where the rental property is located. The agreement should identify the rental space (office or retail) and the building address. Generally, the commission will not be earned until a lease is signed, the tenant has paid the first month’s rent in advance and taken possession of the property.  

The agreement will describe the rate of commission for the initial term of the lease and any renewal periods. If a lease has an escalating rent provision, the parties may agree on a flat commission or a commission based on a percentage of ech years’ rent. Certain items that are not included in the rent may be excluded when calculating commissions such as the utility costs, any free rent or construction costs.  The agreement should also consider the rate of commission if the tenant takes on additional space in the building (whether adjacent or on another floor).  


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Friday, November 1, 2019

What You Should Know Before You SIgn a Co-Working Space Agreement

Co-working is a popular, flexible work style for sharing a workspace and reducing overhead costs for the users. Users can choose an unassigned seat at a desk or a more formal private office setting. Co-working is on the rise in many industries but special care and concern should be noted for professions such as law that require confidentiality.  

What is a user office agreement?

There are many companies that offer co-working facilities, especially in urban environments and these providers will often require the user to sign a User Office Agreement.  The agreement should clearly state that it is not a landlord/tenant lease. In fact, the landlord is the owner of the building, where as the co-work provider is the tenant and the member is a co-work user. 

Co-working agreements resemble a gym membership more then a lease agreement.   For example, the user agreement will list certain “house rules,” which give users the day-to-day rules regarding using the space and sharing it with other users.  Some of the key provisions to look for before signing a user agreement in addition to the fees to be paid are:


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Friday, October 25, 2019

Why Does a Tenant Need to List "Additional Insureds" on its Insurance Policy for Leased Property?

When a landlord and tenant enter into a commercial lease for a retail store or office space, the lease will likely contain a long insurance provision as well as an indemnity provision.  An indemnity is a promise whereby one party promises to indemnify (or compensate) the other against some anticipated loss.  

The commercial lease insurance provision will state the types of insurance the landlord must carry on the building, such as casualty insurance for damage caused by fire, hazards or terrorism and liability insurance to cover damage to property, bodily injury or death. By contrast, the tenant will be required to obtain and pay for insurance covering casualty or liability occurring within the leased premises and coverage for the certain events that occur in common areas of the leased building, especially if due to the tenant’s negligence.  

The tenant is the named insured – that is the party paying for the insurance whose credit was reviewed when issuing the policy and determining the premiums.  The landlord will request certain types of insurance in certain amounts be on a “per occurrence” basis with permitted deductible amounts. Landlords will sometimes request a tenant to carry business interruption insurance.  The rationale behind this request is if an event occurs that interrupts tenant’s business, the tenant ymay lose revenue and then not have sufficient funds to pay the rent.

Why is the tenant being asked to add others to its insurance policy for casualty and liability ?

On most casualty policies (with the exception of business insurance), the landlord will ask to be named as an “additional insured” on the tenant’s casualty policy, together with other interested parties such as the landlord’s agents (e.g. the property management company, or the mortgage lender).

An “additional insured” is a person or entity other than the named insured who is protected under the terms of the insurance policy sometimes referred to as the “loss payee. “ Typically an endorsement to the policy is added to cover additional insureds.  Landlords feel this protection is like “a belt and suspenders.”

The landlord will sometimes request a full copy of the tenant’s insurance coverage, with an endorsement showing the additional insureds listed, but more commonly will request a “Certificate of Insurance” which is a one-page sheet showing the types of coverage, amounts and deductibles and the lists the parties covered as additional insureds. 

The Bottom Line

Both the tenant and landlord should have their attorney carefully review the insurance provisions of the lease and indemnity clause to determine that there is adequate protection for each party and reasonable coverage given the specific risks.


Friday, October 18, 2019

Why Landlords Want Tenants to Obtain Renter's Insurance

Residential landlords will often include a provision in the lease requiring the tenant to carry renter’s insurance. Landlords do not want be sued by tenants for damage to their possessions and want tenants to look to their own coverage. Tenants often balk at an additional cost and mistakenly assume that they are covered under the landlord’s policy. This is not the case. 

In fact, the landlord’s insurance will cover repairs to or replacement of the structure from things from fire, water or storm damage. Damage to or theft of the tenant’s possessions are not covered. Tenants will often believe their possessions are not worth much, when you make an inventory (TVs, computers, clothing, books, mattress, furniture) it adds up!  

A common lease provision reads as follows:

“The Tenant shall be responsible for obtaining at Tenant’s own cost and

expense, a tenant’s insurance policy for the Tenant’s furniture, furnishings,

clothing and other personal property.  The Tenant’s personal property shall not

be the responsibility of the Landlord, and will not be insured by the Landlord. 

The Tenant’s insurance policy must also include liability coverage.  Upon

request, the Tenant shall periodically furnish Landlord with evidence of

Tenant’s insurance policy.”  

Some savvy Landlords will go further and add: 

“Tenant shall provide a copy of renter’s insurance at the time of lease signing

and at each renewal of the lease.  Tenant shall provide written notice of any

interruption of Tenant’s insurance during the Lease term.”  

This additional provision prevents a tenant from letting the renter’s insurance lapse for non-payment or alerts the landlord if the insurance carrier dropped the tenant.  A failure to provide the insurance could be a breach under the lease.  

Tenants should consider who is listed on the insurance policy,  in particularl  roommates and couples, to be sure all occupants’ possessions are covered. Some renter’s policies can extend to possessions damaged or stolen while traveling.  A Renter’s policy can also cover a hotel stay or other interim housing if a tenant must leave its rental because of damage.  

In conclusion, renter’s insurance is not as costly as one may think and it is a good investment and protection tool for both the landlord and the tenant.


Friday, June 7, 2019

How Title Insurance Protects Homebuyers

Buying a home is the single largest investment that many individuals will make which makes it essential for potential homeowners to protect their interests. In particular, it is crucial to ensure that the seller can transfer free and clear ownership of the property by obtaining title insurance.

In short, title insurance protects both lenders and owners against claims for unknown defects in title to the property such as another individual claiming ownership of the property, unpaid taxes, judgments and liens, improperly recorded documents, encroachments and easements, as well as fraud and forgery.

In a residential real estate transaction, there are two types of policies, a lender's policy and a buyer's policy, and the homebuyer is required to pay for both. The lender's policy, or mortgagee's policy, specifically protects the lender's interest, including the loan amount and legal costs. The buyer's policy protects the owner up to the original sales price of the property, or its full market value, depending on the type of policy the buyer purchases.

In order to obtain title insurance, it is necessary to engage the services of an escrow agent, or an attorney, who will order a title search. This is a comprehensive examination of public records associated with the property such as deeds, taxes, court records - judgments, bankruptcies, wills, trusts, divorce decrees and other documents.

The title company will rely on the results of this search to issue a preliminary report, or a title commitment, which details the potential defects and outlines the conditions that must be met before a policy can be issued. This report gives the seller the opportunity to remedy any liens or other encumbrances before the loan closing, or in the alternative, from the proceeds of the sale.

In sum, title insurance protects lenders and buyers from a wide range of problems such as a fraudulent sale, unpaid taxes or other liens and defects. While the cost of a title insurance premium is typically based on the purchase price of the home, it also depends on the services the title company is offering. Lastly, the rules governing title insurance vary from state to state, so it is important to consult with an experienced real estate attorney.


Friday, May 10, 2019

Real Estate Contracts in a Nutshell

Buying a home typically involves entering into an agreement with the seller and most real estate contracts contain standard terms. However, it is essential to consult with an experienced real estate attorney who can review the contract. Let's take a look at some of the key terms in a real estate contract.

Obviously, the agreement must specify the purchase price. Unless you are paying for the property in cash, it will be necessary to obtain a loan from a bank or mortgage lender. Accordingly, the contract should state that the offer is contingent upon a loan approval. If possible, the interest rate and other terms of the loan should be specified to make sure you can make the monthly payment. If the application is rejected or lender offers a higher rate, you may need to back out of the deal. In short, without this provision in the contract, you may lose your deposit.

Further, a critical aspect of buying a home is arranging for an inspection of the dwelling to ensure that it is structurally sound, the roof does not need repairs, and that the heating and electrical systems are functioning properly. If there are defects that need to be repaired, the contract should specify that the seller will agree to make and pay for them.

While homebuyers often assume that fixtures and appliances come with the home, this is not always the case. For this reason, the contract should specify whether the refrigerator, dishwasher, washer/dryer, ceiling lights and other appliances and fixtures are included.

In addition, it is important to clarify which party will pay specific closing cost such as escrow fees, title search fees, title insurance, notary fees, re-coding fees, bank fees, and the like. In some transactions, it may be possible to negotiate a seller's concession. In this arrangement, the seller agrees to pay part or all of the buyer's closing costs.

Lastly, the contract should also include a planned closing date that considers other factors such as whether the buyer is simultaneously selling an existing home, conditions of the loan commitment, and any other issues that could delay the loan closing.

In the end, if you are planning to buy a home, an experienced real estate attorney can help protect your interests and get the best deal.


Friday, January 11, 2019

How to Negotiate a Commercial Real Estate Lease

There are number of considerations for business owners involved in negotiating a commercial lease, not the least of which is the fact that the main objective of landlords is to maximize profits. By understanding the following fundamental concepts, it is possible to make a good deal.

Market Conditions

First, understanding the market conditions for commercial properties is crucial. Generally, pricing is based on square footage, but there is a difference between "usable" square feet and "rentable" square feet.

Rentable square feet is the actual measurement of the space that is being leased. However, rates are typically quoted based on usable square feet which combines the space with a percentage of common areas such as lobbies, hallways, stairways and elevators.


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Attorney Irene V. Villacci represents clients throughout Nassau and Suffolk Counties and the surrounding areas, including: Queens, Brooklyn, Staten Island, Bronx and Manhattan.

Prior results do not guarantee similar outcome.



© 2020 Irene V. Villacci, Esq., P.C. | Disclaimer
53 N. Park Avenue, Ste. 41, Rockville Centre, NY 11570
| Phone: 516-280-1339

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