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New York Lawyer
Hofheimer Gartlir & Gross, LLP
Heritage and progress are the tenets by which Hofheimer Gartlir & Gross run their law firm. Since their founding over a century ago, they have merged a rich heritage of legal knowledge with up-to-date quality to satisfy their diverse clientele.
Through their many years they have formed a trust with the community
and multi-faceted, long-term working relationships. Their concerns extend
beyond the primary demands of clients and include a wider variety of
legal and business issues. Simply put, they are there looking out for
you every step of the way.
A bedrock of Hofheimer Gartlir & Gross is cooperative work, so they
will be sure to collaborate closely with you, the client, at all times.
They will remain steadfast in their commitment to providing a range
of legal services through talented minds, unwavering quality, up-to-date
technology and responsive services.
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FAQ
What exactly is commercial real estate?
Broadly defined, the term "commercial real estate" can be used to refer to any dealing with real property in a business context. It could involve leasing out office space, owning an apartment complex or selling real property along with and as part of the sale of a business. It might be industrial or agricultural property. It could even involve residential properties like apartment complexes or rental houses being held for business or income-producing purposes. It can even involve working with the government. Unless the property is a residence where the homeowner is living, you're probably dealing with commercial real estate.
Are there really that many differences between a commercial
real estate deal and buying a house?
While many of the concepts are the same, there can be huge differences between commercial and residential real estate. Commercial real estate transactions can be far more diverse and wide-ranging than selling homes. Any real estate deal has its share of risks, and problems can arise that you could never possibly foresee. In general, however, the risk and potential liability exposure that you face on a commercial real estate deal can be much greater than when you buy a house. Look at it from this perspective: by and large, we all have a pretty good idea of what goes on in a typical family home, but can you say the same thing about a piece of business property?
Depending on the nature of the business, commercial property may have all kinds of liens and title problems. There may be greater concerns about hazardous materials or zoning issues. Also, there will always be questions about the suitability of the property's location for your business needs.
Furthermore, in many instances, you aren't afforded the same consumer protections on a commercial real estate deal that may be available when you purchase a residence. In some states, for example, residential homebuyers are given greater protections against abusive lending practices than are business owners. Likewise, there are mandatory disclosures required in residential real estate matters that may or may not be required in a commercial transaction.
What are some of the common pitfalls involving a real estate business deal?
Regardless of whether you're buying a home or a piece of investment property, there will always be risks involved. Your goal should be to lessen these risks as much as you can. Examples of potential problems that oftentimes lead to legal disputes include:
• Defects in title
• Debt service and lender requirements
• Mechanics liens
• Zoning and land use problems
• Market fluctuations
• Hazardous waste and environmental contamination
Real property interests are usually conveyed by a deed. In order to
track how property changes hands, every state has a public record system
where real property deeds are recorded, becoming a part of the public
record system for everyone to see. In theory, this is a great system
for keeping track of who owns what, but deeds are sometimes not recorded.
Sometimes people sell or transfer partial interests in property. Lenders
make loans against properties and record mortgages or deeds of trust
that become liens that are of public record. Easements given to cross
over or use property may or may not be of record. A judgment against
a person can be recorded and become a lien against any real property
that person owns, even without his consent. All these things can become
a lien against title. You may not be buying everything you though you
were buying, because someone else may have a prior claim that you didn't
know about.
If you're borrowing money to acquire a piece of real property, the lender is no doubt going to want security for the loan. While a personal guarantee may work if your net worth is substantial, a lender will usually want a mortgage or deed of trust against the property. This will give the lender the right to foreclose if you fail to comply with the terms and conditions of the loan. Beyond the repayment requirements, these terms and conditions can give rise to other concerns that could become a problem. For example, some lenders prohibit borrowers from taking out more loans on their property, which could stop you from getting more financing that your business may need down the road.
Often times, a commercial loan will also require that a business maintain a certain "net equity." Pre-payment penalties are also common on real property loans. Also, many lenders on a big commercial real estate deal require that their legal fees and costs be paid by the borrower(s).
In a business context, contractors who do work on real property have a process called a "mechanics lien" that they can use to make sure that they get paid. This is a statutory lien that contractors, laborers and materialmen place on property when they've performed work or furnished materials in the erection or repair of a building or an improvement. They must generally give advance notice that they're going to file the lien, and must then take action to enforce the lien within strict timelines if they aren't paid. Ultimately a mechanic's lien could be used to foreclose on property, so it can be a very powerful tool for a contractor, a laborer or a materialman.
A big concern for a business is to make sure not only that property used in the business is properly zoned, but also that the zoning of nearby or adjacent properties is not going to be a problem. Believe it or not, many people fail in new businesses because they don't investigate the land use and zoning issues carefully enough. Even if you do your homework, issues can come up down the road if governmental agencies or neighbors try to change the zoning on your property to limit your use of it.
If you're in the real estate business, changes in property values and other market fluctuations can have a profound effect on your operations. Rents can go up or down; tenancy rates can increase and decrease. Changing property values and market fluctuations can also affect any other type of business that owns property. With retail space, for example, a company that owns rather than leases a store location may decide to change locations to follow their customer base, only to find out that they can't afford to move because of property values having dropped to the point that their business premises can't be sold at the price they need. (In contrast, a lease may provide more flexibility because, at the end of the term, the business could simply pack up and move without having to worry about selling the premises.)
The biggest potential concerns to owning business property, though,
are hazardous waste or environmental cleanup problems. Property owners
are the ones who have primary responsibility for fixing such problems,
even if the current property owner didn't cause them. These problems
may not be obvious or apparent to the naked eye, and could arise from
anything ranging from an underground storage tank to an old garbage
dump. If you're in the chain of title to contaminated property (meaning
that a some point you held an ownership interest in that property),
you're potentially responsible for paying for the clean up. The costs
for an environmental cleanup operation can run into the millions of
dollars.
How can a Lawyer help?
The benefit of competent legal advice on a real estate deal stands on its own. There are so many things that can go wrong on a real estate deal that you may very well end up kicking yourself mightily if you don't hire an attorney to help you with the transaction. You may even end up hiring a lawyer on a lawsuit, which could end up be a lot more expensive.
Real estate agents don't usually get paid unless the deal closes (or unless you somehow become obligated to pay a commission by, for example, backing out of a deal or otherwise breaching your listing agreement). Also, listing agreements will clearly state that real estate agents are not providing legal advice.
So real estate agents are typically not going to worry about the "what if's" of the legal details and are inclined to do whatever they can to push a deal to closure. This is not the case with an attorney working on an hourly basis, who's going to get paid one way or the other. An attorney will be in a better position to provide you with essential legal advice and to do so with more impartiality than may be the case with your real estate agent.
Contact Hofheimer Gartlir & Gross, LLP Today! 212.944.0500
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