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Common Pitfalls in Commercial Transactions that Result in Real Estate Claims February 16, 2017 Presented By: J. Mason Williams IV, Esq. Widerman Malek, PL www. USLegal. Team. com

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Commercial Transactions • Real Estate Transactions • Construction Liens

Negotiations and Pre-Contract • • Title Issues Site Knowledge Valuation Oral Agreements Law/Jurisdiction Entity Participants Patent Defects • • • Taxes Assumption of Liability Lease Terms Lender Issues Attorney’s Fees and Costs

Title Issues • Use a reputable title company • Review the title report closely – Chain of Title – Liens/Judgments – Easements – Encroachments • Deed language – Parties – Legal Description

Site Knowledge • Property Survey • Inspection – Mold Inspection • Environmental Survey • Zoning/Land Use • Easements • Binding Development Plans and Restrictive Covenants

Valuation • Make sure all elements are accurately described – Size – Location – Buildings – Age – Use • Make sure the commercial appraiser has commercial experience • Remember income producing elements

Oral Agreements • • Get Everything in Writing/Statute of Frauds Be Clear Know the other party’s law Know the local laws, ordinances, and zoning where the property is located

Law/Jurisdiction Common Law • (most of the United States, most of Canada, England, Australia): law developed by judges, courts, and similar tribunals, stated in decisions that nominally decide individual cases but that in addition have precedential effect on future cases. * Civil Code • (Much of Europe, China): a systematic collection of laws designed to comprehensively deal with the core areas of private law such as for dealing with business and negligence lawsuits and practices. * *Wikipedia, “Common Law” and “Civil Code” - https: //en. wikipedia. org/wiki/Common_law and https: //en. wikipedia. org/wiki/Civil_code ** University of Ottawa, - http: //www. juriglobe. ca/eng/syst-onu/index-alpha. php

Law/Jurisdiction (Cont’d) • Know the law of the other party – Examples: Italy, Quebec • Know what you cannot contract around – Examples: China, European Union, Canada, USA • Use a letter of intent or letter of understanding

Entity Participants • Make sure the correct parties are involved • Review the prior deeds, title report, and chain of title • Confirm the description of entity or entities in the contract is accurate

Patent Defects • Ask the Question! • Do your best to anticipate these • Consider past problems in the industry, business area, economy, etc. • Still have disclosures in “As-Is” contracts

Taxes • • • Hire a Tax Attorney, CPA, or both Transfer Tax Mortgage Tax Sales Tax Ad Valorem Tax 1031 s

Lease Terms • Copy of the Lease – Assignability – Time Period (and Extensions) – Increases in Rent – Type of Lease – Security Deposits • Rent Roll • Tenant History • Tenant Credit Information (if available)

Lender Issues • Talk to the Lender and know what they need ahead of time • Be wary of personal guarantees • Understand the collateral • Timelines • Cash is King

Leases (In-Contract) • Failure to abide by the lease terms – Notice – Deposit • Build-outs • Sub-leasing • Fixtures

Construction (In-Contract) • Contract Terms – Payment Terms – Substantial Completion – Notice • Liens – Subcontractors – www. Fullerton. Law. com (Manual of Credit and Commercial Laws, 104 th Edition, Appendix 43, “Mechanic’s Liens”) • Releases/Satisfactions

Construction (Post-Contract) • • Notice Punch Lists Certificate of Occupancy (CO) Latent Defects – Design – Construction • Delay

Misrepresentation/Fraud (Post-Contract) • Due your due diligence – Ask questions – Get the necessary documents – Get help, if necessary

Tips • • • Dig into it Get everything in Writing Diversify your real estate portfolio Keep good relationships with the other parties Ask questions Get help

Questions? J. Mason Williams IV, Esq. Widerman Malek, PL Melbourne, FL 321 -255 -2332 Mason@USLegal. Team. com www. USLegal. Team. com

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