Moratorium on Evictions and Foreclosures Extended to October 17, 2020

On April 20, 2020, Governor Baker signed into law An Act providing for a moratorium on evictions and foreclosures during the COVID-19 Emergency, which severely limits the ability of landlords and mortgage lenders to enforce lease obligations, and conduct evictions and foreclosures during the COVID-19 crisis. This emergency moratorium was extended by 60 days, until October 17, 2020. That means, absent exigent circumstances, landlords and mortgage lenders cannot take affirmative steps to impose penalties upon or enforce their rights against tenants and homeowners who fail to pay rent or monthly principal and interest payments as a result of COVID-19. These restrictions apply to residential and (certain) commercial tenants alike.

With respect to commercial tenants, the Act primarily protects for profit and non-profit small businesses that occupy a property for commercial purposes. Businesses that are excluded from the Act include a premises occupied by a tenant that (i) operates multi-state; (ii) operates multi-nationally; (iii) is publicly traded; or (iv) has not less than 150 full-time equivalent employees.

The Act forbids Landlords from filing an eviction action for non-payment of rent. Landlords may not impose late fees or report non-payment to the Consumer Reporting Agencies (Credit Bureaus) if the tenant provides proof that the non-payment of rent relates to the pandemic. Mortgage lenders are also obligated to grant a forbearance to homeowners who cannot pay their monthly principal and interest payments as a result of the pandemic.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Governor Baker Ends Smoke / Carbon Monoxide Inspection Exemption

Governor Baker has rescinded the Emergency Order that allowed parties to residential real estate transactions defer smoke and carbon monoxide inspections until after closing. This means that parties presently entering into a purchase and sale agreement for a residential property in Massachusetts are unable to defer the required smoke and carbon monoxide detector inspection to a date after closing. The rescinding of the order does not invalidate any inspection deferral that agreed to in the purchase and sales agreement pursuant to the terms of the Order. Those transactions that closed prior to July 10, 2020, now have until October 8, 2020 to schedule an inspection with the local fire department, and obtain a signed certificate of inspection.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Remote Online Notarization is Now Here in Massachusetts

Real Estate and Estate Attorneys are now able to notarize important documents by way of remote videoconferencing. Governor Baker signed into law Bill S. 2645 which temporarily allows attorneys and notaries public to remotely notarize documents under certain conditions:

• All parties and the notary public must be located in Massachusetts. The Notary should confirm the location of the signatory at the outset of the video conference. The signatory must also swear and affirm that they are present in Massachusetts.

• All signatory parties must provide proof of identity during the video conference or by emailing a copy of a State ID or Passport to the Notary Public. It is recommended that the Notary receive a copy of the ID prior to initiating the video conference and then verify identity during the video conference.

• The notary must observe execution of the documents through real time electronic video conferencing. It is recommended that the signatory hold up the document so that the Notary can verify the document being signed and that the camera be placed at an angle so that the Notary can observe the signing.

• All executed documents must be sent to the notary for the stamp and signature immediately after the video conference.

• If a Mortgage is being executed, the signatory and Notary must hold a second video conference to confirm that the document signed was executed by the signatory.

• The Notary certificate must state that the signatory remotely appeared before the Notary Public.

• The notary public must execute an affidavit confirming under the penalties of perjury

  that the notary public has: (i) received a copy of each principal’s current identification credential and visually inspected the credential during the initial video conference with the principal, if applicable; (ii) obtained each principal’s verbal assent to any recording of the video conferences; (iii) taken each principal’s affirmations as to physical presence of the principal within the commonwealth; and (iv) been informed and noted on the affidavit any person present in the room, including a statement of the relationship of any person in the room to the principal.

• The Notary Public must retain the Affidavit for a period of 10 years and it does not need to be recorded at the Registry of Deeds.

This new law will ease the pressure and burden on Notaries Public and Attorneys who have struggled to adhere to social distancing standards during the COVID-19 pandemic.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Median Price of Closed Single Family Real Estate in MA is $416,000.000

The Massachusetts Association of Realtors® (MAR) recently reported that the median price for Massachusetts single-family homes is now $416,000 and the median price for Massachusetts condominiums is now $428,500.  These prices are based on recent sales prices of homes in Massachusetts and can be used to estimate home value on the market. The increase for single family homes is a 6 percent increase from March 2019, which was $390,500.00. The increase for condominiums is a 14 percent increase from March 2019 which was $375,000.00. It was reported that closed sales in March 2020 have decreased by 3 percent due to the COVID-19 pandemic, however, the demand for housing remains strong and residential real estate inventory is at record low levels. This is helping keep the value of residential real estate in Massachusetts steady and at its current market value.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Source: The Massachusetts Association of Realtors® (MAR); www.marealtor.com. Northshore Legal LLC claims no rights or ownership of any content or source materials contained in this Post.

MA Now Provides Additional Protections for Homeowners and Tenants

In response to the COVID-19 pandemic, on April 20, 2020 the Massachusetts legislature and Governor Baker extended temporary protections to homeowners and rental tenants.

The new legislation and law provides two important protections for homeowners: A moratorium on foreclosures for the sooner of 120 days from enactment or 45 days after the end of the state of emergency, and 180 days of mortgage forbearance for homeowners experiencing a financial impact from COVID-19.

The new legislation and law provides additional protections to residential and small business rental tenants. The following provisions are in effect for the sooner of 120 days after enactment or 45 days after the end of the state of emergency. Landlords may not impose late fees or report to consumer reporting agencies for a tenant’s late or failure to pay rent. Landlords may not sent a Notice to Quit for a failure to to pay rent. The only exception for a Notice to Quit is if the tenant is engaged in criminal activity or has violated the lease terms by creating a health and safety risk. Additionally, Massachusetts Courts are prohibited from are accepting new non-essential eviction cases and all pending eviction cases are present placed on hold.

These protections are aimed at ensuring that residents and occupants of residential real estate in Massachusetts are provided housing during the current pandemic.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

IRS has Granted Extensions for 1031 Exchanges

The IRS released Notice 2020-23 that provides numerous extensions to address taxpayer issues due to the outbreak of of the novel coronavirus (COVID-19) in Massachusetts and the United States. The IRS has issued extensions that relate to 1031 exchanges for real estate investments. The Notice extends any 45-day or 180-day deadline that occurs between April 1 and July 14, to July 15, 2020 for real estate and proceeds that part of a 1031 exchange.

Real Estate exchangers that benefit from an extension of the 45-day deadline are those entities or persons that closed, or will close, on their relinquished property between February 16th and May 31st. If the 45 day deadline expires within this time period, the deadline is extended to July 15, 2020. If the 180 day period is after July 15, 2020, then the exchanger must still close within 180 days.

Real Estate exchangers that will benefit from an extension of the 180-day deadline are those that closed on their relinquished property between October 4th, 2019 and January 17th, 2020. In this instance, the 180 day deadline has been extended to July 15, 2020.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Real Estate Services is an Essential Business Activity in Massachusetts

On March 23, 2020, Massachusetts Governor Charlie Baker issued an emergency order requiring all businesses that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to the the public and workers. Since the enactment of the emergency order, it has been amended to include “Residential and commercial real estate services, including settlement services.”

Residential and commercial real estate brokerage may resume their brick and mortar agency operations. However, the real estate brokerages must observe the rules that preclude gatherings of ten or more persons, and the current social distancing and hygiene rules.

The amended order also means that real estate attorneys in Massachusetts may also resume their normal business operations. Real estate attorneys provide “settlement services” by acting as the closing and escrow agent throughout the real estate transaction. There are many purchase and sales agreements that were entered into prior to the date of the emergency order, and there are numerous transactions that are scheduled to close during the month of April. If real estate attorneys were not considered as essential during the current crisis, the damages suffered by homeowners and buyers, as well as the Massachusetts economy would be unprecedented.

Northshore Legal LLC specializes in real estate law, and represents buyer and sellers of residential and commercial real estate. We will continue to provide updates throughout the pandemic crisis. We can be reached at consultation@northshore.legal or 781-463-6063.

Federal SBA Relief for Small Businesses is Now Here

The Federal CARES ACT (Coronavirus Aid, Relief, and Economic Security Act), in part, provides immediate relief for small business owners who are facing capital crunches due to the present economic slowdown. This article will provide a brief overview of the programs presently available for small business owners in Massachusetts and throughout the United States.

The Small Business Administration (SBA) has expanded the 7(a) Small Business loan program to provide employers with payroll assistance to ensure that employees stay employed. The Paycheck Protection Program (PPP) Loans provides provide cash-flow assistance through 100% Federally guaranteed loans to employers who maintain their payroll during the pandemic. If employers maintain their payroll, the loans would be forgiven, and if certain conditions are met. Effective April 3, 2020, small businesses and sole proprietorship can apply through any Federally insured banking institution that is Small Business Administration (SBA) certified. On April 10, 2020, independent contractors and self-employed individuals may apply for 7(a) loans. It is recommended that any businesses that require case assistance to retain employees and pay for critical health care benefits contact their preferred SBA lender as soon as possible.

Under the Small Business Debt Relief Program, the SBA will assist with SBA loan payments, including all principal, interest and fees for a period of six (6) months.

Under the Economic Injury Disaster Loans and Emergency Economic Injury Grants Program, small businesses are eligible for a $10,000.00, and the funds must be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

This article is merely a brief of the Federal assistance. Please visit the SBA on the Web for more detailed information, or visit: https://www.sba.gov/page/guidance-businesses-employers-plan-respond-coronavirus-disease-2019-covid-19?utm_medium=email&utm_source=govdelivery and https://www.sba.gov/funding-programs/loans

Northshore Legal LLC of Lynnfield, MA is a boutique law firm and is led by Stefan E. Cencarik, Esq. We specialize in residential and commercial real estate, business transactions, corporate law, and probate. We can be reached at 781-463-6063 or consultation@northshore.legal.

MA Division of Banks Advises Lenders and Services to Offer Mortgage Relief

Due to the outbreak of of the novel coronavirus (COVID-19) in Massachusetts, the Division of Banks has strongly encouraged and advised all Banks, mortgage servicers and mortgage lenders to implement homeowner relief programs to assist real estate owners in Massachusetts who face financial difficulty. The main objective is to ensure that the financial service industry provides programs and assistance to homeowners so that they may avoid the eventual loss of their family home. (These guidelines are not mandatory at the time of this Blog entry). The recommendations include the following:

• Postponing all real estate foreclosures for a period of 60 days;

• Waiving late payment fees and any online payment fees for all monthly mortgage payments for a period of 60 days;

• Forbearing mortgage payments for 60 or more days from their monthly due dates;

• Refraining from reporting late payments to consumer reporting agencies for 60 days;

• Providing loan modification assistance to mortgage borrowers;

• Ensuring that the servicing operations are active and that homeowners can reach the lender with questions and concerns;

• Contacting Borrowers to ensure that they are aware of any mortgage relief options.

Northshore Legal specializes in commercial and residential real estate, and represents clients throughout Eastern Massachusetts. We will keep you updated on the developing events concerning the current pandemic.

1031 Exchange Deadline Can Be Extended Due to COVID-19

Due to the outbreak of of the novel coronavirus (COVID-19) in the United States and Massachusetts, the IRS has issued tax relief Notice 2020-18 pursuant to the President’s issuance of an emergency declaration. The IRS Notice postpones the due date for filing Federal Income Tax returns and for making Federal tax payments to July 15, 2020. Returns and payments were due on April 15, 2020.

This is good news for real estate investors in Massachusetts that are presently engaged in a 1031 exchange transaction. For those real estate investors that are subject to an exchange period deadline of April 15, 2020 it is possible and advised to take advantage of the 90 day extension. If you closed your relinquished property between October 18, 2019 and December 31, 2019, it is now possible for you close close your replacement property by July 15, 2020. If you are an real estate investor and have questions about your transaction, please contact one of our Lynnfield, Boston area real estate lawyers at 781-463-6063.

Obtaining a Smoke / Carbon Monoxide Certificate during the COVID-19 Pandemic

For residential real estate transactions in Massachusetts, the parties must obtain a certificate of inspection from a local fire department indicating that the property has been equipped with functioning and adequate smoke and carbon monoxide detectors. Specifically, MG.L. ch. 148 s. 26F mandates that the Seller in any residential real estate transaction in Massachusetts equip the property with smoke and CO detectors, and obtain certification from the local fire department. It is customary for a residential real estate attorney at any closing to receive the original certificate of inspection from the Sellers or the Listing Agent for the Seller prior to or at closing. Otherwise, the assigned attorney, as settlement agent, will suspend or reschedule the closing.

Due to the outbreak of of the novel coronavirus (COVID-19), many local Fire Departments have suspended inspections for the installation of approved smoke and carbon monoxide detectors. On March 20, 2020, Governor Baker issued an Executive Order permitting the deferral of smoke detector and carbon monoxide alarm certificate inspections as required under Sections 26F and 26F½ of MG.L. ch. 148 so long as:

1. The Parties to the sale or transfer have agreed in writing that the buyer assumes responsibility for equipping the property with approved smoke detectors and carbon monoxide alarms.

2. The buyer agrees as a condition of taking title to equip the property with approved smoke detectors and carbon monoxide alarms immediately upon taking title.

3. An inspection as otherwise required under sections 26F and 26F½ occurs no more than 90 days after the state of emergency is lifted.

This Executive Order allows parties to shift the burden of installation and inspection to the Buyer, and defer such until after closing. However, Buyers and Sellers of real estate in Massachusetts should be aware that there are costs associated with the certification process and purchase of the detectors. It is recommended that parties speak to their real estate attorney to discuss a credit from the Seller to the Buyer to cover these costs, and a holdback or escrow from the sale proceeds to cover these costs. The Executive Order makes no mention of cost shifting and this can be an important issue for all parties.

Tenant Considerations in Commercial Real Estate Purchases

Financing non-residential real estate and investment properties that are occupied by tenants create numerous issues and considerations for the Buyer, Seller and Lender. Here is a brief overview of some of the issues and documents that need to be addressed prior to any commercial real estate transaction.

Collateral Assignment of Leases and Rents

Most, if not all, commercial lenders will require the Buyer to executed a Collateral Assignment of Leases and Rents at closing. This document will provide the Lender a security interest in the future rents due from the tenants. The Buyer / Borrower’s rights as the landlord under the leases are assigned to the lender and permit the Lender to step in to collect rents if there is an event of default. This is a customary document in most commercial real estate purchase transactions that are financed.

Estoppel Certificates

Estoppel Certificates are typically requested by a Buyer from Seller that provides a certification concerning the material features and issues of the landlord-tenant relationship. These certificates will confirm the terms of lease, including its term, amount and payment of base and additional rent, and security deposit amounts. It will also confirm that there is no default of, or modification of the lease. The Certificate will also confirm whether the tenant has any claims against the Seller / Landlord. These certificates are crucial since it will confirm the expectations concerning the lease agreement and preclude the tenants from raising unmentioned or unliquidated claims against the new landlord / Buyer.

SNDAs

A subordination, non-disturbance, and attornment agreement, a/k/a/ "SNDA," will define the parties rights between a Lender and the tenants in the event that the Landlord / Buyer defaults on the loan obligations. By providing a lease to a tenant that predates the recording of a mortgage, a landlord creates a leasehold and those interest may take priority to a new lender and mortgagee. So, a lender will request that a tenant subordinate its interest to the mortgage and the Lender will be able to terminate the lease under a power of sale during a foreclosure. The non-disturbance provision provides that if the Lender accepts title to the property at foreclosure, it will not interfere with the tenant’s use and possession (granting a right of quiet enjoyment) so long as the tenant is not in default. Finally, attornment obligates the tenant to recognize the Lender as the new landlord in the event of a foreclosure. This is a customary document that is designed to protect the rights of the Lender in the event of a default.

1031 Exchanges: A Primer

A 1031 Exchange is a real estate transaction that permits real estate investors to sell investment property and use the funds to acquire a replacement property without having to pay capital gains tax at transfer. This type of exchange is method of deferring tax that is governed by Internal Revenue Code Section 1031, and is related rulings and regulations. There are several strict rules for compliance in order to qualify for a 1031 transaction, and it is crucial that you hire an experienced qualified intermediary and agent to assist you with this process. A real estate investor is unable to perform these tasks itself.

The subject real estate must be used in a trade or business or for business, and the replacement property must be “like kind.” First, the relinquished and replacement properties must be used in a trade or business, or for investment purposes. In other words, conducting valid business operations on the property or renting property to tenants is acceptable. Second, the relinquished and replacement property must be “like kind,” which is broadly interpreted to include properties as previously described.

Before entering into a purchase and sale agreement, it is recommend that you retain a professional 1031 exchange provider that will serve as a qualified intermediary. This organization will ask that you enter into an exchange agreement and will hold the proceeds of your relinquished property in escrow until the time you need to pay for the replacement property. These escrowed funds cannot be access by the Buyer / Seller, and can be used to pay the existing liens and closing costs of the relinquished property, and purchase price and closing costs for the replacement property.

After the closing for the relinquished property you will have forty-five (45) days to identify the replacement property that you will purchase. You may initially identify up to three (3) replacement properties. If you designate multiple properties, you can use your sale proceeds and tax deferred gains to purchase multiple replacement properties. Within one-hundred and eighty (180) days of the closing date for the relinquished property, or before the due date for the investor’s tax return. Here, it is important to note that if you close the relinquished property after October 17 and before December 31, you will have less than one hundred and eighty (180) days to close on your replacement property. Here, the timing of the sale of your outbound investment property, and purchase of replacement properties is absolutely crucial. In addition to retaining a professional qualified intermediary, it is important to line up replacement properties prior to the sale of the relinquished properties, and to watch the calendar when scheduling closing dates late in the year.

If you are a real estate investor, and require require assistance in your real estate transactions, please contact Northshore Legal at 781-463-6063.

Kick Out Clauses in Residential Massachusetts Real Estate Transactions

In a white hot real estate market, Sellers of residential real estate on the Northshore of Massachusetts have adopted a new contractual provision to counter a Buyers’ request for an existing home sale contingency. Typically, a potential Buyer of a residential property that presently owns another property, will be required, for financial reasons, to sell their existing home in order to purchase the replacement home. The reason is simple: Most homeowners do not want to carry the mortgage, property insurance and taxes for two homes, and any mortgage lender will require that Buyer sell the existing home to satisfy loan underwriting requirements.

Therefore, Massachusetts homebuyers that are looking to upgrade or downsize their home, will likely request that a Seller of real estate agree to a prior sale contingency. In other words, if the Buyers fail to sell their existing residence prior to the closing date or some other date set by the parties, the Buyers then may terminate the transaction and receive a full refund of their deposit.

Sellers are now countering a home sale contingency by inserting their own contingency clause in a purchase and sale agreement. A “kick out” clause will permit a Seller to continue to market the property for sale to other prospective purchasers while the property. If the Sellers receive an offer for an amount equal to or that exceeds the existing and agreed to purchase price (and no prior sale contingency), the Sellers will then have the right to demand that the Buyers waive the home sale contingency, otherwise, the Sellers may terminate the transaction. In this instance, the kick out clause will provide the Sellers an escape hatch if they are able to find Buyer for the property that are willing to pay a greater price and waive any home sale contingencies. This is not a desirable position for any homebuyer since the Buyer will not only lose the right to purchase the property, they will likely have to start the home buying search again and may lose their interest rate lock set by the lender.

If you are presently negotiating a purchase and sale agreement it is important that you retain experienced legal counsel that is skilled at limiting the scope and applicability of kick out clauses. Northshore Legal LLC has seen many poorly drafted kick out clauses that impose strict limitations on Buyers and provide the Sellers with expansive rights. These kick out clauses often appear in counter offers from the Sellers to the Buyers on Standard Offer to Purchase Real Estate forms, and are often drafted by real estate agents that have little experience in such clauses. If you received a counter offer that contains a kick out clause and require assistance with your real estate transaction, please contact one of our attorneys at Northshore Legal at 781-463-6063.

What are my options if a Lis Pendens is Wrongfully Filed Against my Property?

A Lis Pendens, also known as , is a legal notice approved by a Massachusetts judge that is recorded at the Registry of Deeds to which the related property is situated. This legal notice provides record notice that there is a legal action pending against the real estate at issue and/or named in the lawsuit. A Lis Pendens may only be allowed if the applicant makes a claim of a right to title to real property or the use and occupation thereof.  The Lis Pendens differs from a real estate attachment in that the Lis Pendens relates to title or occupation of real property and an attachment is a remedy to secure assets to satisfy a potential judgment or prohibit transfer or concealment of property that could satisify a judgment. 

The effect of the Lis Pendens is to "cloud" that title to the property, or otherwise, create a defect in title that will discourage any potential purchasers or transferees from accepting title to the property.  It can also interfere with and prevent a property owned from obtaining a loan whereby the property is being used as collateral for the loan (mortgage). In almost all instances, no purchaser of real estate or lender will complete a transaction and accept title with a legally valid Lis Pendens recorded against the property.  In other words, the title will need to be cleared and the Lis Pendens released before a property owned can warrant clear title to any prospective purchaser or mortgagee (lender). 

The pertinent Massachusetts statute that governs the use and application of a lis pendens is Mass.Gen. Laws ch. 184 s. 15.  The Statute sets the procedure and requirements for obtaining a Notice of Lis Pendens. In order to obtain a Lis Pendens, an applicant must file a verified complaint; identify the real estate and property owners; and describe a claim that relates to title or occupation of the real property.  

What are your options if a Lis Pendens is Wrongfully Filed Against your personal or business property?

In the instance of a Notice of Lis Pendens that was inadvertently filed against a property, a qualified real estate attorney can help you clear title.  There are some cases where the property address or recording information was misidentified by the lis pendens application; an old title abstract was relied on; or there was some other type of clerical error either in drafting or recording the notice.  In these cases, the applicant will release the notice voluntarily.  

In other instances, an applicant who has deliberately an/or has in bad faith filed a notice of Lis Pendens against a property is subject to civil liability. A respondent to a Lis Pendens may file a special motion to dismiss on the basis that it is frivolous. "The special motion to dismiss shall be granted if the court finds that the action or claim is frivolous because (1) it is devoid of any reasonable factual support; or (2) it is devoid of any arguable basis in law; or (3) the action or claim is subject to dismissal based on a valid legal defense such as the statute of frauds." M.G.L. ch. 184, s. 15(c).  If the Court grants the special motion to dismiss, it will dissolve the Lis Pendens and may award legal fees and expenses (including recording fees) associated with the dissolution of the notice.  Legal fees may be awarded for any discovery (including document requests, interrogatories or depositions) related to the dissolution of the notice.  

If you have questions about a Lis Pendens or one was recorded against your property, contact one of our Lynnfield Real Estate and Litigation lawyers for a free consultation.   

Rent, Expenses and Term – Fundamental Components of Commercial Leases

          When entering into a new commercial lease, it is essential that you engage a commercial lease attorney to assist you in reviewing and negotiating the important terms.  This blog article will highlight the most fundamental lease component base rent, expenses that are often passed on to the tenant, and the term of the lease. 

          The most common factor in evaluating the cost of a commercial lease in Massachusetts is the base rent, which is most commonly assessed base on square footage of the rental property.  One should also pay attention to any adjustments in rent per annum.  Once a business owner determines an acceptable rent amount, he/she should consider the rent adjustments and additional expenses that will be associated with renting the space.

          The most common type of commercial lease is the triple net (NNN) lease that will shift the financial burden of property taxes, insurance and common area maintenance (CAMS) and/or operating costs to the commercial tenant. However, triple net leases can also contain additional provisions that expand the scope of tenant financial liability on the leases.  In some cases, commercial landlords may shift the entire burden of property maintenance, repairs, upgrades, and upkeep on the commercial tenant.  This means that the tenant will be responsible for cleaning, snow removal, landscaping, repairs to mechanical systems, and other common every day repairs.  Here, liability may fall on the tenant for the entire building and land, or just a portion thereof, or solely the interior of the property.  In many instances of shared commercial space, commercial landlords will charge the tenant operating costs or CAMS, and maintenance and repairs will be included in the lease.  In this case the tenant will pay its pro rata share of the common expenses, and will not have to bear the entire burden of such expenses.      

           When entering into a new commercial lease, one of the most important features to consider (other than the price) is the term of the commercial lease. In this case, it is important that you consult a Boston area commercial lease attorney to help you with the various issues and considerations that can arise when evaluating a lease term.  In many cases, commercial landlords will offer better rent terms with a longer term of tenancy.  However, this is not a general rule, and a business owner should consider their medium and long term goals for growth prior to committing to a location.  Commercial leases are excessively difficult to avoid for tenants in Massachusetts without significant financial penalty or litigation, so it is best to determine whether the needs and plans for the business align with the term of the proposed tenancy. Additionally, a prospective tenant should conduct significant due diligence prior to entering into a long term lease, including a inspections of the physical condition of the building, assessment of traffic and parking, review of local bylaws, regulations and permit/license requirements, and a review of the surrounding area for its character, propensity for crime, ongoing development, and other features of the area.

            If you are a business owners in Eastern Massachusetts who requires assistance from a commercial real estate attorney that is experienced in drafting, reviewing, negotiation and consulting with clients on commercial leases, you may contact the Law Office of Stefan Cencarik for your leasing needs.  Our commercial lease attorneys are able to help guide you through this process and we can leverage our network of professionals to assist you in evaluating your next business location.

Commercial Leasing for New Businesses

When considering a new commercial lease for your business, it is essential that you assemble the right team to assist you with assessing the value of the location and contract, negotiating and reviewing the lease terms, and assessing other important features of the building and location.  In addition to using the services of a commercial real estate broker and/or commercial leasing specialist, it is crucial that you engage a commercial lease attorney.  An attorney that is experienced in drafting, reviewing and negotiating the different material terms and clauses in a commercial lease can help ensure that you sleep better at night after signing a long term contract for new office or facility.

A commercial lease is a legally enforceable contact that will span a considerable amount of time, such as five years, and will becoming a significant part of your operating budget.  A commercial lease is unlike a residential lease in Massachusetts as the residential tenant protections do not apply in this area.  In this regard, commercial leases are regarded strictly as a business transaction and the commercial landlord is providing a significant amount of authority and rights over the commercial tenant.  There are many clauses concerning default, destruction of the property, base rent adjustments, maintenance expenses, and others that can shift financial and legal responsibility from the landlord to the tenant.  These clauses become traps for the unwary and the involvement of a commercial lease attorney can help you avoid these trap and put your business on the path to success. 

The Law Office of Stefan Cencarik, PLLC and its commercial lease attorneys (commercial real estate lawyers) are adept at drafting, reviewing, negotiating and consulting with clients on commercial leases.  We can also leverage an experienced trusted professional network so as to recommend the right consultant and brokers to help you find, select, and evaluate your next commercial lease property. 

Selling Real Estate Without a Broker - Considerations and Pitfalls

With the real estate market in Eastern Massachusetts favoring sellers of real estate, we have noticed a trend and tendency of some sellers to list their property for sale by owner and avoid the use of real estate brokers all together.  The simplest explanation for this decision is cost.  Many sellers realize that they can avoid a 2.00 - 2.5% commission to a listing broker if they consummate a sale without assistance.  But what is the true "cost" and what are the disadvantages of not using a listing broker for a real estate sale? 

Statutory, Regulatory and Common Law Compliance - Real estate brokers know exactly the types of Massachusetts statutes and regulations that must be satisfied during each transaction. Real estate brokers are also trained on the various types of common law issues, such as misrepresentation or breach of contract, that can arise during a transaction. And they have been trained on how to avoid those types of common law liability. If you are not using a real estate professional, and unless you are an attorney or real estate professional yourself, you will not be able to satisfy and comply with the numerous laws and regulations associated with real estate transactions in Massachusetts. And in that instance, you are exposing yourself to liability.  

Market Valuation - What is your property worth and what purchase price can you reasonably expect to receive?  Finding the right listing price is crucial. Brokers have the skills and resources to help advise you on the realistic value of your property, and a listing price that will attract several ready, able and willing buyers.  It is common for homeowners to over estimate the value of their homes based on their own personal attachment and knowledge of the property. A broker can provide you with a neutral and experienced third party opinion on the value of your real estate.  If you list your property too low, then you are not maximizing the sale price. If you list your property too high, then you will scare off buyers, particularly the ones who are taking out a mortgage and are responsible for a 20% down payment.  In this instance, the value of a broker should not be underestimated. 

All the "little things" - Who is going to collect signatures and deposits for the purchase and sale agreement? Who will make the mandatory disclosures and obtain the required certificates for closing? Who will coordinate inspections, viewings, and walkthroughs?  Who will serve as tour buffer and advocate if your transaction enters troubled waters? Who will greet potential buyers and handle inquires at open houses? Do you have an expansive and established network in the area that you are selling your home that you can market to? This list is limited, and can very extensive, and all the "little things" that a real estate broker will do for you to ensure that you close on-time are invaluable. 

The above list is not an exhaustive description of all the benefits of real estate brokers in transactions. From a legal observational standpoint, we have noticed a trend that real estate brokers provide tremendous value in each transaction and help smooth the process until closing. If you are preparing to sell your home, and would like to consult with a real estate lawyer, please contact us at 781-463-6063.  

Concerns for the First Time Home Buyer

With the short supply of turn key "starter" two and three bedroom homes for sale in Eastern Massachusetts, first time home buyers are now faced with new pressure to quickly make an offer and get under contract as soon as possible.  It is understood that a first time buyer is eager to end the long and enduring search for a new home, however, failure to pay attention and overlook important pitfalls and traps may lead to long term issues.  

Inspections - We are hearing more and more often that buyers are willing to waive inspections and blindly accept the condition of the property being purchased "as is." Unless you are a third generation trades person or have substantial experience in inspecting and renovating residential homes, it is highly likely that you will be unable to identify some serious, and expensive, issues with the property.  Waiver of inspections solely benefits the Seller in the transaction and provides no benefit to the buyer.  If you do not have the property inspected by a certified and qualified home inspector, you could inherit serious issues such that affect the building structure, mechanical systems, or cause other problems such as pest infestation, mold, or others. 

Repair Credits - If you are waiving inspections, and are not asking for credits to allow for the improvement or repair of certain features and systems at the property, then you will essentially inherit a liability for those items after the completion of the sale. It is common for purchasers to request that the sellers provide a credit to repair or replace, for example, a leaking roof, faulty electrical panel, non-functioning oil / gas boiler, rotted eaves-flashing-siding issues, and the like.  If you are not taking a credit at closing for these repairs, then your cost of purchasing the home will increase by the cost of these repairs. 

Short Closing Window - Unless you are paying cash for your new Massachusetts real estate purchase, you should not agree to complete the sale in less than forty-five days. Your mortgage broker and/or lender will be hard pressed to complete and clear your loan to close on short notice.  Your real estate attorney, who will be abstracting and reviewing your title, will also have to place a rush order on all work, and may have difficulty obtaining all items necessary to close.  In other words, if you agree to a short deal time frame, it is entirely possible that you will have to request an extension from the Sellers. Your mortgage lender and closing attorney cannot control all contingencies that can potentially extend the deal time frame. There are limited circumstances and contingencies that allow extensions of the time for performance (deadline to close), and you may end up risking your deposit if you encounter sellers that are unforgiving and who will not agree to extension. 

These are some initial concerns for a first time home buyer of real estate in Massachusetts. Our firm represents buyers and sellers of real estate in Essex, Middlesex, and Suffolk counties, including the cities and towns of Boston, Peabody, Danvers, Lynnfield, Wakefield, Woburn, Andover, Burlington, and others.  We will update this blog article shortly with additional concerns and recommendations for the first time home buyer.  If you are purchasing a new home, please feel free to consult with us anytime at 781-463-6063.