There is no “standard” leasing transaction since each tenant and each landlord has their own concerns and issues dealing with property. If a landlord proposes a lease, chances are that it is biased in their favor.  Even so-called commercial form leases, such as those by the American Industrial Real Estate Association, have their biases in favor of the landlords. Furthermore, all terms are subject to negotiation, not just the base rent and term provisions.

Examples of issues on basic rent terms are whether there are cost of living increases on the minimum rent or if they have “caps”; the computation of common area and maintenance (CAM) charges and limitations, the computation of percentage rent terms and when it is paid.

Other economic terms, such as property tax, security deposit, responsibility for maintenances and provisions regarding continuous operation exclusivity, and improvements, are all open to negotiation.Even the so called “boiler plate” terms may have an economic impact and should be reviewed and negotiated, including such terms as default provisions, property damage, insurance, subordination and relocation provisions. Therefore, we strongly advise that any lease document be thoroughly reviewed. 




2.  I am selling my house “as-is” and the buyer knows he is getting a great deal on it. Since it is being sold “as-is,” do I have to disclose anything about the property? What happens if I don’t?


     a.   A real estate Transfer Disclosure Statement (TDS) is required to be given from the seller to the respective buyer in nearly all real estate transactions, even if the property is being purchased in “as-is” situation. Rather than viewing the TDS as a “chore” or “obligation,” we recommend that you think of it as an “insurance policy,” and a means of protecting you, the seller, from lawsuits alleging fraud. You should list every known defect or condition on the property, and then the
buyer cannot later allege that you hid those facts from them. If you fail to disclose those items that are required in the form, you may be sued for damages, including punitive damages for fraud, or the buyer may seek to undo the transaction.
  
   b.  In addition to the TDS, you are also required to make disclosures regarding natural hazards, Mello-Roos bonds and taxes, ordinance location, window security bars, seismic activity, smoke detectors, lead-base paints, environment hazards, and such disclosures as required by local rules and regulations.  Your real estate broker or agent should be able to assist you in providing you the proper forms for disclosure.




3.  As a tenant, I want to stay at my current location, even if there is a chance of buying the property.  Can I get a right of first refusal or an option? What is the difference?


a.  Possibilities for negotiation include a right of first refusal, a right of first offer, and options. None of these are required to be given and usually must be requested by the tenant.  A right of first refusal gives you, the tenant, a right to match any offer that is given to the landlord for the purchase of the property, or in some cases, the right to extend the term of your lease or lease adjacent property.  The price is set by the third party and you are given a limited time in which to respond.  Assuming a neutral third party has made the offer to the landlord, the price is often equivalent to the fair market value.  This is beneficial if you don’t know, or can’t reasonably predict what the purchase price or lease price may be in the future. 

b.  A right of first offer is often preferred by landlords, especially in office complexes. This right merely gives the tenant the first opportunity to purchase the property or lease specific space before it comes available to third parties.

c.  An option to either purchase property, extend the lease, or expand the lease premises is an agreement negotiated in advance which should set forth the terms of when it must be exercised and the major terms governed in the option period such as rent, term, etc. The mere granting of an “option” without detailing any of the economic terms is really an option to negotiate in good faith but still requires that the landlord consider the tenant’s proposal before looking to third parties.  However, problems may arise if an option price is set too high and the landlord holds the tenant to it.




4.  I am selling my property, and my broker said he can cut me a better deal on commissions if he is allowed to be a “dual agent.”  Is this true?  Should I be concerned?

A dual agent may reduce his/her commission rate, and probably should, since they are representing both sides.  Even though it is legal to be a dual agent, Mr. Polamero thinks that dual agents have a serious and dangerous conflict.  Who do they truly represent, you or the “other guy?”  Do they want what’s best for you or do they just want a commission.  Would you hire one lawyer to represent both sides in a lawsuit?  Of course not.  It is not much different here.