All posts by Waltz, Palmer & Dawson

10 TIPS TO NEGOTIATING YOUR COMMERCIAL LEASE AGREEMENT

Finding a location can be one of the most stressful times for a business owner. Especially now that vacancy rates are so low. According to industry publications, industrial vacancies reduced further in the 3rd quarter of 2018 despite the number of newly completed locations following the construction boom of 2017.  Additionally, office vacancies decreased in the 2nd and 3rd quarters of 2018. This means that industrial landlords are back in the driver’s seat, and office landlords are not far behind.

 

In this Landlord friendly rental market, it is even more important to take the time to make sure that the lease is given a thorough review (preferably by an experienced commercial real estate attorney) prior to signing.

 

Below are ten (10) tips to help you successfully negotiate your commercial lease agreement.

 

TIP #1: USE A COMMERCIAL REAL ESTATE BROKER

 

Commercial real estate brokers can make the search for the ideal location easier; they are familiar with your area and can help you focus your search to only those locations that match your criteria. They know the landlords, understand local rental markets and know what is a fair price for the space you are interested in.  While you might turn to an attorney to negotiate lease language, you rely on your broker to negotiate essential lease terms such as rent, term, and security deposit.

 

TIP #2: REVIEW THE LEASE AGREEMENT AND CONFIRM THAT IT INCLUDES THE ESSENTIAL TERMS.

 

When reviewing the commercial lease agreement verify that it includes the basic terms and that they match what you have been previously told. Mistakes are often made and miscommunications can happen so it is important to make sure the lease correctly states the basic terms such as rent amount, rent due date and length or term of the lease. It is important the lease properly describes how future changes (increases/decreases) to the rent occur and that it contains a detailed and thorough description of the permitted use of the leased space. Most leases normally contain a termination clause but you may have to request that your attorney include language that describes what happens if you need to break your lease. If you have been told anything by the Landlord regarding the lease or the leased space including if the Landlord has promised to make any repairs or modifications to the location or the overall building (even those which are supposed to happen prior to move-in) is stated in the lease. It is surprising how often terms in the proposed lease do not match the terms the tenant was expecting to see.  A careful review can catch these inconsistencies before they become legally binding.

 

TIP #3: LOOK FOR ADDITIONAL PROVISIONS.

 

Your lease may include more detailed information than you were expecting, such as:

 

  • Additional Rent: There are a number of different kinds of rent that can be charged in a commercial lease; see item #5 below Often, a lease will require that you pay certain additional costs or fees on a monthly or annual basis.
  • Insurance Requirements: Your lease may require that you obtain certain levels of insurance or if you are required to reimburse the Landlord for the cost of his insurance. It is important that you speak to your insurance agent, both to verify that you have the required insurance coverage and to confirm the Landlord is not asking for too much coverage (i.e. increasing your insurance bills unnecessarily).
  • Signage: Were you counting on hanging a sign announcing your business? The Landlord may have restrictions on what can be displayed and where. There is also a chance that you may have to pay additional fees for advertising space. Pay attention to the types of signs you are allowed to display and where you are allowed to display them.
  • Hours: Your lease may clearly regulate the hours during which you are allowed to operate your business at the location.
  • Sublease: It should be very clear whether you are allowed to sublease and the requirements for doing so. It is important that you read the lease carefully as sometimes the Landlord is allowed to cancel the lease if you make a request to sublease. Other times, the Landlord will charge a fee or require you to cover their costs if you make a sublease request. Business owners need to keep the future in mind, if transferring the lease is key to being able to sell your business, you will want to make sure that you are able to sublease without negative consequences.

TIP #4: NEGOTIATE AWAY THE UNFAVORABLE TERMS.

 

The lease provided by the Landlord will (almost) always favor the Landlord. You should always review both the lease and any exhibits attached to the lease. Do not be afraid to ask for any changes that you feel are necessary to ensure that the lease is fair to both you and the Landlord.

 

TIP #5: DETERMINE IF THE LEASE IS A NET LEASE OR A GROSS LEASE.

 

It is important to understand if your lease is a “net lease” or a “gross lease.” In a “net lease” you are required to pay a portion of the operating expenses (including utilities, insurance and maintenance fees) of the property in addition to the monthly rent. This additional amount is usually allocated among the tenants on a pro-rata basis (often based on square footage).  In a pure “gross lease” you are only required to pay rent and are not responsible for any additional expenses. You may also have a “modified gross” or “cam stop” lease. These are leases that usually have a floor for expenses. This means that the cost for expenses in the prior years are incorporated in the rent so you only pay the Landlord more if those costs go up.

 

TIP #6: DETERMINE IF THERE ARE COMMON AREA MAINTENANCE FEES (CAM).

 

Common Area Maintenance (CAM) fees are expenses passed on to the tenants by the Landlord in a net lease. They normally include the cost of any maintenance around the property, such as parking lot maintenance, landscaping and janitorial services. It is important that your lease clearly specifies how the CAM fees are calculated as they will likely vary from year to year. If your CAM fees are based on the number of tenants, the percentage (%) of the CAM fees you are responsible for could increase if another tenant moves out or is evicted. If your CAM fees are tied to the square footage of the leased space, you will be charged the same percentage (%) every year regardless of who moves in or out.

 

TIP #7: FIND OUT WHO YOUR NEIGHBORS ARE…AND WHO THEY COULD BE.

 

It is important to know who your neighbors are as they can affect your business and could keep your clients away. For some businesses, it is important that the lease specifies the type of business that can and cannot rent nearby. When you sign the lease for your new daycare center, you might be unhappy to find out the next week that an adult bookstore is moving in next door.

 

TIP #8: KEEP AWAY THE COMPETITION.

 

The last thing any business owner wants is for a potential client to drive to their shop but at the last moment choose to go to a competitor instead (especially if that competitor is located right next door). You want to include a clause in your lease stating that the Landlord is restricted from leasing space to any business which competes with yours.

 

TIP #9: DO THE MATH BEFORE YOU SIGN.

 

Take the time to do the math and calculate all of the costs associated with the lease. As your lease is likely to be in effect for several years, you are making a big commitment and it is important that you are certain that your business can afford the rent, both this year, the next and the next. By identifying and then calculating all the costs you can reduce (possibly eliminate) any surprise expenses.

 

TIP #10: ASK FOR ADVICE.

Signing a lease agreement is a major commitment that lasts for years. It is not a decision that should be taken lightly. If you want to be certain that you fully understand what your lease says and the obligations it imposes upon you, or any other laws that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

To subscribe to our business e-newsletter, pleases send an email request to www.info@wpdlegal.com

 

SERIES LLC: WHO HAS THEM AND WHAT ARE THEY

shutterstock_161596511A Series LLC is a unique limited liability company which provides individualized liability protection to a number of sub-companies (series) operated by one larger company. Assets owned by the individual series are shielded from the risks and liabilities of the other series within the Series LLC.

It is easiest to imagine a Series LLC as one large company with several subsidiaries; each of which is separate and distinct from one another. The Series LLC is the large company and the series are the subsidiaries. Each series operates like a separate entity with a unique name, bank account and separate books and records. Each series has its’ own members and managers and can enter into contracts, sue or be sued and hold title to property (real and personal). The purpose of a Series LLC is to segregate risk within separate entities without having to set up each entity as a separate entity.

The Series LLC was created on the state level and is only offered by a few states. A list of the states which currently offer series LLC can be found below.

State Legal Authority Notes:
Alabama Code of Alabama Section 10A-5A-11
Delaware 6 Del. Code Ann. §18-215
Dist. of Columbia DC Code Ann. §29-802.06
Illinois 805 ILCS 180/37-40
Iowa Iowa Code Ann. §490A.305
Kansas Substitute H.R. 2207 (2012)
Missouri Mo.Rev. Stat  §347.186.1
Montana Montana Ann. Code §35-8-302 & 304 et seq
Nevada Nev. Rev. Stat. §86.296
North Dakota N.D. Cent. Code §§10-32-17.5, 10-32-48, 10-32-56.5.a,10-32-56.7. North Dakota allows series LLCs, but does not specifically provide for a liability shield between the different series.
Oklahoma  18 Okla. St. Ann. §§2005(B), 2054.4
Tennessee  T.C.A. §48-249-309
Texas Texas Business Organizations Code §§101.601 to 101.621, 21.152(A),(C),(D), 21.153(A), 21.361(A)(2)
Utah Utah Rev. Limited Liability Company Act §48-2c-606
Wisconsin Wis. Stat. Ann. §183.0504 Wisconsin allows series LLCs, but does not specifically provide for a liability shield between the different series.
 Wyoming  W.S. 17-29-211
Puerto Rico Puerto Rico Laws Ann. Title 14, §3426(p)

A Series LLC can offer flexibility but is not the answer for every business. An attorney should conduct an evaluation to determine if a Series LLC is right for your business. Should you have any questions about setting up a Series LLC, or any other law that may affect your business, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services.  Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

Child Custody

SOCIAL MEDIA CAN IMPACT YOUR CHILD CUSTODY CASE

Child CustodyFacebook, one of the most popular sources of social media, is used by more than a billion people every day. Many people communicate with friends and family through Facebook instead of writing, texting or telephoning. It’s a valuable social media source for communication, but it can also be a source for gathering useful evidence in divorce and child custody cases. A child custody lawyer can provide important legal information that will help to avoid social media impact on a child custody case in Illinois.

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SO YOU HAVE A WILL….THINK PROBATE WON’T BE NECESSARY?

shutterstock_198721535Think again.  By definition, “probate” is the legal process of proving and administering a Will in court.  The administration process includes settling all claims against the deceased person (the “Decedent”) and distributing the Decedent’s property as provided in his/her Will.

A Will only disposes of assets that were titled in the Decedent’s name at the time of death (referred to as “probate assets” or “probate estate”).   Assets that have a surviving joint owner on title or are payable to someone by way of a beneficiary designation are not probate assets.  If a Decedent’s probate assets total more than $100,000 in value, or if the Decedent owned any real estate in his/her name alone at death, then probate will likely be necessary to transfer such assets to the beneficiaries named in the Will.

Having a Will is definitely better than not having a Will, as it makes the probate process much smoother and, usually, less expensive.  The provisions of the Will will govern how the Decedent’s probate assets are distributed and who is in control of the administration process.  On the other hand, if the Decedent did not have a Will, then he/she would have died “intestate” and his/her probate estate would pass according to Illinois statute.  The statutory distributions to the Decedent’s heirs may be, and often are, very different from what the Decedent would have wanted to happen to his/her estate after death.

Thus, at minimum, you should have a valid Will which designates: (1) who will be the Executor, and waives the requirement that the Executor purchase a surety bond, (2) who will receive your probate assets, and in what percentages, including any holdback or trust provisions for some or all of your beneficiaries, and (3) who will act as guardians of your minor children (if you have any at the time of your death).  You can also include specific instructions for burial or cremation in your Will.

In order for your Will to be recognized and followed by the Illinois probate court, it must be executed with the formalities required by Illinois statute.  If these requirements are not met, or if there are important provisions missing from your Will, then the terms of your Will will not be enforceable by your intended beneficiaries.  This could result in the wrong people inheriting your assets and administering your estate, the wrong people being appointed as guardians of your children (both for their care and for the management of finances for them), and unnecessary expenses being incurred.

If you don’t have a Will, or if you do have a Will and want to be sure that it is valid and covers all of your wishes, please call our at (847) 253-8800  office to schedule a no-charge initial consultation with one of our experienced estate planning attorneys.  We would be happy to discuss your concerns and goals with you, as well as review any documents that you already have, to help you determine what steps are necessary to provide for your family following your death.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services.  Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

SILVER LININGS FOR BUSINESSES FACING CLASS ACTION SUITS

pPaperBillsCloseup_10739684_mlSupreme Court decision suggests possible remedies employers can utilize to minimize or even potentially eliminate consumer class action lawsuits.

Many commentators have championed the recent ruling in Campbell-Ewald Co. v. Gomez, No. 14-857 as a win for consumers.  However, a closer reading of the decision shows it is not quite the home-run for the plaintiff’s bar and, through Chief Justice Roberts’ dissent, actually provides some silver linings to businesses faced with the class action lawsuits.

Campbell-Ewald, involved a rather large class-action lawsuit against a business involving unsolicited text messages often referred to as or “junk texts” that violate the Telephone Consumer Protection Act (“TCPA”).  The potential class was approximately 100,000 people who received these junk text messages from Campbell-Ewald which under the TCPA can cost an employer up to $1,500.00 for each single violating junk text message. The business then faced a very large multi-million potential judgment if found liable for violating the TCPA.

During the course of the litigation the business presented an “offer of compromise” agreeing to pay all damages, attorneys’ fees and costs to just the named plaintiff.  Essentially agreeing to give the plaintiff everything he was individually entitled to under the law. The named plaintiff rejected the offer of compromise and elected to proceed on behalf of himself and the other 100,000 class members.

For the purposes of this article we do not need to go into detail about the primary elements of the case – which involved whether the Federal court had jurisdiction to hear the matter.  This article’s focus is instead on an interesting concept raised in Chief Justice Roberts’ dissent.

In his dissent, Roberts stated that had the company actually deposited the amount stated in their offer with the Court itself then the Plaintiff would have no ability to proceed forward with the class.  As Roberts stated during oral arguments “If you’re getting everything you want, what is the case or controversy? What is the live dispute in which you have a personal stake? … You won’t take ‘yes’ for an answer!”  Roberts continued with this line of thought in his written dissent, stating “Although [plaintiff] nonetheless wants to continue litigating, the issue is not what the plaintiff wants, but what the federal courts may do,” Roberts said.  “Federal courts exist to resolve real disputes, not to rule on relief already there for the taking.”

While Robert’s dissent does not establish legal authority, it will be interesting to watch what happens when the next company faced with defending against a TCPA class action tests Justice Robert’s point on escrowing funds with a court to see if a lower court will agree that doing so eliminates federal jurisdiction for a class-action to proceed forward.

Should you have any questions about business class action law suits or any other law that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

To subscribe to our business e-newsletter, pleases send an email request to www.info@wpdlegal.com