Colorado & Utah Real Estate Attorneys | Sternfield Law

Real Estate Articles

Articles about a wide range of real estate law topics, including leasing, subleasing, economic development and residential real estate.

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How a good lease saves time and money

The Landmark at Greenwood Village

The Landmark at Greenwood Village

It is amazing what a good lease form can do. It reduces review time and cuts legal fees. It is a pleasure to read (at least when you are a lease geek like me), and ultimately it will make enforcement and interpretation of the lease much easier – also reducing future legal fees.

I was recently asked to review a 90-page retail shopping center lease on behalf of a tenant. I thought “90-pages, that is ridiculous!” I have read many commercial leases since I first started practicing real estate law in 2000, but this was one of the longest, particularly given that the property to be leased was less than 2,000 rentable square feet.

I grabbed my coffee and comfortable sweater and settled in for the long-haul.

Retail Shopping Lease

Excerpt from an especially well-written retail shopping lease.

I began reading this lease, and to my surprise, the writing was beautiful. Seriously. No typos, the internal section references were correct and the business terms reflected the letter of intent. And the best part – the basic lease comments that all tenants’ lawyers make (at least I hope they do), were already included. No need to spend time drafting lengthy paragraphs explaining things like why at the end of a lease year, the tenant should receive a credit for its over-payment of operating expenses, or that the tenant should receive rent abatement if utilities fail for more than 3 days.

In a landlord-friendly, and might I add, typical, lease these provisions are not givens. However, in this atypical 90-page lease, the basic comments I normally spend a lot of time inserting, were already included. What a brilliant idea. Let’s just cut to the chase and actually spend time commenting on and discussing provisions that require negotiation.

Sure, I do not sound pro-lawyer (sorry to all you billable-hour fiends), but at the end of the day, when faced with an inordinately long document to review, I would much rather read something well-drafted, that assumes basic lease intelligence, eliminates the stupid “gotchas” and is just reasonable. Not only is this better for my client in terms of reduced legal fees, but it shows good faith on the landlord’s part and demonstrates the landlord’s interest in building a positive future relationship. It also sets the tone for negotiations, causing discussions to begin with both sides acting more reasonably.

If more landlords prepared lease documents this way, the world would be a better place.

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Can your home double as a vacation rental? A legal guide

Because of their close proximity to mountain resorts such as Snowbird, Alta and Park City, mountain homes along Utah’s Wasatch Front are often leased as a vacation rental.

Because of their close proximity to mountain resorts such as Snowbird, Alta and Park City, these mountain homes along Utah’s Wasatch Front are ideal vacation rentals.

I recently spoke with a friend about my family’s plans for taking a vacation. I lamented the difficulty of traveling with small children. It can be so daunting, sometimes we end up not going anywhere. So she suggested I search online for a condo or a house to rent where we could have a kitchen and separate bedrooms. Great idea.

Of course, being a real estate lawyer, searching for a vacation rental got me thinking – how many people who have posted their homes for rent have done their due diligence? What if renting their home for the weekend is against the law? [Read more…]

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5 reasons why a wind farm development can be a complex transaction

1. It’s usually on someone else’s land. Whether the wind farm development will be located on agricultural land, mining property, government land or any other type of real property, a developer needs the right to use the land to house wind turbines, transmission lines and related wind energy facilities. [Read more…]

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What is an SNDA and should you sign it?

SNDA is the acronym for Subordination, Non-Disturbance and Attornment Agreement. It generally arises in the context of a lease agreement for commercial property.

Commercial Office BuildingMost commercial leases provide that the lease is automatically subordinate to all liens and encumbrances placed on the leased premises by the landlord or landlord’s lender, such as mortgages and deeds of trusts. Regardless, when a landlord obtains financing and uses the leased premises as collateral, the landlord’s lender may require the tenant to sign an SNDA. It is also common for commercial leases to require tenants to sign documents necessary to effect subordination. As such, tenants may have little choice regarding whether to sign a standard SNDA, but it is helpful to understand their significance in reviewing them.

As its name implies, an SNDA contains three primary components:

(1) Subordination, meaning the tenant agrees that its leasehold interest, despite the lease effective date, is junior in priority to the lender’s lien. Therefore, the lender has greater freedom to exercise its remedies (such as foreclosure) in the event the landlord defaults under its loan agreement without much concern for tenant’s rights, except as provided in the SNDA or related agreements and as otherwise required by law.

(2) Non-disturbance, which provides that if the lender must foreclose upon its lien or otherwise take possession of the leased premises after the landlord defaults under its loan agreement, the tenant’s leasehold interest will survive the foreclosure or other action and the landlord will continue to recognize the tenant’s rights and interests under the lease.

(3) Attornment, which means that if the lender takes ownership or possession of the leased premises following an event of default by the landlord under the loan agreement, tenant agrees to look to (or “attorn to”) the lender as the landlord under the lease and the lender/landlord will, in turn, perform certain duties of the landlord under the lease, with limitations.

Generally, financial institutions have standard forms of SNDA and a tenant’s ability to modify the form will depend on the particular tenant’s bargaining power. In this economic climate, many tenants request SNDAs upon entering into commercial leases to obtain the benefits of the non-disturbance language in the event the landlord defaults under its loan. While SNDAs do contain numerous lender-friendly provisions, the non-disturbance clauses are likely reason enough for tenants to sign them. It is advisable to seek review of an SNDA by competent legal counsel to help navigate the potential pitfalls.

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Commercial leasing & subleasing to distressed tenants: the dangers

In the current economy there are opportunities to sublease office space at favorable rates and terms.

When it comes to commercial leasing, the challenge for potential subtenants is to avoid the dangers of subleasing from a distressed tenant by asking specific questions, and also strengthening the language in subleases and related documentation to protect the subtenant’s interests. [Read more…]

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What is an ALTA Survey?

An ALTA real estate survey (or ACSM Survey) is a land survey prepared in accordance with the standards adopted by the American Land Title Association and the National Society of Professional Surveyors (a member organization of the American Congress on Surveying and Mapping).  The most recent version of these standards was adopted in 2005.  [Read more…]

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