When it comes to commercial real estate, we help our clients negotiate the terms of a lease and review contracts for the purchase and sale of property, but we also help guide and counsel our commercial clients when it comes to change. Specifically, change of their role.
Owning a commercial property offers many benefits, including being able to legally make changes and improvements to the property and ‘calling the shots’ to use the property as you desire.
Have you thought about leasing part of a building you own? Or selling your commercial property and leasing instead? While it may not seem significant, going from being an owner to being a landlord is a significant change in mindset as well as contractually; the same is true for going from owning a building to becoming a tenant. The rules change and WCN commercial real estate attorneys help our clients through this change in mindset and change in role and degree of flexibility.
At WCN, our commercial real estate attorneys advise and counsel our clients through this time of change to protect your business interests, achieve your goals and to adhere to the contractual obligations. We best serve our clients when engaged early in the process; ideally before any agreements have been finalized so we can best counsel you and, where possible, negotiate on your behalf.
Details in contracts are always important and the same applies to commercial real estate contracts including lease terms and P&S agreements. Whether transitioning from owner to tenant, or owner to landlord, details matter. All these changes are significant, and our commercial real estate team is experienced and committed to helping you understand and navigate your new role.
Here are three client examples of how WCN’s commercial real estate lawyers helped clients as their roles changed.
Example 1 – Multi-generational business – owner occupied to tenant
An existing WCN client with a family business was now being run by a new generation. They were in an owner-occupied property for a significant period until they sold it to a developer. The sale was completed before our team at WCN was brought in to negotiate specific details that were crucial to the family business production.
Many details may affect a lease and now as a tenant, you are no longer in charge of operating the building as you always did when you owned the building. As a business owner, you may have specific elements of your business that are essential to your operations that need to be discussed and addressed in a lease. In this example, the operations of the business relied on materials that were not acceptable to be used or stored on the property in the terms of the lease. Whether it be materials, environmental challenges or specific access needs, at WCN we negotiate lease agreements to support you.
When selling a property and becoming a tenant, the rules automatically change and sometimes moving into a new space is the right choice. We worked with the client and found them another suitable commercial property to lease and negotiated the lease. Please read more about this case and how the company has landed on a great property that fits their business needs. We always encourage our clients to share their intentions with us early in the process, so we can serve them most productively.
Example 2: Owner Occupied to Landlord
Another client has a unique business operating in an industrial location. This client owns the entire building and wanted to lease the bottom floor to a tenant while excluding one small corner in the back of that floor. As real estate attorneys, we recognized the pitfalls and liability issues of such an arrangement and we advised the client to proceed by leasing the whole bottom floor and continuing his business solely on the second floor.
We worked with our client to draft the lease for the entirety of the first floor of the building. The lease also provided the tenant with parking spots right outside the building. Early into the lease, the landlord parked a shipping container in the tenant’s parking spots as they were accustomed to utilizing the building and parking lot as they wished and without constraint. This was a breach of the terms of the lease and created some friction between the tenant and the new landlord. Our advice to our client was to remove the trailer and we reiterated the responsibility of upholding the terms of the lease agreement as the landlord. We entered further negotiation with the tenant and found a solution that would work for the tenants parking and the landlord’s storage trailer.
A goal of ours is to help you maximize any property you have. An example is if you have a vacant lot overnight on your property it might be a great space for landscapers to store their trucks. If there is an agreement, the trucks are gone at seven in the morning and return at six in the evening, which may work for your business. As real estate lawyers, we help with constant communication and provide legal reasoning with each step. We have our clients’ best interest in mind and work to support them and their business.
Example 3: Owner Occupied for 150 years; then becomes a tenant
A third recent example was from a client whose company owned a building in Boston for 150 years but had to move as they needed a larger loading dock onsite. They ended up moving into a building in South Boston with the help of WCN by reviewing and negotiating the lease.
As part of their marketing, the company would host recitals in its old space and decided to do the same in South Boston. In order to allow after-hours access to the public at the new location, the company would prop-open the front door to the building and welcomed anybody in to begin listening to the musicians. This was not an accepted in the term of the lease and therefore was a breach of the lease agreement. The client was upset that they would not be allowed to continue their marketing program and called us. We engaged with the landlord and negotiated an arrangement that was acceptable to both parties. It is a significant change from being an owner to becoming a tenant, and our team best serves you by being in the conversation at every step of the process, knowing your goals and understanding your business.
Our team at WCN are experienced real estate lawyers who have worked with most landlords in the Greater Boston area. We know how to advise our clients on lease terms and negotiations and what situations will be best for them and their business.
Whether you want to learn how to maximize generating income for your property or are becoming tenants for the first time, the real estate team at WCN is here to serve you. Please contact us if you have any questions about your current situation or a new property.
Peter Covo is a Partner at WCN and leads the Real Estate Practice.
This article is not legal advice and should not be taken as such or relied upon as legal advice.