Articles Posted in Real Estate

AdobeStock_219561092-300x200Tokenization is the process in which you replace sensitive data such as a credit card number with a non-sensitive equivalent known as a token, and real estate tokenization refers to creating tokens on the blockchain and assigning them to real estate properties that already exist or are currently under construction. Tokens may represent an interest in real estate but can also raise capital for development investments.

If you are new to the tokenization process, you will understandably have a lot of questions about how it works and what you can do. You will want to make sure you are working with an experienced Silicon Valley blockchain attorney at Structure Law Group, LLP, who can guide you through the entire process and help you achieve the results you desire.

Real Estate Problems Tokenization Can Solve

AdobeStock_413139303-300x200Residential tenants have many more protections than commercial tenants because residential tenants have less bargaining power, or so the law presumes. It is, therefore, much easier to evict a commercial tenant than a residential one. After all, the employees will still have a home to go to post-eviction.  Under California law, the power shifts to the landlord in these agreements. Nonetheless, disputes tend to harm both parties, and resolving them tends to be a matter of coming up with a better agreement. Still, it’s important to understand your rights as both a tenant and a landlord when it comes to commercial leases. In this article, our San Jose real estate attorney will discuss how to manage commercial landlord-tenant disputes.

Eviction

There is no guarantee of habitability; a commercial tenant has limited options when it comes to leveraging a landlord to make repairs. Rent cannot be withheld, even in escrow, and there is no guarantee that repairs will be made unless it is in the lease. The covenant to pay rent supersedes all other considerations when it comes to commercial tenancies. A commercial landlord may send an eviction notice for a lease violation or the failure to pay and the commercial tenant will only have three days to respond. Clauses in the lease may prevent you from suing or prevent you from asserting rights as an evictee. Again, the language will be contained in the lease, so it must be read carefully.

AdobeStock_302452099-300x200The hectic San Jose real estate market can present challenges for any landlord or tenant. With complicated commercial lease agreements, the stakes are often higher, and the legal issues are more complicated. The San Jose real estate attorneys at Structure Law Group are here to help business owners from all industries understand commercial leases. What follows are some of the most common issues that arise in negotiating lease terms.

Price Terms

Unlike residential leases, a commercial lease is not always paid at a fixed monthly rate. The rate can vary depending on market conditions. For example, a tenant might need a lower rate during the off-season when business is slow. Commercial landlords may be willing to negotiate variable rates depending on market conditions, time of year, supply chain disruptions, and other events. Some commercial leases are not paid at a fixed rate at all. Instead, the landlord will agree to take a set percentage of the tenant’s retail sales or a base rent plus the commission of sales. All of these price terms can be negotiated between the landlord and tenant. All of these terms are also subject to the California Civil Code, which prevents rent control on commercial properties. A San Jose real estate lawyer can help either party determine what pricing structure will best meet their needs and goals.

AdobeStock_96879652-300x200When you are selling a business in California, it can be a somewhat complex but still rewarding process that requires an exit strategy to realize the gains from building and operating a successful business. The number of moving parts when selling a business makes documentation of the terms of a sale critical, and there will generally be four stages to follow.

You are going to want to make sure that you have legal counsel when you are negotiating the sale of your business. A California business attorney with Structure Law Group, LLP, can walk you through the entire process.

Preparing to Sell the Business

AdobeStock_410226771-300x200The U.S. real estate market has been drastically changed by the effects of COVID-19. In the years before the pandemic, demand had already begun to outpace supply, but this problem became much worse very quickly when a global pandemic upended the market. The strong seller’s market is likely to continue throughout 2022. Learn more about interest rates, the factors that affect a real estate market, and how the corporate lawyers at Structure Law Group can help your business navigate these challenges.

Interest Rates

One of the key factors driving the real estate market has been low interest rates. Interest rates have, in fact, been at record lows for several years now. Low interest rates allow homeowners to borrow money at a low cost. Low mortgage rates lead to more homebuyers, which has slowly tipped the real estate market in favor of sellers. But there has also been inflation in 2022. For the first time in years, interest rates across the economy are starting to rise. So how will this impact the real estate market in 2022? Forbes spoke with three economic experts about their predictions for mortgage interest rates in 2022. Though their estimates ranged between 3.4 percent and 4.0 percent, all three experts predicted an increase in mortgage interest rates by the end of 2022. Rising interest rates tend to discourage some sellers from buying. While the rates can take some of the pressure off the current sellers’ market, it is important to understand that it is just one factor in a complex economy. Other factors will also determine whether 2022 sees a weak or strong real estate market.

AdobeStock_229466821-300x200For over two years, landlords throughout California have shouldered the financial burdens of eviction moratoria. Federal, state and local laws have limited the circumstances, manner, and time in which a landlord could remove a tenant delinquent on rent or other obligations under the lease. While some would argue these measures were a necessary health precaution during the worst of the pandemic, they shifted the financial burden of missed rental payments onto landlords in most respects. Now, landlords are finally experiencing some relief as eviction moratorium laws expire. Learn more about commercial landlord rights in California under current eviction regulations.

How California Has Handled Commercial Tenant Evictions

Governor Newsom’s latest executive order extended eviction moratoriums on commercial landlords through September 30, 2021. Since that date has lapsed, commercial tenants are no longer protected under the expired law and must rely on state and local regulations still in effect. In sum, commercial landlords may start eviction proceedings against tenants in the counties where no extension has been provided. In some counties, local ordinances have extended eviction moratoriums and protections. Los Angeles County, for example, has created a two-phase tenant protection resolution. Different eviction rules will apply as the procedures are phased in throughout 2022. In Santa Clara County, commercial tenants must now be caught up on at least fifty percent of their arrears, or they could be subject to eviction. Tenants have until August 19, 2022, to be fully paid up on their arrears. Each county has its own rules, so be sure to consult with an attorney about your specific situation.

AdobeStock_288866301-300x200When real estate is transferred in California, it generally constitutes a change in ownership that triggers a reassessment of the taxable value of that property. There are, however, a few key exclusions that can be used to avoid this trigger and protect your business from added tax liability. If you are considering transferring any property to or from your business, be sure to consult with an attorney about the best way to do this. The investment of attorney’s fees can pay dividends in reduced legal and tax liabilities. Errors, however, can lead to costly reassessments, in addition to tax penalties and interest on the added amount due.

Protecting Property Through the Creation of a Business Entity

There are a few different ways to transfer property to a business entity without triggering a reassessment. One is the legal entity exclusion. This rule allows you to avoid a reassessment if 50 percent or less of the interest in a legal entity is transferred to another legal entity. So if real property is held by a legal entity, up to half of the interest in that legal entity can be transferred without triggering a reassessment. If 51 percent or more of the legal interest is transferred, there will be a reassessment. The strategy is often used by business owners who are creating a new legal entity without changing the ownership of their business.

Real-Estate-Investment-1-300x200It is often said that real estate, especially in California, is a strong and smart investment. Investing in commercial real estate in California can have both long and short-term financial benefits.  One may receive passive income from renting commercial real estate, which often includes operating costs for items such as tax, insurance, and common area and general maintenance and as Silicon Valley grows, the property may well appreciate resulting in substantial profits when the decision is made to sell the property. As such, many California companies are either investing in real estate or purchasing their own commercial properties to help offset the high costs of operating in Silicon Valley.

A common and effective way of holding commercial real estate is by forming a California real estate holding company – an entity that holds title to the real estate so as to attempt to minimize the owner’s overall liability in connection with the property and particularly with respect to litigation. The experienced San Jose real estate lawyers at Structure Law Group, LLP can evaluate your real estate investments and help you form an entity to protect your interests.

Benefits of Investing in Commercial Real Estate through a Real Estate Holding Company

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An easement is a legal tool that gives someone else the right to use part of your land. Generally speaking, an easement does not give a party full ownership of that part of the property and instead, will include restrictions on how the party can use the land. Additionally, the property owner retains the right to use their land as they choose, as long as the use does not interfere with the easement holder’s rights.

One type of easement does restrict the property owner’s right to use the land – sometimes, they cannot use that part of their property at all once an easement is in place. These are called exclusive easements and, while they are rare, it is important to understand all implications of this type of easement before you ever grant one.

How an Exclusive Easement is Acquired

Real-Estate-Investment-300x200Real estate is a major investment in Silicon Valley. The law provides many ways to protect real estate assets.  For instance, many investors choose to place real estate under the ownership of a corporation or limited liability company (“LLC”). An experienced Silicon Valley real estate attorney can help guide investors through every step in acquiring real estate. Structure Law Group will help you with all of your real estate investment needs, such as identifying potential acquisitions which are appropriate for your business, performing due diligence investigations, determining whether the investment should be made in the name of a business entity, determining which type of business entity is appropriate for your needs, and executing the transaction documents to give your new asset full legal protections.

Which Legal Entity is Right for My Real Estate Investments?

Both corporations and LLCs are separate legal entities with legal identities separate from that of their owners. However, these different types of entities are treated differently for income tax purposes. It is important to choose the right kind of entity to make sure your real estate is properly protected.  For instance, LLCs can allow for profits and losses to flow directly to their members, without being taxed on a corporate level. Corporations, on the other hand, must be taxed as a separate legal entity. Corporations also do not provide their officers and owners with the same extent of legal protection from claims and liability enjoyed by members of an LLC.  Nonetheless, every situation is unique, so a full analysis of which entity is always right for you is always necessary to make sure you are getting the most out of your investment.