At Estavillo Law Group, we take pride in offering expert legal services to our clients in the Bay Area community. As your business grows, we’ll be there to ensure compliance, reduce tax liability and maximize asset protection. Ready to get started? Call us at (510) 913-9775 today.
As an established entrepreneur, you know that business success isn’t about just one thing; it requires many types of expertise. To achieve your goals, you need to prepare numerous strategies and account for many potential scenarios. However, your time is limited, so how do you ensure all your bases are covered?
The best real estate investors know that it isn’t possible to be an expert in every field. They don’t have time to scope out new investments, design a marketing strategy, run their accounting department AND cover their legal bases. That’s why they delegate.
If you’re a real estate investor in the Bay Area, you’re already working in a competitive market. Trying to act as your own legal team—writing contracts, representing yourself at closings, etc.—is just too much to manage. Luckily, you don’t have to.
As top commercial real estate leasing attorneys in Oakland, our team has everything you need to take your game to the next level. Regardless of what type of real estate you’re pursuing, our attorneys can make sure you’re getting the best deal possible by drafting all commercial leasing-related documents, reviewing paperwork, handling disputes and much, much more.
When you’re ready to protect your financial future and start achieving your real estate goals, there’s no better firm to partner with than Estavillo Law Group. In the meantime, keep reading to learn how our team works with Oakland’s top real estate owners to prepare their most essential documents: commercial leasing agreements.
As premier real estate attorneys in Oakland, California, our legal professionals can guide you through the commercial leasing process and offer expert advice to give you the competitive edge. And the best part? Getting started is as easy as contacting us for a free phone consultation.
What Is Commercial Real Estate Leasing?
Commercial Real estate Leasing is the bread-and-butter of investors everywhere. A real estate lease is a binding legal contract that outlines the terms by which one party rents property from its owner. Depending on whether it is a residential or commercial lease, it includes a number of stipulations and guarantees.
Residential vs. Commercial Real Estate Leases
There are two primary types of leases: residential and commercial. Whereas residential real estate refers to property used exclusively for private living quarters, commercial real estate means any type of property used for business purposes.
In the world of real estate investment, any lessor can benefit from contracting legally drafted leases, but especially owners of commercial real estate. That’s because commercial leases vary widely by type, tend to involve more money than residential leases and are more complex.
Types of Commercial Real Estate Leases
The terms of a commercial real estate lease affect both the lessor and lessee. For property owners, the conditions of the lease and the type of lease can have a huge impact on the property’s profitability. In California, commercial leases are divided into the following three types:
- Gross lease. Widely considered the most tenant-friendly lease, the gross lease only requires tenants to make a single fixed monthly payment. All property expenses, including utilities, taxes, insurance, maintenance and janitorial services, are paid by the property owner, although landlords may put a cap on utility costs in some instances. The owner may use this type of lease for small office buildings with low energy costs and relatively little wear and tear.
- Modified gross lease. In a modified gross lease, the tenant will only pay a fixed monthly cost for the first year, just like in a gross lease. The landlord will continue to pay the other expenses beyond the first year if they remain the same amount. If those expenses exceed the first year’s, the tenant is responsible for paying the difference. Although not as tenant-friendly as a normal gross lease, it still offers most business owners a reasonably cost-effective leasing transaction.
- Triple-net lease. Under the terms of a triple-net lease (which is generally used in retail settings such as shopping centers), the tenant is responsible for paying all of the property’s expenses, including taxes, insurance, maintenance and utilities. Although there are some exceptions, the tenant is responsible for almost every expense incurred through regular property use, which tends to benefit commercial landlords.
Each type of commercial real estate lease comes with its own advantages and disadvantages to both the property owner and the property management party or tenant, which is why it’s essential to work with a commercial real estate attorney before agreeing to the terms of the lease. Failing to do so—especially if you’re a property owner who is unfamiliar with the pros and cons of these leases—can seriously harm profitability.
For example, suppose you decide to lease your commercial property to a tenant who wants to operate a 24-hour laundromat. Eager to start leasing space, you agree to sign a gross lease, without doing your due diligence. You are now responsible for all expenses other than rent.
When you open the first utility bill, you’re stunned—the energy costs make up a huge portion of the laundromat’s mortgage. And just like that, a potentially profitable endeavor is costing you more than it’s worth. An experienced commercial real estate leasing attorney would have caught such a tremendous oversight.
Estavillo Law Group: Oakland’s Premier Real Estate Law Firm
At the end of the day, commercial real estate leases are complex. Even if you know more than the owner of the laundromat property (which isn’t saying much), there’s a good chance you still don’t know the ins-and-outs of these legal agreements. Our real estate lawyers do.
If you want to ensure you’re getting the best deals in real estate transactions, it’s important to seek out legal help. Luckily, the lease lawyers at Estavillo Law Group have extensive experience in lease negotiations, structuring, tenant disputes, retail leasing, eviction, lenders and much, much more.
Ready to partner with the Bay Area’s best? Contact us online to schedule a free consultation or give us a call at (510) 913-9775 today.