The Implied Covenant of Good Faith and Fair Dealing
Anybody who has ever had a child has heard the refrain “but that’s NOT FAIR.” While the concept of “fairness” plays a big role in how the world should operate in the minds of children, there is sometimes a disconnect between “fairness” and the “justice” that is doled out by the legal system. One notable exception is the application by the … Read More
Equitable Subrogation and the Replacement Doctrine
All real estate professionals and investors are familiar with the concept of the priority of liens. As a general rule, when there are multiple liens recorded against a property, the one that is recorded first is "superior" to the one that is recorded later, which, in turn, is "subordinate" to the one that is recorded first. This "ranking" of liens becomes critical if a lien is foreclosed, as upon the … Read More
Negotiating a Lease Renewal Option
Most tenants and their real estate agents who negotiate commercial leases accept that many of the terms in the landlord’s “form” lease favor the landlord. One term, however, that favors only the tenant, and which every commercial tenant should seek to include in their lease, is an option to extend the lease term. The reason that said term is only for the benefit of the tenant is that … Read More
The Defaulting Seller and a Notice of Lis Pendens
By David Allen
After months of searching, you have finally found the house of your dreams, and much to your delight the Seller has accepted your offer of $500,000. You deposit your $15,000 "earnest money" with the escrow company, and an escrow is opened. As part of your "due diligence" you spend $1,000 on inspections, and in anticipation of moving, you pay a moving company a $1,500 non-refundable deposit. The … Read More
Follow the CC&R's Because it's the Rules!
There are seemingly two types of people who live in houses or condominiums that are subject to rules and regulations, known as Codes, Covenants and Restrictions, or "CC&R's." There are those who live there because there are CC&R's, and there are those who live there despite the fact that there are CC&R's. The concept behind CC&R's is quite simple. If a group of people who own … Read More
Options and the Right of First Refusal in Commercial Leases
In commercial leases, it is common for the tenant to be given the "option" to continue to lease their premises for a new term commencing immediately upon the expiration of the existing term. Although the option only favors the tenant, who has the sole right to either exercise or decline to exercise it, there is usually little reason for a landlord to refuse to give such right to the tenant, in that under … Read More
How do I 'Take Title' When Acquiring Real Estate?
While it is true that you most often cannot tell much about a book by its title, the same does not hold true when it comes to real estate, as how title is held to real estate, does tell you a lot. The question faced by a person acquiring real estate in Arizona concerning how they wish to take title is usually posed to them by their real estate agent or by the title company during the escrow process. & … Read More
When In Doubt, Disclose, Disclose, Disclose
So Joe, who lives and works in Chicago, has decided that he wasn't getting enough use out of his second home in Scottsdale, located on the 15th fairway of a very challenging golf course, and has, with some regret, put it up for sale. A buyer is quickly procured, and Joe's listing broker presents him with form entitled "Residential Seller's Property Disclosure Statement," commonly referred to as a "SPDS" ( … Read More
What is a Subordination, Non-Disturbance and Attornment Agreement, and Why Do I Need One?
While most commercial leases contain a requirement that the tenant will execute a "Subordination, Non-Disturbance and Attornment Agreement," commonly referred to a an "SNDA," a majority of tenants who have signed such leases, and most likely several of the real estate agents who have represented those tenants, would be hard pressed to explain the meaning of an SNDA, and why they are needed by both commercial … Read More
Better Safe Than Sorry Always File UCC Termination Statements
If you are negotiating a new business loan, you know that your due diligence investigation on the borrower should include a search of the Secretary of State's records* to confirm that the assets being pledged as collateral are "free and clear" and not subject to the security interest or other lien of another lender, lessor or other secured party. A UCC lien search of the Secretary of State's records will … Read More