The Dirt Lawyer's Blog Archive

I guess it is time for me to dust off my chat hosting skills -- I can't believe it has been about 13 years since I have done it -- for a good cause!  #CRECHAT on Twitter is a great group of commercial real estate professionals that meets weekly at 1:00 PM (Central time) on Fridays for an hour to discuss issues of the day in the business.  This is the brainchild of my friend Jason Sandquist in Minneapolis, whom I have gotten to know through social media .  I think he is a great and smart guy and really appreciate the effort he has put into #CRECHAT. This week's topic is "Overcoming Obstacles in Commercial Real Estate Transactions."  Simply put: what are some of the biggest problems out there that you have encountered, and how did you solve the problem for your client or for yourself to make the deal happen?  Was it a person, a thing, a legal problem, a business issue, money or something else? And what steps did you take to make the deal happen?  Or was it a deal that

I have been reading a lot online about so-called social media expertise and all these folks who purport that they can make me a better and more successful lawyer because of their skill at marketing via blogging, Twitter, Facebook and the like. This isn't to say there aren't a few people out there whom I think have legitimate knowledge and even expertise when it comes to social media.  But I think that, more often than not, the real experts are not so much the ones who advertise themselves as authorities and try to sell you services (again, there are exceptions), but rather the folks out there in the real world who are just doing it. I do not consider myself a social media expert, guru, ninja, black belt, maven, or anything like that. But I have been at it a long time; longer than most, now that I've thought about it thanks to a recent Twitter exchange. My blog turned four years old last month without any fanfare.  But my time in social media goes back beyond that.  In the r

Thanks to the efforts of Jason Sandquist , some of us in the commercial real estate industry who also participate on Twitter are planning a series of weekly chats on the industry at 2 PM Eastern time, starting tomorrow. You can also follow a feed of the chat here .  I was thinking about playing hooky tomorrow with the nice weather and all, but I do not want to miss the first effort!  (Perhaps the iPad or a laptop in the clubhouse is a good compromise.) I hope you join us.

That is my current analogy of how the market is performing right now. Why? After looking at this and other similar deals. In test cricket you play it safe for the long haul. The game is five days long with, typically, two full turns of batting and fielding. (Yes, I am over-simplifying cricket. It isn't the easiest game to understand for us Americans, after all.) So batters tend to try to hit balls that will get them one and two runs, with anything more being gravy. That is what buying a building at a 6-cap is: safe and long-haul. There are shorter forms of cricket that have become increasingly popular, such as one day games or even three hour formats, known as 20/20 cricket. Here the emphasis is on taking risk and hitting for fours (you score four by hitting the ball to the boundary of the field) and sixes (for hitting beyond the boundary). These deals are still in the works, because they are riskier and harder to underwrite and many institutional investors are, well, okay with

This is a follow up to my post on why you should call me (or your real estate lawyer) first. Let's be honest, though: it isn't always going to happen.  Why? Time, money, hubris, you name it.  I get that.  I don't like it but I get it. What really irks me, though, is a corollary to at least two of the five points I made last week; namely, this classic: "Oh, I just signed the document without reading it." And it happens more than I care to admit. I can hear someone say, well, what about the boilerplate residential loan documents that are uniform and the same for every single deal?  Okay, I understand. But did you confirm the deal terms were correct? What about the HUD-1? Did the Truth-in-Lending Statement change? (That is a no-no these days.) Did you sign a document saying that you are going to own and occupy the house when in fact you are not? What am I getting at? R ead T he F riggin' D ocument.  Maybe it will all make sense and you can at least be informed a

I read with great interest Maura O'Connor's recent blog post on re-engineering real estate law .  It was a good post for what it is, except that I had to say to myself: "Isn't it about time the large law firms caught up with the rest of us?" (Full disclosure: I was, some ten+ years ago, an associate at the Chicago office of Seyfarth Shaw, the firm where Ms. O'Connor is now a partner.  [She came on board after I left, as Seyfarth did not at the time have a real estate practice in its California offices.] I had a wonderful experience there and many of my former colleagues are friends to this day.  I harbor absolutely no animosity toward BigLaw and work routinely with  them on deals.  And I respect the work they do.  I just no longer wish to bill 2000+ hours a year.) As Maura points out correctly, BigLaw is slow to change its business model out of institutionalism, profit incentive, hourly billing rate pressure, per partner profits and other factors.  For someone

Lawyers love checklists. They love checking little boxes and ticking off each portion of a deal as it is finished, culminating (hopefully) in the closing of a transaction. Much as I like to chuckle about this, checklists serve very important purposes.  When I started as a real estate lawyer, I thought that my prodigious memory could handle all the details and that I didn't need to spend the time working on them.  My mentors fortunately convinced me otherwise before I fell into bad habits, and they were right. (See #2 below.) I therefore have a checklist for every commercial real estate purchase or sale or loan in which I am involved, be it one page long or more than a dozen with over 100 items.  Before you ask: yes, I have checklists for other real estate transactions, too.  I use a checklist of different sorts for leases, one that no one else I know uses.  But it works for me and keeps the deal going.  I also have my own little quirks when it comes to how I prepare and edit and wo

Okay, time to fess up: I am in the business of making money as a real estate attorney .  Gee, imagine that!  But that does not mean I always get the call from a client or a prospective client, or get it in time.  Here are some real life (modified a little to protect confidentiality and all that) examples of clients who should have called me first before doing something: 1.  Oh, it was only a letter of intent.  I figured you could just fix it up in the contract.   Maybe yes, maybe no - and for a variety of reasons.  Does the letter of intent say it is non-binding?  And even if it does, are there provisions a court may find binding anyway, such as the duty to negotiate and work in good faith?  (Yes, it all depends.) And even if you have all of that going for you, there may be provisions in the LOI that, while non-binding, are awfully hard to negotiate against once it is in the "roadmap" of the deal.  There are few positions I like to argue against less than, "Why are you r

In the last few weeks I have read several items suggesting that the normal node of real estate lawyers, or transactional lawyers in general, is as a deal killer.  The most recent came today while reading the website of John T. Reed , a real estate writer whom I respect a great deal.  He is truly one of my favorite writers on real estate, current events and the military.  If you haven't been to his website. I encourage you to check it out. I have never really thought of myself as a deal killer.  I see my job as advising clients on potential risks that might be out there so they can make an informed business decision on whether or not to go forward with a transaction.  Here's an example based in part on real life.  Client X is thinking about buying a property. A portion of the property is encumbered by a covenant with a right of reverter to the city if certain work is not completed and a certificate of completion filed with the city.  The work was done and a there was a certifica

One of the documents you will see in commercial real estate loans is a subordination, non-disturbance and attornment agreement, known in the business as an SNDA.  Many clients who do not encounter this particular document on a daily basis will call or email me to ask for a translation. The SNDA is a document executed by (1) the lender of real property, (2) a tenant at that property and (3) usually – but not always – the owner of the property borrowing money from the lender.  The purpose of the SNDA is threefold:   1.  The SNDA subordinates the rights of the tenant under its lease to the lender’s mortgage or trust deed on real property. This is important to a lender because it wants to make sure its lien and its rights are superior to those of the tenants. Many commercial leases have language automatically subordinating the lease to the loan, but: (a) some do not; (b) some large tenants or tenants will clout will negotiate that provision out of the lease or condition it on an SNDA (mo

If you think residential real estate is all about location, location and location try doing some retail work!  There tenants or buyers don't just want the right neighborhood, the want the right, side of the street, a full mall and the right mix of tenants.  Oh, and tax incentives don't hurt either, especially for the box tenants. This story gets into traditional and strip mall vacancy rates (which will vary wildly) and does a good enough job, but I wish it had taken the analysis a step further. So I will. National tenants and retail tenants with a lot of negotiating power will often negotiate co-tenancy clauses in their leases, giving them the right to reduce rent or even terminate the lease if certain events occur.  Usually they involve one of two events, and sometimes both.  The first is if the leased area of a center goes below a certain threshold, then the tenant has the right to walk.  The other typical co-tenancy clause involves a major store; e.g. , if two of the four a