Legal News

Author: Jomathews Verosilove on Jan 24,2023

Commercial Property Issues: Legal Aspects and Solutions

The term commercial property or commercial real estate refers to property that is used for the purpose of conducting business. Also, the term "rental property" can refer to real estate that is in the business of generating income, which can be the result of rental income from the property or capital gains from it as the value of the property rises.

Moreover, multifamily residential real estate is also considered commercial real estate. Therefore, apartment buildings are also considered commercial real estate. When it comes to borrowing and taxation purposes, commercial properties with more than a certain number of units may qualify as residential properties if they have more than that number of units. The majority of apartment complexes and buildings are owned by investors who are expecting to maximize profits from the rental income they will be able to receive and reinvest in other properties. The eviction law, the local rent control laws, as well as other legal issues that arise in the residential leasing business are extraordinarily complex and unique to the industry.

Legal issues related to commercial property

The legal implications associated with the ownership and leasing of commercial property can be very significant, particularly in the case of a lease. Among the many issues that can arise in commercial property law, there are some that are more common, for example:

Land use and zoning

Local zoning authorities have normally regulated the type of land that can be used for the purpose of conducting business for the purposes of allowing businesses to operate on the land. Generally, commercial properties must comply with environmental and zoning regulations in order to be permitted to operate. In order to determine the specifics of any land use regulation, zoning policy, or business characteristic, all of these factors play a crucial role in determining the way that they are applied.

Generally speaking, properties that are zoned as residential, commercial, or industrial are systematically separated by local governments. If the use of the building or the proposed use of the building does not comply with the current zoning, the owner or lessee can encounter issues with the local zoning authority. 

Aspects of commercial leasing

Commercial leases are widely used, and there are a number of types of commercial leases available for the use of businesses. There can be advantages and disadvantages to ownership as well as leasing of commercial properties, and each of them may have its own advantages and disadvantages. As in the case of residential leasing property, there can be legal issues that can arise when leasing a commercial property.

In the case of a commercial building, a lessor or a seller may be under an obligation to disclose material defects to the buyer. This can cause conflict. In certain cases, there may be issues with encumbrances, easements, or deed restrictions which may affect the use of the property, as well as questions regarding the use of the property. Whether a landlord or a tenant has a conflict of interest when it comes to the repair of leased commercial properties, their obligations can be conflicting.

Compliance with ADA

In the United States, every business with more than 15 employees or that is open to the general public is required to make its facilities accessible to people with disabilities in order to comply with government regulations. In accordance with the provisions of the Americans With Disabilities Act (ADA), people who purchase or lease commercial real estate are required to take certain steps to ensure that the property complies with the law, as well as to understand what steps are needed to make sure the property complies, and who is responsible for paying for modifications as needed.

Would it be the seller's responsibility to ensure the property is compliant before selling it, or would it be the buyer's responsibility to ensure the property is compliant before it is sold? Does the lessor or lessee of commercial property have responsibility for ensuring that ADA compliance is met when it is leased? Answering these questions correctly is necessary for the successful completion of any transaction, regardless of its size or complexity.

Taxes on real estate

Commercial property taxes are based on the assessed value of the property, much like the taxes on residential properties are based on the assessed value of the property. In general, property taxes on commercial properties are higher than those on residential properties, as commercial properties are usually worth more than residential properties. Having the ability to generate income from them makes them more valuable in the long run. It is, therefore, likely that the property taxes on commercial properties will be higher than those on residential properties.

Solutions for Commercial Property Issues

If a dispute is determined to be of a particular nature, then a specific process might be needed to resolve it, depending on the situation. In the event that a business owner has a dispute with the local zoning authority, for example, the company may have to deal with that authority. It is the parties' responsibility to resolve disputes affecting commercial lease contracts using the standard procedures for resolving civil disputes involving commercial lease contracts.

Negotiation

As long as the parties to a dispute are willing to negotiate between themselves, it is always possible to reach an agreement. Those who are unable to achieve a satisfactory resolution on their own can seek help from a lawyer to resolve the issue.

Mediation

Generally, mediation is an attempt to resolve the conflict between two parties through the use of a third party who is knowledgeable about the laws underlying the dispute and is able to meet with them for the purpose of mediation. Mediation is the process of listening to both sides of a dispute and coming up with a solution that is mutually acceptable to both parties. There is a document that is prepared by the mediator after the parties reach an agreement so that the agreement can be used by all parties in the future if necessary.

Arbitration

Unlike a civil trial, arbitration is conducted by a private person, usually chosen by the parties themselves, who is called the arbitrator, in the same way, that a judge is hired for a civil trial. The arbitrator will make a decision regarding the dispute within a few days after the parties have presented their arguments to the arbitrator. Depending on the circumstances, a binding arbitration decision can be enforced by a court, which means that the parties can bring a lawsuit against the arbitrator if they disagree with the ruling. If the parties do not want the agreement to be binding, they can also opt not to have it.

Civil Lawsuits

In the event of a significant dispute regarding commercial real property, it is possible for a party to file a lawsuit as a means of resolving the dispute through the civil courts if there is a need to do so. It is possible for a civil suit to ultimately result in a trial, where a judge or jury decides who should be credited with the victory at the end of the trial.

Conclusion

In the field of real estate law, commercial property is dealt with in a very specific way. It is possible that you might need the assistance of a commercial property lawyer if you would like to gain a deeper understanding of the laws that pertain to commercial real estate in your area. The attorney you select will always be able to provide you with the clarification you need on any legal issue. As well as representing you in negotiations, a lawyer can potentially save you money by acting on your behalf rather than having to go to court to resolve the matter.

However, if this is not possible, your lawyer will be able to assist you in finding other ways to resolve the dispute in the event that this cannot be done. In the event that you have suffered financial losses as a result of a property dispute, it can be possible to recover money damages for these losses. During a lawsuit, your lawyer will be able to represent you in court if it becomes necessary for you to sue. In some cases, a commercial lease can be revised, or other alternatives may be found to be able to resolve the issue, such as renegotiating the lease.