The Nesbitt Commercial Group hosted a rooftop happy hour event for our business partners and colleagues on June 20th in downtown Denver. We hope everyone who was able to attend enjoyed themselves as much as our team did, and are looking forward to the next one!
Wrongful Withholding of Security Deposits Act
Reasons to Withhold a Security Deposit
The law is clear when it comes to the situations in which a landlord may keep all or a portion of a tenant’s security deposit.
- Property damage not attributed to normal wear and tear
- Unpaid rent
- Abandonment of the rental property
- Tenant’s unpaid utility, repair and cleaning bills
Tenants who have not received their security deposit and an itemized deduction statement within the appropriate time period should pursue legal action, as should any renter who has had a security deposit withheld for inappropriate reasons, such as to repair problems caused by normal wear and tear. If the landlord does not provide an itemized deduction statement, he may be required to forfeit any amount of the deposit that was withheld, even if it could have been rightfully withheld.
Resolving Landlord/Tenant Disputes Over Security Deposits
Early Termination, Kick-out, or Cancellation clause are all terms we hear quite often in commercial leasing but it is something that is still not fully understood by many. Simply put, a “Kick-out Clause”, also known as a “Cancellation Clause” is a reciprocal clause in a commercial lease in which a landlord can evict a tenant or a tenant may vacate the space, after a certain period of time has passed, if certain needs or threshold’s are not met.
A 3,000 square foot industrial tenant has a 5 year lease term, the “Kick-out” or “Cancellation Clause” states that if the tenant has occupied the space for three years, the tenant may break the lease should they have an urgent need for more space for storage of equipment that the landlord cannot accommodate within 6 months of written request by the tenant. In essence, the tenant is kicking out of the lease due to the landlord not being able to meet the threshold agreed upon during the lease negotiations.
Another example of a universal “Kick-out Clause” would be as follows. During lease negotiations, the landlord and tenant agreed that if a specific sales volume was not met, the landlord would have the authority to terminate the tenants lease and in turn the landlord could re-lease the space to a new tenant. The current tenant would then be able to walk away from the obligations of the lease as their business is not as successful as anticipated previously. Thus making the clause beneficial to both parties in the lease.
There are many ways a “Kick-out Clause” can be crafted in favor of the landlord, and the threshold for a landlord to take advantage of these clauses is very low. This is why it is extremely important to work with a seasoned leasing professional such as a member of The Nesbitt Group when drafting and negotiating your commercial leases. A skilled commercial real estate broker will be able to advise you of important provisions missing in a standard commercial lease that could save you thousands of dollars as well as unnecessary stress and possibly legal action. An air tight lease can be a landlords saving grace when it comes to protecting their investment. Contact a member of The Nesbitt Group today to discuss your leasing needs.
- A broker will save you time- The client should not be the one to do the heavy lifting, i.e. searching for properties that may or may not meet their needs, contacting listing agents and negotiating rates. A good broker will present you with options, arrange tours once they are certain a property has what the client needs, and will negotiate on the clients behalf, saving countless hours of the clients time.
- Working with a tenant rep. or buyer agent will save you money- In most cases, broker representation for a tenant or buyer is free. Traditionally a listing agent offers a commission to the broker representing the tenant or buyer, thus making the representation services free to the client. Some special cases would require a fee to be negotiated between the client and their representing broker but more often than not there is no charge to the client.
- A broker has current market knowledge- Since a commercial broker is touring properties and negotiating on a daily basis, they have their finger on the pulse of the market. This will make them more skilled in negotiating your rate, as well as offering a quicker turn around time in identifying properties as they are aware of the available product.
- A good broker will have industry contacts- Knowing other brokers will open the door to “pocket listings” or listings not yet on the market. This will possibly allow the client to be the first in line for a prime location or ideal property that isn’t even on the market yet, which is a huge advantage.
- A broker subscribes to one or more commercial multiple listing services- A good commercial broker has access to one, or all of the available commercial multiple listing services in your market. Since not every available property is listed in every “MLS”, this will ensure that no stone is left unturned when seeking potential properties.
- A broker will find you the best property to fit your needs- Working with clients in different industries provides insight and familiarity with different industries and their day to day needs. When you work with an industry professional, they will consider those day to day and long term needs from a property and present options that will meet those needs.
- A broker will identify space efficiency- Some properties have common areas that consume large amounts of square footage and increase your rent dramatically. A good agent can guide you away from buildings that have huge common area charges or at least provide an apples to apples comparison.
- A broker will negotiate the best rate- Working with a broker who has current industry knowledge of lease and purchase rates will ensure you secure the best possible pricing for your lease or purchase. An active broker is always on top of fluxuations in the market and will make sure you are getting the property for the right price.
- A broker will allow you to remain neutral- Whether you are seeking to lease or buy a property, allowing a broker to negotiate on your behalf will allow you to remain a neutral party, only participating indirectly in negotiations.
- A broker will make your search, and your life, easier all around- From saving time on searching and inquiring on properties, to negotiations, a broker is there to save you time, energy, and to assist you in making the right decision for you and your goals. Working with a broker will ensure your success.
There are many reasons why you should consider using a broker to represent you in a real estate transaction, time and savings being the main two points to consider. When selecting a broker make sure you choose someone with years of experience in the market you are interested in. Asking a colleague for a referral is also a great way to find an experienced professional. The Nesbitt Group specializes in buyer and tenant representation services and would be happy to answer any questions you may have when considering a move. Contact us today!
Similar to our previous posting “Top 10 reasons to work with a commercial broker” we have compiled a list of the Top 5 reasons why it is worth your while to work with a broker on your listing.
- Industry contacts- When working with an experienced commercial real estate professional, all agents in the surrounding area should know about your listing as soon as possible. Leveraging your brokers industry contacts can help you get interested buyers or tenants sometimes before the property hits the open market.
- Marketing- In addition to leveraging contacts, having marketing practices in place will ensure consumers are informed about your properties availability. Properties for sale or lease should be listed on one or more multiple listing service, flyers and other marketing collateral should be in place, and the property should have a minimum of one sign displayed to the general public.
- Negotiations- Chances are, as the owner of a property you do not spend your days negotating commercial real estate transactions. A commercial broker will not only know exactly what the market is doing, but also what type inventory is moving, and what concessions are considered industry standard in a transaction. These are a few, of many powerful negotiation tools that will be used in deciding a lease rate or sale price.
- Preserve relationships- In many cases there will be a relationship between buyer and seller or tenant and landlord that will survive past the closing. Maybe the current owner will lease space from the new owner, or if you are a landlord, you will come into contact with your tenants at some point in the future. Maintain an even keeled relationship with the other parties involved, and let the brokers get into the heated negotations should there be a disagreement on terms.
- Save time- Attempting to sell or negotiate lease terms for a commercial property is anything but quick and easy. From marketing, to showing the property to countless interested parties, to negotiations, an entire day could be spent just returning calls and emails. Allow a professional broker with systems in place to assist you with your transaction.
As a seasoned commercial Realtor, my team has had the opportunity to work with numerous real estate investors. From multifamily to office buildings, there are a few universal rules of thumb that I want to pass along.
Have a game plan- And stick to it! Decide if you want to invest in multifamily, office, or industrial ahead of time. Specializing in a property type will allow for a higher level of attention to the needs of a property and will afford the knowledge needed for identifying strong investments in the future.
Work with a knowledgeable broker- No matter how many properties you have owned, the industry is always changing. Having a resource with their finger on the pulse of the market, coupled with your knowledge will be key to ensuring you are making the right decisions for today’s market.
Get financing ahead of time- Financing a commercial property can be a much longer and more difficult process than obtaining residential financing. With a pre-approval in place, an offer can be made once a suitable property has been identified. This proactive step will ensure you do not miss out on an opportunity due to financing, or lack thereof.
If you are a seasoned investor or novice, these 3 tips will get you through any transaction with ease. Working with a broker can alleviate stress, save you time, and most importantly MONEY. Make sure you at the very least have a seasoned professional on your side.