6. March 2012 by Kristian Alekov.

Breach of Contract:

As a general rule, the objective of contract damages is to insure that the aggrieved or injured party should receive what he or she expected from the bargain. To the extent that an award of money can do so, the aggrieved party should be placed in the same position as though the contract had been fully performed. This is what is known as protecting the expectation interest of the parties. (Rest.2d §344(a))

There are several limitations on awarding damages to make the non breaching party whole:
A party cannot recover for loss which he could have avoided or mitigated through his reasonable efforts. (Rockingham Cty. v. Luten Bridge Co. 35 F.2d 301 (4th Cir. 1929); Rest.2d §350)

Damages are limited to those losses which were foreseeable, i.e., in the contemplation of the parties at the time the contract was entered into. (Hadley v. Baxendale. 9 Exch. 341(1854).) ; Rest.2d 351.) Special damages are recoverable when special circumstances exist which cause some unusual injury to the plaintiff. The plaintiff can only recover special damages if defendant knew or should have known of the special circumstances at the time the defendant entered into the contract.

Damages for breach of contract fall into three categories:

Expectation = Prospect of gain from the contract. (Rest.2d §347)

Reliance = Detriment the injured party may have incurred by changing his or her position. (Rest.2d §349) Purpose of reliance damages is to restore the victim of breach to the position he or she would have been in if the contract had not been made. (Rest.2d §344(b).)

Restitution = Interest in the benefits the injured party has conferred upon the breaching party. (Rest.2d §344 (c).)

For more info contact Affinity Title, Fort Myers, FL.

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5. March 2012 by Kristian Alekov.

Last week, the U.S. Treasury announced that President Barrack Obama had released his budget proposal for 2013 (FY2013 Greenbook).  The budget proposal, which looks very similar to the one released last year for 2012, includes a number of law changes.

In particular, one of the issues President Obama’s proposed budget addresses is the issue of the Federal Estate Tax Exemption.

Under current law, one can transfer up to $5.12 million tax-free during his or her lifetime or at their death without incurring a tax of up to 35%.  Right now, this amount is set to dip down to $1 million at a tax rate of 55%.

President Obama’s budget proposal calls for a permanent cut of the gift and estate tax exemption amount to go back to 2009 levels of $3.5 million.

This news brings a lot of wealth advisors and estate planners on alert, as it may curtail some advanced-level estate planning they have been using in recent years to help people plan for the proper distribution of hard-earned assets to ones loved ones and out of the hands of the government.  Various planning loopholes that have been available for years may soon be limited or may vanish altogether!

A lot of people are going to be keeping an eye on this budget and Congress in the months to come as we lead up to the 2012 Presidential Election.  Estate taxes, gas prices and the overall budget deficit are all major issues on the table for Presidential candidates.

Those single households with more than $3 million of assets and those married households with more than $6 million of assets are encouraged to seek out the advice of qualified legal counsel with respect to their estate planning matters.  This year may prove to be a huge window of opportunity to take advantage of some of these estate planning and advanced-level estate tax planning strategies before they are limited or even eliminated altogether.

This post brought to you by the good folks at Affinity Title. We would love to have you follow us on Facebook.

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2. March 2012 by Kristian Alekov.

Not very many people know about title insurance the way they may about other, more common types of insurance—life insurance, home owners insurance, car insurance, health insurance, etc.  Title insurance, however, is a type of insurance that anyone that owns property will, whether they know it or not, be forced to purchase.

There are a number of myths that surround title insurance and the good folks over at Affinity Title are here to “bust” some of these common myths.

Myth #1.  Title insurance only covers the bank or lender.  Yes and no.  There are 2 types of title insurance policies.  One of the policies covers the lender (known as a “Loan Policy”) and another separate policy covers you, the buyer (known as an “Owner’s Policy”).  Also see Myth #3.

Myth #2.  If I refinance, I don’t need to get a new title insurance policy.  As the buyer, you will not need to get a new insurance policy if you refinance your loan. Once you purchase an Owner’s Policy, you and your heirs will be protected as long as you have an interest in the property.  However, when you refinance a loan, you are getting a brand new loan and the lender will require you to purchase a new Loan Policy when refinancing.

Myth #3.  Title insurance is required when buying a home. When purchasing a home, the lender will require that you purchase a Loan Policy and that cost is typically included along with all of the other costs associated with purchasing your home.  You aren’t, however, required to purchase an Owner’s policy—although it is highly recommended that you look into doing so.

Myth #4.  Title insurance will protect the value of my home. Title insurance only helps in the event that there’s a claim that comes up against the title of the home.  It doesn’t prevent the loss of marketability of the property due to a title claim.  If a claim arises, you will most likely not be able to sell your home until the claim is settled.

Myth #5.  I have to go with the title insurance company my escrow company and bank use.  This is not true.  You have the right and option to seek out and research the wide variety of insurance carriers to write your title insurance policy.  While it may seem convenient that the lender or the escrow companies already have an insurance agency that they work with, keep in mind that they are not always looking to find you the best rates available and may have their own financial interests in mind.

Myth #6.  Title insurance is expensive.  Premiums for a title insurance policy are calculated differently based on where you’re located and some regions the policy covers certain costs and in other regions, it does not.  Unlike other types of insurance, title insurance has a one-time premium that is paid at the time of closing escrow and is typically calculated as a percentage of the price of the property.  This rate varies and your title insurance agency should have this available to you before purchasing a policy so that you can make an educated decision when choosing a title insurance company.  Keep in mind that while title insurance helps protect you from the “what ifs” against the title of your property, it will be far less expensive to you to get the policy than to pay out the attorney fees and court costs associated with defending your property’s title should a claim arise against your property.

Myth #8.  I don’t need title insurance. Whether you need title insurance or not, your lender will make sure that they are covered in the event that a claim comes up against the title of your home or property.  You don’t “need” to purchase an Owner’s Policy, but given the fact that your home may be one of your most valuable assets, it would be wise to spend the extra money upfront to pay the one-time premium to help with the costs associated in case something does come up.  The cost involved in defending your property’s title if something does come up isn’t just limited to attorney fees or court costs, but there’s also the costs associated should you have to sell your property, find another home, move somewhere else, etc.

If you are looking to buy a home or want coverage to help you protect any real property you may currently own from any title claims in the future, contact Affinity Title today to get a quote.  Like many things in life, title insurance is one of those things you don’t realize you need until it’s too late!  So, Affinity Title today!

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13. February 2012 by Kristian Alekov.

Lease Term

The term of the lease is often a complicated and contentious issue. You want a very short initial term and a huge number of renewal options. An outrageous extreme of this would be a one-day lease with 3649 one-day renewal options. Needless to say, this is not going to happen. Some landlords have a minimum term of three or five years. Depending upon their level of motivation, they’re often flexible with regard to this issue. Reflect upon your preferences for your lease term and address it early in the discussion with the office building leasing brokers. For example, if you are seeking a six-month lease or a 20-year lease (at a fixed rental rate with no rental rate increases during the term), broach this issue sooner rather than later in the discussion with the office building’s leasing agent.

Addressing the issue of lease term early in the communication leasing broker is appropriate. However, in most cases, do not automatically eliminate a building because the quoted lease term is shorter or longer than your objective. Lease term is often a negotiated issue.

Office Space Prospects

Next, start identifying the office space prospects which generally fit your criteria. These are office buildings that are in the general location or submarket you have identified and which generally fit the criteria described earlier in this article.

After compiling a list of office space prospects, you may need to limit it further or before going to see each building. For example, if there are 36 options which fit the above described criteria, you probably would not want to visit each building. An online office space search service is invaluable in gradually narrowing your criteria. This allows you to “what if” scenarios regarding your criteria. Prior to using such an online service, to confirm that it has a comprehensive inventory of buildings in the area you are considering.

Develop a Short List of Prospects

When you have limited the number of options to perhaps three to seven buildings, discuss the building options with your office rep broker to narrow the options. If you are seeking a short-term lease, is the broker is virtually certain that some of the building owners will not provide the desired lease term? Has the broker expressed reservations regarding the quality of management, maintenance or service at some of the buildings?

Visit the Office Space

The next step is to visit the office space in buildings that appear to be a good fit. Reflect upon the criteria you initially established and any issues that may have since surfaced. Take detailed notes while visiting each of the buildings. (The details of the buildings will fade quickly if you visit 3 or 4 office buildings a day.) Ask questions regarding fundamental deal points to see if the information verbally provided by the building-rep broker provides further inside into the landlord’s negotiating position. Also ask questions regarding security, crime, maintenance and any other issues which concern you.

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10. February 2012 by Kristian Alekov.

So you want to sell your cell site lease? Probably a good idea to do a little homework first. Right? First let’s take stock of what you have in the way of a cellular site lease and the physical cell site itself.Let’s get your cell lease out and go over a few items.

1. When did your cell site commence (commencement letter – This is the date that the lessee started paying rent)? This will help determine the anniversary dates of your site lease escalations.
2. How much was your beginning cell site lease payment? The beginning site lease payment is the bases for lease payment escalations. Offers from cell buy-out firms will be multiples of your monthly income. These can range from 50 times monthly site rent to 140 times monthly site rent. With averages at 120 times monthly site rent.
3. Do you collect additional rents (co-location rents or ‘co-los’) when the lessee adds (sub-leases)  additional cellular carriers? Many poorly negotiated cell site leases DO NOT contain the right of the owner (lessor) to collect additional carrier rents paid for sub-leases.
4. Who is the carrier who has the lease and who are the additional carriers (sub-lessees)? This is probably the most important feature of your cell site. This is referred to as ‘credit worthiness’ (applies to sub-lessees also) and is used in the risk reward ratio used by a cellular buy-out firm. There is ‘risk’ in buying a lease that has a high probability of being ‘terminated’ due to a merger or carrier failure that causes redundancy or loss of income.
5. If you do collect additional rents (3 above) how much are your additional payments? These co-location rents will have a great bearing on the value of your cellular lease buy-out. (see 2 above)
6. Does the cell carrier (lessee) pay their proportionate insurance and real estate taxes for the property on which you have given them a right-of-way? This is normal boiler-plate, but make sure you can prove that these payments are being made by the cell lessee.
7. Is the right-of-way specific or general? A general right-of-way is more attractive to a cellular buy-out firm because it allows them to add sub-leases to additional cell carriers without further negotiations  for additional ground or roof space – WHETHER OR NOT YOU ARE PARTICIPATING IN THE ADDITIONAL RENTS.
8. How much does your lease payment escalate and how often? Two schools of thought here. Having a normal escalation (3% annual or 15% each 5 years) is pretty safe as far as the carrier staying on your site when a new nearby site becomes available, however if you were able to negotiate a much higher escalation you could be in danger of losing your lease to a nearby that is offering a lower set escalations.
9. How much time does the cellular lessee have to give you should they wish to terminate (referred to as ‘The Termination Clause’)? This is normally 30 to 90 days. I’ve heard of, but never seen, a telecom lease that did not have a termination clause.
10. What are the option periods (renewals), these are normally 5 years? This is a true ‘red herring’ if there is a site termination clause.
11. What is the term of your lease? Normal terms are 30 years, 40 years and ‘perpetual’. After the cell lease expires the cell lease reverts back to you or your estate.
12. Who are the additional cell carriers? (see 3 above)? These carriers are important in determining the future cash flows (see 4 above)
13. What type cell structure is on your site cell (tower, pole, stealth, etc.) The size and capacity or the cell site structure is important as the cost of the structure (and its dis-assembly in case of ‘termination’) is a factor.
14. Are their fiber-optics to your cell site? This would be a big plus as fiber is expensive to install and does show some intent to continued use.
15. Are their additional cell sites nearby? Could be either a plus or a minus. Is the nearby a proximity a necessary continuation of the cell coverage of the carrier(s) on your site? Or is it in competition for your carriers to re-locate?
16. Have you been approached by a ‘rent reduction’ firm representing your cell site lessee? Could be a sign that the carrier may feel that the rent is too high. These firms play two site owners against one another to achieve the lowest and best re-negotiated terms.

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9. February 2012 by Kristian Alekov.

Define the building quality, price per square foot and total monthly budget for office space. The office space broker will advise you if your expectations are on realistic. Visit with the tenant rep broker to make sure the amount of office space you are seeking is consistent with your current and projected number of employees. The density for most American offices is between three and six employees per 1000 ft² of net rentable space. (The difference between net rentable space and actual space is discussed shortly).

Layout

The conceptual layout is important unless you’re planning to completely demolish and rebuild the office space. This is very expensive. (Demolishing and rebuilding office space will likely cost at least $25-$40 per square foot depending on your location). Determine whether you are looking for space which is mostly open concept, or which has a large number of smaller or larger offices. This will allow you to cull options that do not fit.

How important are ingress and egress during peak traffic periods? The layout of the site will determine the ease or difficulty of peak traffic access.

Signage

Is signage important? You may need to consider restrictions imposed by the landlord, local government and subdivision deed restrictions. If signage is important, obtain a written copy of all signage restrictions soon after becoming seriously interested in office space. Obtain candid insights from your tenant rep broker regarding signage for the office building.

Parking

Do you require a high amount of parking? (4 or more spaces per 1,000 square feet of space is a relatively high amount).

Rental Rate Options

Rental rate options include: gross, gross plus expense escalation, modified gross, and triple net. A gross lease simply has a rental rate and no allowance or adjustments for expenses. Gross plus escalations includes a base level of rent and expenses in excess of a defined level. The defined level is often the expenses for the year the lease is signed. In a modified gross lease, the tenant pays rent and some of the expenses directly related to his space. These often include utilities and janitorial. This type of lease can also provide for expense escalations. In a triple net lease (NNN), the tenant pays rent and all operating expenses. Operating expenses include insurance, taxes, maintenance, repairs, utilities, janitorial, etc. In general, a gross lease favors the tenant by providing a fixed level of total payments.

Evaluate Amenities Important to You

Initially, determine which amenities are essential. Adding a large number of amenities to your criteria may eliminate too many office space options. It might be nice to have a print shop in the building, but it would probably be even nicer to have a rental rate of $15 per square foot versus $19 per square foot.

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8. February 2012 by Kristian Alekov.

Purchasing foreclosed commercial properties today offers a lot of benefits. First, they are cheaper. They are sold below market value because lenders would only want to recover the unpaid mortgage. Moreover, buyers have a lot of options in the market, which is why they have to be competitive.

There are many ways to earn through such property. To understand how, you need to learn about the different types of commercial properties. But before that, let us first define what a commercial property is. Such property is defined as any entity or real property that is intended to generate profit. Here are some examples of commercial properties:

Apartment buildings: this is a great way to start your property investment venture. They are readily available and you can easily find financing for it. However, if you are going to invest in one, make sure that you will be ready to manage it.

Hotels / Resorts: investing in these types of properties require experience. You need to have it managed professionally. If you think, you have the qualification, then do so.

Retail Centers: this is also a good source of income, but this can be very expensive and will demand a lot of your time for management.

Office buildings: this is a great investment if you are looking for a place to process transactions.

There are other types of commercial properties to choose from. See to it that you choose the property that suits you best. Here are few considerations you need to make:

1. Look for a good location. A good location is essential for your business to thrive. It is important that the establishment is accessible to you and your clients. The location has to be safe to safeguard your business and investment.
2. Make sure that the property is within your price range. The property should be affordable to you. To learn about how much you can afford, go to your lender. See to it that you have finalize your financing methods to assess how much you will spend for the purchase and for monthly payments.
3. Choose the right type of commercial property. Aside from the properties mentioned above, there are other types of properties to choose from. When choosing, consider the type of business you will venture in. What will it need?
4. See to it that the property has the right size. This will depend on the needs of your business. If you are going to have it leased, make sure that it is suits the needs of your tenants. If you do not have inventory for the business, a smaller home will suffice.
5. Find a good location. Location is very important for the business to succeed. It has to be accessible to you, your tenants and other individuals who are essential for your business to thrive. Check the neighborhood as well.

Investing in commercial properties is a great way to earn extra cash. However, you need to be cautious and prepared when investing in them. Find the property that suits your business needs best.

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7. February 2012 by Kristian Alekov.

Commercial foreclosure takes place when a business is unable to settle its business mortgage loan. There are several of these properties available in the market today. This makes it ideal to purchase one if you plan to invest in a commercial property.

A commercial property is a worthy investment if you use it properly. You can use it in your business or you can have it leased and earn from the rent. However, you have to be careful when investing in one. See to it that you have a plan. You should also anticipate the expenses and possible losses you will incur during the first year of operation.

What happens to the commercial property once it forecloses?

Unlike homes, the lenders will have a few options when dealing with foreclosed commercial properties. They can use it for their operations. If they cannot use the establishment, they have the option to have it leased. Many are looking for commercial properties to rent. However, most lenders would rather sell the property and recover the losses right away.

Advantages of purchasing a commercial foreclosure today

There are many advantages of buying such property today. First, they are less expensive. You will easily find a property sold at a price that is lower than its market value. Moreover, you will have a lot of options because like residential properties, there are a lot of foreclosed commercial properties in the market today as well.

Most of the time, the lender or bank will hold an auction. Before participating in the auction, see to it that you have acquired all the essential details of the property. Consider all-important factors before deciding whether to bid or not. Moreover, see to it that you are ready with your financing. Have your mortgage application approved. See to it that the property is within your price range.

Things to consider when purchasing such property

There are important considerations you have to make when purchasing such property. This includes the type of business you are going to use it for. You should also think of the type of property you want to have. Most importantly, you need to find a good location.

The type of business: Thanks to the internet, there are several types of business you can start up without spending a lot. These businesses does not require a big establishment to operate. Thus, you need to think of your space requirement when looking for a commercial property.

The type of commercial property: There are different types of commercial properties you can find in the market today. What is important is that you find one that suits your business needs. If you are planning to have the establishment rented, think of the needs of your potential tenants.

The location: This is very important when you are shopping for a commercial property. First, it has to be accessible. Think of the users of the property whether they be clients or suppliers. It should be easy to reach. It should be safe as well.

Make sure that you consider the above-mentioned factors when shopping for a commercial property.

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6. February 2012 by Kristian Alekov.

The commercial real estate market of Las Vegas, Nevada continues to suffer from huge numbers of vacant properties and foreclosed premises. Analysts have stated though, that the biggest reason for commercial properties’ struggle is the decline of the retail industry in the area.

According to real estate experts, the oversupply of foreclosed and repossession properties in Las Vegas has dragged down the values of homes. Along with rising unemployment levels, the foreclosure problem is hugely influential in putting a break on the spending of consumers all around the metro area. And almost everyone knows what this means – no consumers spending money, no business for retailers. And if the retail sector is down, so is the commercial real estate industry.

Experts have reported that the domino effect of foreclosed and repossessed homes in Nevada is mostly felt in the Southern Nevada region. In Clark County, taxable sales declined considerably in 2009, although they did post a 2.7% rise during the first 10 months of 2010, according to the Nevada Department of Taxation. However, more problems for the retail sector and the commercial real estate industry are expected in 2011.

The vacancy rate of the Las Vegas commercial real estate market, particularly in the retail property sector, has gone beyond 10% at the start of 2011, realtors have reported. This percentage is considered massive, given that around five years ago, the commercial retail vacancy rate in the area was a mere 4%.

Aside from huge listings of repossession houses, market analysts have also cited online commerce as a big thorn on the side of retailers in Las Vegas. According to them, Internet-based retailers are hurting physical stores, mainly because online sellers are getting their goods from surplus inventories which allows them to sell products at heavily discounted prices. To compete, brick and mortar retailers are forced to lower their prices to the point that profits are going below operating costs.

In addition, most consumers admit that online shopping is definitely more convenient than physical buying. For the most part, experts stated that unless consumer spending picks up, the retail sector and the commercial real estate market of Las Vegas will not be able to fully recover.

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