Let’s talk about dates, why don’t we? Not the swipe-right kind – Daily News

on Oct17
by | Comments Off on Let’s talk about dates, why don’t we? Not the swipe-right kind – Daily News |

Today, dear readers, I’d like to talk about dates. No, not those that emerge from swiping right – where’s the challenge there, btw? Or, for those frothy products of palm fronds that find their way into a shake.

Instead, let’s talk some about those calendar creatures that presage the passage of time. You see, dates are quite important in a commercial real estate transaction. Indulge me, as I share a few examples.

Time is of the essence. A fancy legal way to let you know, hey, pay attention! I learned this the hard way early in my career.

We negotiated a five-year lease. My guy ultimately wanted to buy the building. Thus, we convinced the landlord to grant us an option. Well, the date for exercising said right – by notifying the owner in writing – came and went as did our opportunity. Ooops!

Fortunately, the titleholder was forgiving and allowed us a bit of grace but not before a finger-wagging letter was sent our way. Contained within most commercial real estate agreements are these words – “time is of the essence.” Governed are all the dates such as commencement, expiration, notices, and extensions. Wise agents calendar the important ones lest they blink past. I’m penning this post three days late. Hopefully, my editor will allow some latitude.

Leases

Leases memorialize the terms and conditions of landlord and tenant understandings.

Generally, a commencement date signals the start. Early possession may indicate an earlier date under in which the occupant is granted access. Expiration occurs at the end. Easy! Not so fast. Don’t forget rent increases that bump throughout the term – typically on the anniversary and by a preset or calculated amount.

Then there are expense reconciliation dates. Expect these in February. As mentioned above – extension rights such as options to renew, extend, expand, contract, and ownership options such as rights of first offer, refusal, to buy come with dates. Fortunately, in the case of options to extend – you’re afforded a window – like no earlier than nine or later than six months from expiration.

Approaching expiration, you’ll make a decision to stay or move. Staying might be for an additional term or month-to-month. Yes. Dates are involved.

Escrows

Buying commercial real estate is a rather involved dance defined by days on the docket.

A signed purchase and sale agreement is delivered to a clearinghouse of documents and dollars – AKA an escrow holder. Date of the agreement, yep. Date of full execution, sure. Dates for deposits to be received, uh-huh. Date for additional deposits, boom. Ok, got it.

But, lurking within the boilerplate are dates under which contingencies are outlined. How much time will a buyer have to arrange to finance, inspect the condition of the roof, visit the city and check on uses, review title for any exceptions, etc? Also, when will these time stamps commence?

Upon buyer and seller signing the contract, seller delivery of an important document, preliminary title commitment or the opening of escrow? Yes, yavol, oui, and si! As you may have gathered – a cacophony of calendar credits consists.

And ALL of the dates are as important as your first one with your significant or as memorable as waiting in line on PCH. You may be wondering – how does an agent keep track? Many employ a critical date calendar produced by the escrow holder. Or, we group certain waivers together. Or, we simply write into the contract language that reads – “the later of 30 days from the opening of escrow or five days from receipt.”

So, don’t date yourself by using a paper calendar or singing “Eye of the Tiger”. Simply, use a modern tool that can provide calendar alerts – like when it’s time to head to Laguna and wait in line for a shake.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.



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