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Things to Consider for Commercial Real Estate Leases – for Landlords

Lynnette Ariathurai, Bay Area Business Attorney, Fremont, Hayward, CA

Owning commercial property in California can be lucrative, especially when that property is located in an area that is highly trafficked and desirable for businesses in the region. At the same time, it is important to recognize that the value of a commercial property investment depends on having a strong, well-drafted lease agreement.

The lease is the basis of your relationship with a commercial tenant. It is crucial that a lease effectively protects your interests in all possible scenarios. Here, our Fremont commercial real estate lawyer highlights six important issues that landlords should consider when negotiating and drafting a commercial lease in California.

Commercial Rent (Base Rate, Utilities, Percentage Leases)

It is no secret that the most important thing for landlords is collecting rent. Rental payments are the lifeblood of commercial real estate investment. A well-drafted commercial lease will help you ensure that you are in the best position to get full and fair market value rent for your property and that you can actually collect the rent.

A commercial lease should clarify exactly who is responsible for all costs—it should specify the amount of base rate, the date it is due, and payment of utilities. In some cases, commercial rent is based, in part, on business revenue. Often referred to as a “percentage lease”, it may be a good option for some California landlords.

Duration of the Lease (Early Termination/Renewal Rights)

A commercial lease should always have a well-defined duration. Both parties need to know exactly how long their current obligations will last. Beyond that, commercial landlords should also consider including provisions that clarify what will happen at the end of the lease. Among other things, you may want to consider:

Automatic renewal rights (first refusal rights);
The ability to extend the lease; and
Early termination options.

At the end of the current commercial lease term, the landlord-tenant relationship will either be extended or it will terminate. It is useful to operate under an initial commercial lease that helps facilitate a smooth transition, whatever the parties decide to do.

Alterations, Improvements, and Maintenance During the Tenancy

Commercial leases should have clear information about the commercial tenant’s ability to make any alterations to the premises during the terms of the lease, as well as information about whether you or the commercial tenant will be responsible for necessary improvements or maintenance during the tenancy.

Insurance and Indemnity

A commercial lease should always prepare for the possibility of unexpected loss—whether because of property damages or a lawsuit from a third party. This starts with insurance. While a commercial landlord will typically maintain their own insurance policy, it is important to consider whether a commercial tenant will be required to have a liability policy or another type of insurance policy as well. Additionally, commercial landlords may also want to consider some type of indemnity clause. As defined by the Cornell Legal Information Institute, an indemnification clause is a contract provision that shifts a liability risk from one party to another.

Collection of Overdue Rent and Evictions for Non-Payment

Unfortunately, not all commercial tenants live up to their responsibilities. You may run into a problem collecting rent. If so, you have the right to take immediate action against the business, potentially including initiating eviction proceedings. Your commercial lease is the basis of your ability to collect rent and evict a tenant for non-payment. A properly drafted commercial lease will ensure that you are in the best position to collect, even if a commercial tenant files for bankruptcy.

Termination of the Lease for Other Types of Contract Breaches

As a tenant, the primary obligation a business owes to its commercial landlord is a timely rental payment. Of course, that is not typically the only obligation. Landlords also need a commercial tenant who will treat their property well. In a commercial lease, you should strongly consider including a clear definition of what constitutes a breach of contract sufficient to justify termination of the lease and removal of the tenant. For instance, a commercial tenant may be removed for creating a nuisance or engaging in unlawful activity on the property.

Contact Our California Commercial Real Estate Attorney Today

Are you planning to rent commercial property to a new business tenant? You should seek advice about your commercial real estate lease from an experienced Fremont business law attorney. Attorney Lynnette Ariathurai is committed to serving commercial real estate landlords in California and can discuss the issues you should be considering in your commercial lease. Contact us to learn more about the services we provide. We serve clients in Fremont, Hayward, Milpitas, Union City, Newark, and throughout the East Bay.

business law attorney, commercial property leases, commercial real estate leases, contract agreements, contract attorney

Common Mistakes Made in Contract Agreements

Contract agreements are the basis of most commercial transactions in California. Whether you are starting a business, buying or selling a company, entering an agreement with a vendor/distributor, or hiring a new employee, you will benefit from a professionally drafted agreement that establishes and protects your rights and interests.

A proper contract is all about the small details. Even a relatively minor error could cause serious headaches for you or your business. With guidance and support from a local contract attorney, you can help avoid the most common mistakes. Here are four common mistakes made in contract agreements to watch out for:

1. Failing to Draft a Written Contract

You can enter a contract agreement without writing anything down. Oral contracts are (often) enforceable in California. Under Cal. Civ. Code § 1622, “all contracts may be oral, except such as are specially required by statute to be in writing.” That being said, it is almost always a mistake to rely on an oral agreement. Not only does a written agreement clarify expectations and avoid misunderstanding, but it will make it much easier to protect your rights should a dispute arise.

2. Copying and Pasting a Template Agreement from the Internet

It does not take much internet research to find some basic contract templates. The ‘copy and paste’ approach to contract drafting is not good enough for you or your business. When parties rely on a pre-built template agreement, they frequently run into problems. A proper contract is one that is customized to meet your specific agreement. Copy/paste language is often inapplicable and inadequate.

3. Signing an Agreement that You Do Not Fully Understand

Do not sign a business or employment contract unless you fully understand the terms. In far too many cases, people run into problems because they signed an agreement they simply did not understand. Before you finalize an agreement, take the time to carefully read it over. Pay close attention to all the specific terms.

4. Not Working with a Local Business Contract Lawyer

Contracts are complicated. You do not need to negotiate and draft an agreement alone. Professionals and business owners can benefit from the guidance of an experienced California business contract lawyer. Among other things, your business attorney will:

Understand your purpose and objectives
Review the specific terms and conditions of the agreement
Fix any ambiguities or errors in the contract, and
Negotiate any terms that are unfavorable

It is important to remember that business contracts are fundamentally negotiable. You have the right and ability to seek better terms. Do not finalize an agreement until you are satisfied with the contract.

Contact Our California Business Contract Attorney for Help

Attorney Lynette Ariathurai is an experienced, reliable contract lawyer. If you have any questions or concerns about business or employment contracts, our team can help. Contact us now for a completely confidential initial consultation. From our office in Fremont, we serve communities throughout the East Bay, including Hayward, Milpitas, Union City, San Leandro, and Newark.

business attorney, contract agreements, local contract attorney

Ways to Resolve Disputes Between Businesses

When you are facing a business dispute, it is important to consider your options for a cost-effective and timely resolution. When businesses are engaged in disputes with one another—particularly when those businesses are located in different areas of the country—forms of alternative dispute resolution (ADR) can be particularly useful. By using ADR, you can avoid costly litigation, and you may be able to avoid multiple trips to another region of the country for court hearings. To be sure, you do not want to spend money on multiple trips for court hearings when you could resolve your business dispute quickly and efficiently. At the same time, employing methods of alternative dispute resolution can allow businesses to avoid complications concerning jurisdiction and choice of law matters.

Mediation and arbitration are two commonly used forms of alternative dispute resolution under California law. Our experienced business attorney can help you understand the benefits and limitations of each type of ADR.

Mediation to Resolve a Business Dispute

Mediation is a form of ADR that requires the disputing parties to engage in communication with one another, with the aim of reaching a resolution to their dispute. In mediation, you meet with the other party and a neutral third party (the mediator). Your attorney, as well as the other party’s attorney, can also be present.

Mediation cannot be compelled, both sides must consent to mediation. Mediation is much different from a court hearing in which a judge hears both sides of a dispute and makes a ruling or decision. In mediation, the mediator’s job is to facilitate communication between the parties. The mediator does not issue a decision about the dispute. If you cannot reach an agreement with the other party, then your case can move onto arbitration or litigation. If you can reach a decision, then you can enter into a formal agreement with the other party to officially resolve the dispute.

There are both benefits and limitations to mediation. An obvious benefit is that the process is much faster and less expensive than litigation. You may need to attend mediation only once before reaching an agreement. Another benefit is that the discussions during mediation are confidential. As such, any confidential matters pertaining to your business will not become public record. Nor can the statements made and documents presented through mediation be used in a subsequent arbitration or litigation. Finally, mediation can allow you to play a key role in resolving your own dispute, and it may improve communication between you and the business with which you had a dispute. The major limitation of mediation is that you cannot compel the other side to produce evidence you may need to prove your claim. Also, if you cannot reach an agreement, the mediation may not be a good use of your time or money.

Using Arbitration for Disputes Between Businesses

Many businesses rely on arbitration to resolve disputes with customers, employees, and vendors, but arbitration can also allow you to resolve a dispute with another business.

Like mediation, the key benefits of arbitration are that it is quicker than litigation and more cost-effective. Unlike mediation, an arbitrator—a neutral third party (arbitrator(s))—hears the dispute and can issue a binding decision. Unlike mediation, arbitration can be compelled if there is a signed written agreement between the parties to arbitration. One of the key limitations of arbitration. If you don’t like the outcome, your options for appeal are much more limited than they might be if you had chosen litigation.

Seek Advice from our Fremont Business Lawyer

If you need assistance resolving a business dispute, our Fremont business law attorney can help. We serve businesses in Fremont, Hayward, Union City, Milpitas, and Newark, CA. Contact the Law Firm of Lynnette Ariathurai online today or call us at 510-794-9290 for more information.

arbitration, business dispute, business law attorney, mandatory arbitration agreements, mediation

Can California Employers Still Have Mandatory Arbitration Agreements with Employees?

Business owners and employers in Fremont and throughout Northern California should know that they may not be permitted to require employees to agree to arbitration clauses or agreement under particular circumstances, according to a new law in the state. The new law, Assembly Bill 51, limits the ways an employer can use an arbitration clause. In brief, you may not be able to require new employees to sign employment contracts that contain arbitration clauses. We want to provide you with more information about the new law, which was supposed to take effect in early 2020, and to explain what its implications might be for California businesses.

Understanding California Assembly Bill 51

California Governor Newsom signed Assembly Bill 51 into law in October 2019, to commence in January 2020. The law is designed to prohibit employment discrimination, and one aspect of the bill is that it prohibits employers from requiring job applicants or current employees, as a condition of their employment, to enter into arbitration agreements. The legislative reasoning behind this part of the bill was that arbitration agreements can unnecessarily silence employees and can prevent them from making concerns about sexual harassment at work, public.

Under the new law, it is unlawful (and actually criminal) for an employer to require a job applicant or an employee to agree to an arbitration under the California Fair Employment and Housing Act (FEHA) or the California Labor Code, as a condition of that person’s employment. The law does not invalidate currently existing arbitration agreements. Yet business advocates have filed a lawsuit to prevent the new law from taking effect, arguing that the Federal Arbitration Act (FAA) preempts AB 51. The U.S. District Court for the Eastern District of California recently issued a preliminary injunction that prevents California from enforcing the terms of AB 51. Until the case is ultimately decided, what should your business do?

Impact of AB 51 on Businesses in California

For many businesses in California, arbitration—including mandatory arbitration—can help to keep business costs down and can prevent costly business litigation in the event of an employment or other contract dispute. As such, it is in the interest of many small businesses in Northern California that the law be preempted by the FAA.

In the meantime, what should you, as a business owner in the Fremont area, do to ensure that you are in compliance with existing law? Most importantly, you should know that any arbitration agreement that existed prior to January 1, 2020—when AB 51 was supposed to take effect—does not fall under the new law at all. Even if it were to take effect, arbitration agreements in force prior to this date will remain lawful. Next, you should keep in mind that AB 51 only applies to claims under the FEHA or the California Labor Code. Accordingly, it is certainly lawful to require employees to agree to arbitration for disputes that would not arise under either of these laws.

If you want to require an employee or prospective employee to agree to arbitration for claims that could potentially be covered by AB 51, it is important to recognize that you are taking a risk as a business. If AB 51 is ultimately determined to be lawful and not preempted by the FAA, then any arbitration agreements you make after January 1, 2020 could result in both civil and criminal penalties. However, if AB 51 ultimately cannot take effect, an arbitration agreement that would otherwise be prohibited by AB 51 could be enforceable in California. If you have questions about your business’ situation, you should speak with a business lawyer as soon as possible.

Contact a Fremont, CA Business Law Attorney

If you have questions or concerns about how the new limits on arbitration could impact your business, it is important to speak with an experienced Fremont business law attorney as soon as possible. The law will have significant practical considerations for many small business owners, tech companies, and other businesses in the region.

Contact the Law Office of Lynnette Ariathurai online today or call us at 510-794-9290 to learn more about whether California employers can still have mandatory arbitration agreements with employees. We represent business owners across Northern California in Fremont, Hayward, Union City, Milpitas, and Newark.

arbitration clause, assembly bill 51, business law attorney, employment contracts, mandatory arbitration agreements

Top 5 Business Contracts Mistakes

Contracts and contract reviews are part of everyday life for Bay Area businesses. However, many business owners and managers make mistakes when creating, considering or approving a business contract that can have catastrophic ramifications on your business. Here are five common mistakes in business contracts and how to avoid them.

1. Using Internet or Ready-Made Contract Forms

There are several reasons a ready-made contract form will not work for you and your business. They include:

Contracts must be relevant in your locality. A form contract from Michigan may not contain clauses that are standard in California contracts.
State laws are varied. The law could be different from where and when the contract was originally drafted. You must review borrowed language from such a contract for amendments to relevant state law, including additions and subtractions to the various codes at play in the agreement.
Contracts are drafted from the perspective of one side over the other; is the form contract you are reviewing beneficial or detrimental to your deal?
Contracts for one type of entity may not be relevant for other types of entities

2. Seeking Legal Advice After Signing the Contract

Even if your deal is relying on a generic contract template you pulled from the Internet, have a business contract lawyer review it before you sign it to make sure it protects you and includes all of the terms it should and does not put your business at risk.

3. Forgetting the Recitals

A recital, in legal terms, is a preamble to the contract. It provides a general idea to the reader about who the parties are, what the contract is about, and why the parties are signing the contract. Often overlooked during the contract drafting and negotiation phases, when a dispute arises over contractual interpretation, the court or arbitrator may use the recitals as an aid to interpretation of the contract. Focus on the operative provisions of the commercial contract, but do not forget to set the scene and provide the reader of the contract with background information.

4. Not Knowing Which Clauses to Include and Which to Leave Out

Not understanding boilerplate (standard contract clauses) can come back to bite you when a dispute arises. A business lawyer provides advice as to which clauses should be included in your contract and which clauses should not.

For example, an assignment clause should be included in a commercial contract. An assignment clause will permit you to assign the contract to another entity (someone who buys your business). Without an assignment clause, the contract may not be sold or transferred should you sell your business after the commercial contract is signed.

Another issue that can be addressed by a business attorney is whether a contract should include an arbitration clause. The arbitration clause must also contain information about the impact of any decision by an arbitrator. With no or weak arbitration clause included, the statement may be advisory and not enforceable.

5. Forgetting That Words Have Meaning

Form contracts are notorious for containing vague and ambiguous language. Using words without clear definitions is dangerous to contracting parties because it places the interpretation of such language in the hands of someone else. Ambiguities are normally construed against the drafter of the contract. It is possible then that ambiguous language will have at least three interpretations – yours, the other party’s, and the court or arbitrator’s. A court or arbitrator may be bound to interpret such a clause using the custom and practice of your locality, which can be different from the custom and practice of your industry and even your intent at contract formation.

Ask Us to Review Your Business Contract

Make sure that your commercial contract is in writing and reviewed by an experienced and knowledgeable business contract attorney who can provide you with actionable advice and counsel to protect your business.

Avoid these and other common business contracts mistakes. Contact us now about reviewing your commercial contract before you sign it. We represent and counsel clients in Fremont, CA and the surrounding communities of Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, CA.

arbitration clauses, business contracts, contract attorney, contract mistakes

A Legal Expert Should Be Reviewing Your Businesses Documents and Agreements

Here’s Four Really Good Reasons

Many businesses don’t often hire independent counsel to review their business documents. The documents in question can range from a simple sales contract between your company and a new client, to a commercial space lease for a new location, to a complex asset sale agreement to sell or purchase an asset, product, or business.

It’s quite easy and natural for the Owner, Principal, or President of the company to review and sign-off on any contract that crosses his desk. Who better than the Owner, Principal, or President is most versed in the business and its products, markets, and services?

The Owner, Principal, or President of the business along with the business unit seeking the contractual relationship is most certainly the expert on the subject of the deal. The internal review is just one aspect of the review process for a legal document. When the document in question is a legal document or agreement, a legal expert should be brought in by the business to offer a legal perspective. It is critical for a legal professional to take a look before the document is signed and presented to the other party for approval.

Here are four really good reasons why in your next review of a business agreement you should strongly seek a legal expert to help you legally interpret and analyze the document:

1. The cost of skipping an attorney review of your business agreements could put you out of business in comparison to what it costs to have someone review the documents and analyze the deal before signing the agreement.

2. An attorney review of your business agreements can offer a fresh legal perspective and provide you with advice of current customs and practices in your industry relating to contracts.

3. You are not an expert at contract interpretation or the law if a dispute arises. A lawyer is able to provide clients with interpretation and analysis of the law in your jurisdiction to the facts of your contract and/or potential dispute. No other professional is able to do that. Especially if a mistake was made during the contract formation or execution process, a lawyer can help your business solve the problem and defend your company in court when a deal goes sideways.

4. A business lawyer is also your legal representative. During the drafting and negotiation of the contract, a business lawyer can stand in your place, negotiate with the other party’s counsel, and provide you with actionable intelligence on points in your agreement where you can influence or change terms to protect your business and receive a favorable outcome.

If you are a business in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, California, seek the legal advice and counsel of a business lawyer. The Law office of Lynnette Ariathurai is ready to help.

business agreements, business contracts, document review, legal representation

Contract Dispute May Render Group Of Elderly People Homeless

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Thursday, January 18, 2018.

A group of families in another state are highly concerned about a contentious battle that remains ongoing between a Medicaid insurance provider and an assisted living and care facility. The situation involves a contract dispute that is negatively affecting elderly members of the families who happen to live in the assisted living facility. In essence, they’ve been told that if the problem is not resolved by a particular date, they will have to vacate their residences. Some readers in California may relate to the situation.

Younger family members of the residents have expressed their concerns, saying the notices those affected received in the mail were akin to possible evictions. Spokespeople for the nursing facility say they want nothing more than to peacefully and swiftly resolve the issues at hand so they can continue providing the highest level of quality care they have always provided for their residents. The central focus of the contract dispute between the personal care home and the insurance company has to do with residential rates.

The daughter of a 91-year-old resident says she’s very worried her mother will have to move far away from her if the current problem is not resolved soon. There are approximately 70 elderly residents who would be in similar circumstances if the nursing home and insurance company don’t achieve an agreeable solution. This situation is a prime example of how contract disagreements between specific parties often impact others who may not be directly involved in a particular contract.

A business and commercial law attorney can be a great asset when a negotiation problem or contract disagreement arises. An experienced attorney who is well versed in California business laws can advise a client as to what the most viable option available might be to get things back on track in the least stressful manner possible. Anyone in Florida concerned about a current contract problem can seek support by requesting a meeting with a commercial law attorney.

Contract Disputes, medicare

Quick Action And Negotiation May Solve Contract Dispute, Early On

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporationposted in Contract Disputes on Thursday, October 26, 2017.

Many people in California enjoy traveling by bicycle. In fact, San Francisco is a prime location for businesses catering to bicyclists, such as Ford GoBike, a bike sharing program that allows travelers to access bicycles inexpensively for personal travel throughout the city. This particular company says it has an exclusive contract with the city; unfortunately, a contract dispute has apparently arisen once word got out that the city’s transportation agency is planning to forge a deal with a Ford GoBike competitor.

In an effort to mitigate the contract dispute before things get out of hand, the Metropolitan Transportation Commission has initiated a dispute resolutions process. The MTC bases its actions on the threat of legal action regarding Ford GoBike’s allegations that the city is breaching an existing agreement. The MTC said that it has received word that the city plans to enter a contract with another bike share program; therefore, it believes problem solving techniques may help diffuse a potentially acrimonious situation if Ford GoBike decides to take the matter to court.

A notable factor in the situation is that Ford GoBike bore complete financial impact when it started its bike share program in the city. The company’s willingness to foot the entire bill (with no cost to the public) was primarily based on the agreement that it would have exclusive rights to running such a business in the city. Some say, if left unresolved, this situation could have a ripple effect in other regions.

Generally speaking, California company owners who work closely with experienced legal representation are often able to overcome their contract-related disagreements sooner than those who try to handle their own problems. A good place to start when seeking guidance about a particular issue is to request a meeting with an experienced business and commercial law attorney. It is better for the bottom line in the long-run if a dispute is resolved in as timely a manner as possible.

arbitration, Contract Disputes, negotiation

Attorneys Know How To Word Things To Avoid A Contract Dispute

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Tuesday, June 13, 2017.

Business people in California and throughout the nation often enter written agreements with one or more parties to secure services, employment and/or other commercial transactions. When a contract dispute arises, it can cause immediate and long-lasting negative repercussions, including productivity delays and economic losses. Terminology used within a particular contract is often essential to the success of the agreement; therefore, it’s typically best to allow an experienced attorney to review a proposal before signing anything.

An business and commercial law attorney understands the importance of choosing words carefully when drafting a prospective agreement that will become legally enforceable. One or two words can make all the difference regarding each party’s obligations and responsibilities contained therein. To prevent a contract dispute, it’s crucial to make sure all parties understand and agree upon the chosen terms and phrases placed in writing.

Wording happens to be a main issue in a current contract disagreement in another state. The situation involves a group of educators who serve at least 13,000 students in their area. They want administrators to change contract terminology pertaining to employee transfers. They’re also fighting for an increase in long-term pay as their current starting pay is satisfactory, but they make nearly $5,000 or so less than area counterparts once they hit the 10-year mark.

Hiring a business and commercial law attorney to negotiate on one’s behalf and aggressively pursue all options available toward a favorable outcome is a smart move many California business people make. Those who hope to avoid a contentious dispute understand that experienced representation is often a key factor in achieving their goals. An attorney can provide many contract services, from actually drafting a proposal on a client’s behalf, to reviewing a prospective agreement or litigating a particular issue as needed.

Need help with contract reviews, creation, or representation? Please contact the Law Office of Lynnette Ariathurai, serving businesses in Fremont, Hayward, Union City, Castro Valley, Milpitas, or Newark, CA.

Contract Disputes, contract wording

Aggressive Representation May Help Resolve Contract Disputes

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Tuesday, June 6, 2017.

Successful California business owners may relate to a recent disagreement that iPhone maker, Apple had with Finnish company, Nokia. The contract dispute has reportedly ended, but not without a struggle. Often, such situations can be diffused when a savvy business owner understands the importance of hiring aggressive legal assistance to negotiate (or litigate, if necessary) a solution.

The central focus of the Apple versus Nokia contract dispute was intellectual property. Apple told Nokia it would no longer pay for use of its patents. Apple also claimed Nokia committed extortion.

Nokia said many of Apple’s products, including iPhones, tablets and other electronic devices, contained its patented property and that Apple needed to pay for what it uses. When these types of disagreements arise, and a lot of money is at stake, tempers can become quite heated in court. Both sides are obviously trying to protect their own interests.

That’s where keen insight and experience can come in handy. A California attorney who knows the ins and outs of contract litigation can protect a business owner’s rights without compromising the bottom line. Those who wish to obtain the best results in the least amount of time possible typically hire aggressive representation to act on their behalves. Regardless of whether a particular business owner is fighting against accusations or is attempting to right a wrong that’s been committed against his or her company, retaining the help of a business and commercial law attorney is often a crucial factor in obtaining a successful outcome.

Contract Disputes, contract representation