Texas Real Estate Blog

POA Mystery Revealed

This week I decided to share a presentation I am doing for some clients on Property Owner’s Associations (POA’s). With the advent of so many mixed use projects (residential/retail/commercial) this topic has expanded beyond the local HOA we all know and love. Frankly, there are very few projects these days that don’t have some sort of community association twist. As such, as I meander through transactions I find that my colleagues, let alone their clients, know very little about how these associations work or are structured. In fact, while they look very complex, once you know where to look for the laws that affect them and are familiar with the documents that create and operate them, you will find that they serve a very valuable purpose and are essentially easy to understand and navigate. The article I have attached takes you from soup to nuts on the purpose of a POA and the laws that govern them in conjunction with the documents that control their operation. Nuts_and_Bolts_of_Community_Organizations.D… This article provides a basic framework for those of us who work with POA’s every day and for those of you who get drafted to serve on your own HOA (Advise-NEVER miss the annual meeting of your own HOA-you will be sorry).

As far as I am concerned, summer is the time to lighten up a little bit. For those of you who have not wasted countless hours on the website www.damnyouautocorrect.com you are certainly missing out on a real treat. Here’s a tastehttp://damnyouautocorrect.com/9683/coming-out/  And here’s a hint–turn yours OFF!

Assignments vs Subleases

Those of you outside the DFW Metroplex are probably a little sick of hearing about the tremendous win by our Mavs last week. Sorry, but I can’t let this post go by without paying homage to a team that pulled off one of the biggest and most satisfying upsets in NBA history. I called this for the Heat in 4. I mean, come on, the Heat, on paper, is the most talented team in the NBA and, I guarantee, they will win their share of Championships, but what a testament to, and perfect example of, pure American grit (by a German no less) and determination. Congratulations to the Mavs organization and thanks for a memory we in Dallas will cherish for a long time.

Now, to business. This post is devoted to assignments and subleases. I know, another riveting exhortation on lease transactions. However,  this area has become hot with all the movement in the leasing arena. We have had many clients move from their existing space to bigger and better digs because of the fabulous rental rates in the market today. We have also had many clients trying to unload their lease space to fend off bankruptcy. So, short of giving the space back to the landlord, what are the alternatives? Answer–assign or sublease the premises. Once the hard part (finding a viable subtenant) is done, the next crucial part of the process is the actual transfer and all the legal complexities attendant thereto. Most of our clients who are not in the real estate business assume that once they assign the lease or sublet the premises to someone, they are off the hook forever. Not even close. As such, attached is a fairly detailed article which addresses the differences between the two alternatives, the strategy behind both and the ramifications thereof.SP-#3396686-v1-Lease_Assignment_and_Sublease_Agreements This too, is a good desk reference for anyone who advises clients in the leasing area.

Ok—one more tribute to our beloved Mavs. How many times have we seen a draft or a trade ultimately make a huge difference for a franchise (Does Cowboys/Vikings/Jimmy Johnson/Hershel Walker ring a bell??)http://www.businessinsider.com/sports-chart-of-the-day-mavs-title-can-be-traced-to-one-trade-2011-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29&utm_content=Google+Reader Now, Go Rangers! Have a great week everyone.

Partnerships, LLC’s and Other Fascinating Stuff

You are probably wondering why I have a picture of a poor guy who is on the mound on ESPN with his fly down? Well, I will get to that later but I had to get your attention because this post, while important, is a yawner. Today, I am posting a compilation of laws and statutes pertaining to Partnerships, LLC’s and other entities. Yes, we lawyers have to actually know this stuff so I thought it might be nice to share the pain. Seriously, I can’t tell you how many times a week I get a call from a client asking me,”How quick and how much to form an LLC”? Actually it takes a matter of minutes to form an LLC; however, if the constituent documents underlying the LLC/Partnership are not done correctly the ramifications could be expensive and last for years. The most important part of the formation of an LLC or Partnership is the Operating Agreement for the LLC and the actual Agreement of Partnership. These documents will set out the basic rights, obligations and ownership interests of the respective members and partners. These are very detailed and act as the “game plan” for the venture and the pre-nup for the investors. In addition there is a ton of law that governs LLC’s and Partnerships, much of which is covered in this articlePartnerships_and_LLCs. The bottom line is that this article can serve as a great desk reference for anyone who advises others in business relationships. Frankly, with all the stellar legal advice we render for clients in this regard, the best advice/caution I always give to clients is that if the person(s) you are about to do business with are not the type of people you would do business with on just a handshake, then I would think twice (no–thrice) about the marriage.

Now to the photo-it’s actually a snippet from an article on business etiquette that I found refreshinghttp://www.businessinsider.com/how-to-tell-the-boss-his-fly-is-down-2011-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29&utm_content=Google+Reader You never know what people are observing about you, so its best to always maintain a “professional” demeanor. In short, manners matter.

Off to the Outlet Mall!

I thought this week, in the spirit of Memorial Day,  I would pay homage to the outlet mall which, despite our economic crisis in the real estate world, is actually making a come back. If you think about it, it makes perfect sense as people love to shop, especially on holidays (just ask my wife and daughters) and outlet malls provide the ability for my brood to obtain designer labels at discount prices (most of the time). Nevertheless, in my world, the outlet mall development presents a number of unique challenges that a normal strip center does not. As such the attached article SP-#3396871-v1-Issues_In_Outlet_Centers addresses  a number of issues that affect outlet centers.  Hopefully, this type of development will lead the way in the resurrection of retail.

Speaking of shopping–have you ever wondered what the logos of various brands of automobiles actually mean? Frankly, never gave it much thought until I read this article http://www.businessinsider.com/car-logos-2011-5#the-aston-martin-logo-was-designed-to-suggest-speed-11. Very cool historical reflection on where these logos that we have come to know, love and buy. Have a great week everyone!

CAM Caps Anyone?

This week I am posting about “Common Area Expenses” which is  a topic which is often intentionally over looked in both retail and office leases. If you are well versed on this topic then this post will be perfect bed time reading. If, however, you routinely skip over this issue, get ready for some sleepless nights. I find that this section of the lease is often ignored because either the parties assume it is standard language or they won’t admit they just don’t understand it. Regardless, the failure to drill down into this paragraph can cost both the landlord and tenant some serious angst. I have attached an excellent article prepared by two of my colleagues, Margaret Jordan (Kane-Russell/Dallas) and Robinson Plowden (Sutherland-Asbill/Atlanta), that should serve as the go to desk reference on this issue.SP-#3389981-v1-CAM_Costs__Caps__Audits_and_New_Ideas This article details the costs and expenses typically allocated among the landlord and tenant in a lease for Common Area and related expenses. It uses retail as an example but the concepts equally apply for office and other areas. Obviously, the failure of a tenant to recognize the CAM expenses which are reasonably payable increases its CAM expense inordinately. Conversely, the failure of the landlord to include expenses normally payable by a tenant eats into its IRR. As such, it behooves the parties to a lease to pay attention as a mistake in this area is a costly one.

Now, speaking of the unfair payment of expenses–On this day in 1895 our beloved Supreme Court issued one of its all- time best rulings by deciding that Congress had clearly exceeded its authority in imposing an onerous and counter-productive law commonly known as “the graduated income tax”. In fact, it was denounced by Senator John Sherman of Ohio as …”a symbol of socialism, communism and even devilism”. Since the law was new and controversial, the party in power in the Congress decided it was best to sneak it in…er…to pass it as part of the “Wisconsin-Gorman Tariff Act”. But when they started to collect the tax, it was a secret no more. The Court thought the concept of a graduated income tax was not worthy of discussion on its merits so they struck it down on procedural grounds. Unfortunately, that allowed later and lesser Regulators, Legislators and even Jurists to change procedures and charge taxpayers. Oh the agony…..