Case Studies - Real Estate

 

Buying the Farm (But in a Good Way)

Our client wanted to purchase a large tract of farm land for commercial development. Title to the property was complicated by numerous poorly documented sales of the parcels that had been consolidated to form the tract, and because the farm straddled two counties. In fact, the title abstractor said that the title to the property was the most complicated he had ever seen. We resolved all of the title concerns and also negotiated and prepared the purchase agreement. In our negotiations, we made sure that the seller would be responsible for any taxes associated with the change from agricultural use to commercial use. This provision alone paid for our services because the seller, and not our client (the buyer), was required to pay the substantial agricultural transfer tax at closing. We also obtained numerous other protections for our client in the purchase agreement and made a very complicated transfer into a hassle-free closing for our client.

 

Negotiating a Complex Lease and Avoiding a $1 Million Loss

Our client was a large commercial tenant which had outgrown its premises and needed to move its expanded business into larger space. Our client had the right to terminate its lease three years before the end of the term and it had located new space in anticipation of exercising the right to terminate. After the client came to us to negotiate the new lease, we discovered that the client and its broker had overlooked the intricacies of the termination right in the existing lease. To successfully terminate the existing lease, our client was required to provide a termination notice by a certain date and vacate the premise by a later, fixed date. If the new landlord was late in delivering the new premises – a fairly common occurrence – and our client therefore was late in vacating the existing premises, our client would forfeit the early termination right and remain liable for another three years’ rent—in addition to the rent payable under the new lease. In short, a minor timing problem could result in a loss to our client of over one million dollars. With this understanding, we negotiated a strict indemnification agreement with the new landlord which provided that the new landlord would pay all rent due to the former landlord in the event the new premises could not be delivered on time. With this “incentive,” the new landlord had no problem meeting the delivery date required in the new lease.

 

   Helping a Tenant Escape Renovation

 

Our client was referred to us after the large downtown office building where it was located began major renovation. Extreme noise from jackhammers and other construction equipment had started to interfere with our client’s business and there would be many months of noise to come. Our client wanted to terminate the lease, but had been told its lease allowed the renovation with no possibility of termination. We developed a strategy based on a thorough review of the case law of constructive eviction and interpretation of the applicable lease provisions. We also guided our client in collecting evidence of the existing and impending disturbance to our client’s business. With the law and evidence in hand, we negotiated with the landlord. We obtained not only a termination of the lease, but also a six-figure settlement to defray the expense and inconvenience our client would experience in relocating its business to new premises.

 

A Master Lease for the Future for a Landlord Planning Renovations

Our client, the owner/landlord of numerous retail and office buildings, was planning a major renovation and additional construction at one of its retail and office complexes. This client needed to continue entering into new leases, yet also retain the ability to renovate and build in the future. We identified the landlord’s specific requirements and created provisions throughout the landlord’s master lease that preserved the necessary flexibility for future work. These provisions addressed relocation of tenants, demolition of buildings, tenant cooperation with facade renovations, construction in common areas, and the appropriate allocation of common area expenses. With little alarm to the current and future tenants, the landlord was able to preserve all meaningful options for future work, while continuing to lease premises in the near term.

 

Evicting a Problem Tenant

Our client was a large local landlord struggling to address a tenant’s continuing holdover. Despite our client’s diplomatic requests, the tenant not only refused to vacate, but also refused to pay the holdover rent—equal to 150% of the normal rent. The tenant claimed that it had been treated in a discriminatory manner and should have been allowed to extend its lease. The tenant’s holdover was not only costing our client money, it also was preventing the landlord from leasing the space to another business which wanted to expand. By the time it brought the problem to us, our client needed a quick resolution. We immediately reviewed all of the applicable documents, issued the notice to vacate required by law, and then filed suit to evict pursuant to local code. Faced with the very real threat of eviction and a substantial holdover penalty, the tenant began to negotiate with us. We obtained not only a prompt eviction and payment of the premium holdover rent for the prior eight months, but the reimbursement of our client’s legal fees.

 

A Condominium Conversion with 85 Parties

Our client, an LLC with a complex membership structure, wanted to purchase a District of Columbia apartment building and convert the building to a condominium. The task was complicated by the LLC’s membership structure and made even more challenging because the conversion required us to deal with 85 tenants who had a right of first refusal under D.C. law.

 

The attorneys at Garson Claxton assisted in both the complex negotiations with the tenants and the purchase of the property. We were able to negotiate separate deals with enough tenants that a majority of them vacated the premises, allowing the conversion. We also were able to document to the members’ satisfaction complex financial and member responsibility agreements.

 

The $11 Million condominium project has been a success but would not have happened without our attorneys thorough knowledge of the law, negotiating skills, and the patience to be sure our client’s needs were met.

 

Making a Complicated Deal Happen

Our client wanted to purchase raw land in Charles County to subdivide into 90 lots for single family homes. The $4-million deal was complicated by the fact the land was being sold by representatives of an estate who had questionable authority to sell and by financing that included take-back financing, third-party financing, in-kind payments and monetary payments. We were able to satisfy our client, the sellers, and the lender, and the sale closed.

 

Purchase of an Office/Retail Building with Safeguards that Mattered

We assisted our client in the purchase of a commercial building with office and retail premises. The purchase agreement which we had negotiated protected our client from numerous potential problems. When our client discovered structural defects in the building, our contract required the seller to pay for necessary repairs. Similarly, the purchase agreement prevented the seller from modifying existing leases with the current tenants, which enabled our client to protect the future uses of and revenues from the property. The seller sought to enter into one lease that could have significantly reduced the future net operating income, but our contract prevented the seller from doing so. Instead, our client (the buyer) controlled the lease negotiations even before he bought the property. Whenever an issue arose prior to closing, our contract had anticipated the problem and protected our client.

 

Procuring a Special Exception for a Special Business

Zoning laws restricted our client’s business to only a few locations and, even then, a special exception was required. When faced with an expiring lease and the desire to own her own building and land, we assisted our client in the difficult process of identifying potential locations. Once our client had found the needle in the haystack, we negotiated a purchase agreement that provided protections for our client, including contingencies for financing and the requisite special exception. We then began the arduous process of procuring the special exception. We presented our case and won the special exception, despite the many applicable requirements. Shortly thereafter, we helped our client close on the purchase of the building and land.

 

Refinancing an Apartment Building in a Hurry

  

To take advantage of low interest rates, our client sought to quickly refinance an apartment building with an international lender. The lender imposed numerous, stringent requirements for the loan. We coordinated the assemblage of hundreds of documents, certifications and reports required by the lender. Further, we negotiated numerous compromises to protect our client and still closed the loan in record time.