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Most Common Things that Can Go Wrong During an Arizona Real Estate Transaction
Most Common Things that Can Go Wrong During an Arizona Real Estate Transaction 1930 1086 Gottlieb Law

Many people assume that once the real estate purchase contract is signed the hard part is done.  Buyers and sellers, however, need to understand there are many common things that can happen during the transaction causing the deal to fall apart. When it comes to real estate transactions in Arizona, it is important to be aware of the potential issues that can arise and understand the process from start to finish in order to give yourself the best chance for a smooth and successful transaction. Having a knowledgeable real estate agent and experienced attorney to guide the process can help avoid and resolve common issues as well.  Here are some of the most common things that can go wrong during an Arizona real estate transaction so you can be prepared in 2023.

Inspection Issues Lead to Disputes

The Arizona standard residential resale real estate purchase contract, used generally when real estate agents represent the buyer or seller, includes a 10 day inspection period.  This provides the buyer the opportunity to hire a home inspector and any qualified specialists to review all details of the home before moving forward with the purchase.  It is common for a buyer to find some issues with the home that impact their interest in buying the home and the ultimate price they are willing to pay.  Common small issues will typically be resolved with the seller agreeing to repair the defect before closing or adjust the sale price so the buyer can resolve the matter after closing.  Larger issues, like structural damage, mold or insect infestations, can often lead to a buyer deciding not to move forward with the purchase of the home.  It is generally good practice for anyone involved in a real estate transaction to stay patient and allow the inspection professionals to do their job during this period before assuming the transaction will move forward.  The results of the inspection will need to be considered by both parties and adjustments to the purchase contract and price are a normal part of an Arizona real estate transaction.

Title Issues

Title issues can be a major hurdle when it comes to completing a real estate transaction. Common title issues include unpaid taxes, liens, encumbrances, past due mortgages, or even recorded court judgments (please note the Arizona legislature recently amended Arizona statutory laws impacting the homestead exemption). These issues can create a cloud on title, making it difficult to transfer ownership of the property. Title issues can also make it difficult to secure financing, as lenders may not approve a loan if title issues are present. In some cases, title issues can even make it impossible to complete a transaction. Fortunately, there are solutions available to help resolve title issues. Great title companies have experienced professionals who can help identify title issues and find solutions. Additionally, title insurance can help protect buyers and lenders from potential losses due to title issues. Finally, in some cases, it may be possible to negotiate with the holder of the lien or mortgage to resolve the issue. By taking the time to identify and address title issues, buyers and sellers can resolve many title issues and still complete a successful real estate transaction.  Some situations involving title issues warrant hiring real estate counsel to protect the client’s interests.

Buyer Runs Into Financing Challenges

Financing issues are common and can happen to buyers that have been pre-qualified for the purchase. Pre-approval letters issued by a lender do not mean that the buyer will be fully approved in the underwriting process. These financing issues can have a major impact on a transaction, causing delays, changes in terms, or even the cancellation of the transaction altogether. To avoid financing issues, both parties should have a clear understanding of the other’s financial situation and the terms of the transaction.

Financing issues can also arise if the home appraises for less than the purchase price.  The lender will typically not approve a mortgage in these situations and both parties will have to negotiate a suitable path forward.  Sellers should consider that lower-than-expected appraisals will impact other buyers’ ability to purchase the home as well.  In a hot real estate market, some buyers might be willing to make up the difference in value with additional cash payment at closing.  This is obviously dependent on the buyer’s ability to facilitate that payment and their desire to move forward with the transaction after finding out the appraised value.

If financing issues arise during the transaction, there are solutions available, such as extending the timeline, renegotiating the terms, or finding alternative sources of capital.  The available solutions will often depend on both parties’ willingness to agree on a new timeline so the buyer has time to find new financing.  Flexibility is advised if both parties genuinely want to complete the transaction.   

Closing Issues at the Finish Line

Closing issues can have a significant impact on the successful completion of a real estate transaction. Common closing issues can include an unexpected lien on the property, title defects, a delay in obtaining insurance, or an issue with the buyer’s financing. It is important for all parties involved in a real estate transaction to be aware of potential closing issues and how they can impact the transaction. Depending on the nature of the issue, it is possible that the closing date may need to be pushed back or that the terms of the transaction may need to be adjusted. In the event of a dispute, it may be necessary to involve a third party such as a title company or an attorney to help resolve the issue. Solutions for closing issues will depend on the specific situation, but may include having the buyer or seller provide additional funds, having the buyer or seller withdraw from the transaction, or negotiating a new agreement. It is also essential to determine if any closing issues will affect the buyer’s ability to obtain a loan or insurance and adjust the terms of the transaction accordingly.  

Finally, it is common for the buyer to discover issues post-closing, more commonly known as non-disclosure issues.  Buyers are advised to seek qualified real estate counsel in these situations to get a complete assessment of their legal rights and options.

Expert Real Estate Attorneys Can Guide Transactions to a Successful Closing

Anyone looking to buy or sell real estate should be prepared for common issues to arise during a transaction.  The purchase process is designed to allow both parties time to gather all the information necessary and resolve any potential issues.  Working with licensed real estate agents and experienced real estate attorneys can help avoid common pitfalls and provide both parties with solutions to most common problems.  The attorneys at Gottlieb Law have provided industry-leading representation to Arizona buyers and sellers in the real estate market for more than a decade.  We can help avoid common issues and achieve your real estate goals.  Contact us today at 602-899-8188 or schedule an initial consultation online.

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Understanding Informal Probate in Arizona and When to Use It
Understanding Informal Probate in Arizona and When to Use It 1776 1180 Gottlieb Law

When someone has passed away and left behind assets, they are typically distributed according to the deceased’s last will and testament. The process of distribution is called probate, which is typically required if the deceased had more than $100,000 in real property or more than $75,000 in personal property. An executor or administrator leads the probate process and ensures the assets are apportioned according to legal instruction.

There are three types of probate in Arizona: informal, formal and supervised. Each is its own process, but informal probate is the simplest of the three because there is minimal court involvement. It is also the least costly option.

Keep reading for answers to common questions about informal probate in Arizona and when to use it. 

What Is Informal Probate? 

Informal probate in Arizona refers to the settling of an estate without court supervision. If the deceased left a valid and uncontested will, the court appoints a personal representative to take inventory of the estate and conduct appraisals, pay creditors, file a final tax return and distribute assets to the named beneficiaries per the terms of the will. 

Because there is no court proceeding, this is the least expensive and most common probate process in Arizona.

Who Can Apply for Informal Probate in Arizona?

Generally, persons who had a familial or financial relationship with the deceased can apply for informal probate in Arizona. The Arizona Revised Statutes §14-3301 details who is eligible and can apply for informal probate:

  •  The surviving spouse of the decedent
  • An adult child, parent or sibling of the decedent
  • An heir of the decedent
  • The department of veterans’ services, if the decedent was a veteran
  • Any creditor, if 45 days have passed since the death of the decedent
  • The personal representative of the estate as nominated by the court
  • The public fiduciary, if no other person is qualified and willing to serve as personal representative 

What Does the Informal Probate Application Entail?

The informal probate application is simple to file for those who qualify, but there are several required forms that can be confusing and time consuming. It is wise to consult with an experienced attorney when navigating an informal probate to ensure all relevant parties understand the process. 

The application for personal representative details who is vying to be the estate’s personal representative: the name, address and priority for appointment. The decedent’s last will must be included in the application and the applicant must attest that it is valid and not subject to any revoking instruments to the best of their knowledge. Once the application is completed, the applicant must file with the Superior Court. The Maricopa County Superior Court handles proceedings in Phoenix and the surrounding area.

What Happens After a Personal Representative Is Appointed?

Once appointed, the personal representative has a number of responsibilities to complete within 90 days. 

According to Arizona Probate Code, all potential beneficiaries and heirs of the estate must be given proper notice of the informal probate. After receiving notice, devisees have four months to file a challenge to the will. Any challenge will trigger a formal probate court proceeding. If any heirs or beneficiaries did not receive notice of informal probate, they can challenge the informal probate within a year of the proceeding or two years of the decedent’s death, whichever is greater.  This aspect of informal probate makes it essential to handle the notification requirements properly with certified mail that can be documented.

As mentioned previously, the personal representative is also responsible for taking inventory and appraising the assets or hiring an appraiser to estimate the property’s value. The representative and, if employed, appraiser(s) must detail the property and indicate whether it was held as a separate or community property. This process includes finding any liens or encumbrances on the property, if applicable.

Once there is an established inventory of the assets, the personal representative can file the inventory with the court and send copies to interested parties or mail copies to all parties named in the will. Only when this process is complete can the personal representative distribute the assets and close the estate.

What if There Is No Will?

If someone has died without a will or with an invalid will, the estate is said to be intestate. An administrator is typically appointed to oversee the probate proceeding and act as an executor to distribute the decedent’s assets. The assets are then distributed according to Arizona state law. The administrator is responsible for receiving any legal claims against the estate and settling the decedent’s debts with creditors. He or she is also tasked with locating the legal heirs of the decedent and administering the property among them with the help of the probate court. 

Find an Experienced Arizona Informal Probate Attorney

Dealing with any issues related to a family member’s passing can be difficult.  Some people opt for informal probate because they believe it will be quick and inexpensive, but that is not always the case if it’s not handled properly and beneficiaries challenge the proceedings down the road.  It is important to hire experienced attorneys to handle the key details of the process correctly and effectively to make sure that the difficult process is handled fairly and does not drag on longer than required.

If you are experiencing issues related to estate probate, especially those with real estate holdings, the experienced attorneys at Gottlieb Law can represent your interests throughout the entire process. Contact us today at 602-899-8188 to schedule an initial consultation or contact us today.

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Make Sure to Avoid These Regular Legal Mistakes Made by Small Business Owners in Arizona
Make Sure to Avoid These Regular Legal Mistakes Made by Small Business Owners in Arizona 1773 1182 Gottlieb Law

Nobody wants legal trouble, but it’s an unfortunate reality for small business owners in Arizona who neglect crucial protections for their business. Whether entrepreneurs are juggling too many responsibilities or simply feel they cannot afford a lawyer, plenty of them learn too late that taking a casual approach to legal matters leaves one’s business vulnerable. The good news, however, is that research and preparation can help business owners evade common legal missteps. It’s impossible to forecast every possible legal risk, especially considering the nuances of different industries, but these are regular legal mistakes to avoid.

Improper or Unwise Business Setup

One of the most important decisions you will make early on in your entrepreneurship journey is how you set up your business. Sole proprietorship and general partnership structures are legally sound, but it’s wise to establish limited liability through an LLC, corporation or even a limited liability partnership. Otherwise, in the event of a lawsuit or other issue, not only are your investments in the company and the company assets at risk, but so are your personal assets. Failing to legally separate and protect your personal assets from those of your company can be a costly, irreversible mistake.   

Ownership structure also affects investor relationships and the potential to sell the business. Most outside investors look for the stock structure of a corporation, but small businesses may choose to establish an LLC instead because of the demands of maintaining corporate records. Consider the tax implications, investment opportunities and whether you intend to sell your operation before filing setup paperwork. 

Poor Record Keeping and Document Organization

Every business is required to maintain documentation on cash flow, tax history, human resources, employees, insurance and much more, which is no small feat — especially for entrepreneurs who are unfamiliar with record keeping best practices. However, there are substantial monetary penalties for businesses that fail to keep up these records — and the impacts can be felt years down the road. A violation may even disqualify the owner from certain business loans, causing the entire operation to fold. 

Small business owners in Arizona should become familiar with the documentation required for their chosen organizational structure. Corporations, for example, have specific records that must be maintained and do not apply to other types of businesses. From the time you establish your business, keep all of your documents (and keep them organized) so you can protect yourself and avoid the dissolution of your business. 

Employee Issues

It’s exciting to see your business grow enough to need staff, and stellar employees can amplify that growth even further. But before bringing anyone on board, be sure to do your due diligence on local, state and federal employment regulations. Resolving workplace legal issues can be a costly endeavor.

The first mistake in this category is not setting expectations upon hiring employees. Arizona is an “at-will” state, meaning either an employee or employer can dissolve the employment agreement at any time. In other words, absent a contractual agreement to the contrary, workers are not bound to one company and can leave whenever they want, while companies can fire employees at any time without reason. Employees of your small business in Arizona will likely already know they have employment-at-will status, but they should still acknowledge it formally during onboarding. Additionally, they should sign paperwork containing your business’ conduct policies, especially those around harassment and discrimination. Arizona courts often treat employee handbooks as enforceable contracts, so take special care when writing them.

Small business owners also run into trouble when they improperly treat W-2 employees like independent contractors. Fortunately, the IRS provides detailed information about classifying workers as self-employed, independent contractors or simply employees. Arizona also passed a new Declaration of Independent Business Status law (A.R.S. § 23-1601) that allows employers to have their independent contractors declare their status and verify they meet the requirements.

Finding Themselves in Court 

Running a small business in Arizona is incredibly demanding. You likely wear many hats in the effort to keep the operation running smoothly, and there is a major investment of your time, money and resources. Therefore, your business cannot afford to find itself in court. Litigation is oftentimes a lengthy process, and legal fees can mount quickly. 

The best way to stay out of legal trouble is to take the time and money to establish protections and set up your business to avoid these regular legal mistakes. Consulting with experienced attorneys may seem expensive up front, but think of it as a long-term investment in your small business’ success.  The attorneys at Gottlieb Law can help small business owners in Arizona get their company setup correctly and proactively avoid most common legal mistakes.  Contact us today at 602-899-8188 or schedule an appointment on our contact us page. 

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Gottlieb Law Founder Benjamin Gottlieb Featured Article in Ahwatukee Foothills News
Gottlieb Law Founder Benjamin Gottlieb Featured Article in Ahwatukee Foothills News 763 240 Gottlieb Law

Gottlieb Law Founder Benjamin Gottlieb shared some insights for businesses struggling with rent concerns due to reduced profits in 2022 in the most recent release of Ahwatukee Foothills News.

Read the Full Article on Page 28 and 30 below:

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Understanding Real Estate Disclosure Laws in Arizona When Selling a Home
Understanding Real Estate Disclosure Laws in Arizona When Selling a Home 1769 1184 Gottlieb Law

One of the most important things for anyone looking to sell their home in Arizona to understand is what must be disclosed to potential buyers.  Home sellers will commonly start the process by figuring out exactly what information they have to share with potential buyers and it is natural to have some confusion.  The good news is there are some simple guidelines that will help any seller disclose all the required information.  Here is what you need to know about real estate disclosure laws in Arizona.

Arizona Residential Seller’s Property Disclosure Statement

Anyone that has bought or sold a home in Arizona should be familiar with the Residential Seller’s Property Disclosure Statement, commonly known as SPDS.  The Arizona Association of Realtors created this standard form to simplify the disclosure process for sellers.  If you are working with a Realtor, it is typically one of the first things he or she will go through with you as a part of the listing process.  For those sellers that are looking to sell their home without the representation of a real estate agent, you will want to carefully read through and complete the form by sharing all the information detailed on the form.

Understanding the SPDS and Disclosure Requirements

For starters, all known material information and any defects or issues with the property must be disclosed in the SPDS.  There are six sections to work through that cover the required areas of disclosure for all sellers.  Here are some of the key points for each section:

Property and Ownership

The disclosure statement starts with the key details of the property.  Among other things, this section covers information like the address, year built and ownership status of the property.  You must disclose if the property is owner-occupied, leased, foreclosed or vacant.  For rental properties, the seller must disclose when the current lease expires.  If the property is part of a homeowners association, the seller must include all the pertinent details of the homeowner association fees and when they are due as well as other pertinent information.  The seller must also include any known proposed or existing assessments the potential buyer will need to pay.  Any existing liens or easements on the property must be detailed as well. 

Building and Safety Information

The second section covers any known issues or defects with the roof or structure of the building.  Among other things, sellers are required to disclose known leaks and repairs in the roof.  They must also share any warranties on the roof, including whether those warranties will transfer ownership.  Sellers must also share any known issues with the foundation, walls, ceiling, doors and windows.  

As a seller, it is important to understand that no issues are too small to share.  If you have had any small repairs or issues, simply detail what you know about what happened and what you did to address the matter.  This section also requires sellers to disclose any known wood infestations.  If the property had any issues with termites or wood destroying insects, make sure to disclose the details and what treatments were used to correct the issue.  Sellers should also detail any issues with heating and air conditioning systems, plumbing, and electrical systems.  If the home has a pool, hot tub or water feature, there is a section to detail any known issues or defects.

The section ends with a catch-all miscellaneous section that is particularly important for Arizona sellers.  If your home has ever had scorpions, bees, reptiles or bed bugs, this must be disclosed to the potential buyer.  It also covers any work that might not exactly fit into one of the previous categories.  Make sure to even share things like landscaping work, appliance changes, and other property improvements, even if they seem small.

Utilities

The third section covers all the utility services used on the property.  The seller will need to list the provider for each utility, like electrical, fuel, cable, internet, phone, garbage, water and fire.  Sellers must disclose if there are any known drinking water problems.  They must also include if any alternative power systems, like solar or wind, are being used on the property.  While this section is short, it is still important to be thorough.

Environmental Information

This section requires sellers to disclose any known issues with soil, drainage, erosion, fissures and more.  Sellers must detail whether these problems occurred in the past and were fixed or whether they are still an issue.  Many sellers are surprised this section includes questions about whether the property is subject to issues like airport noise, traffic noise, rail line noise, nearby landfills, and even odors.  There are also questions about any known contaminants, like asbestos, radon gas, lead-based paint and underground storage tanks.  This is another section where it is advisable to disclose anything you can think of that can be considered material to the property.  This allows the buyer to make their decision with pertinent information and eliminates your liability down the road if they try to claim they were not provided correct or complete information.

Sewer and Waste Water Treatment

The fifth section of the SPDS covers the property sewer and waste water system.  Sellers must disclose if the property has had a professional verify the existing sewer connection and what type of sewer is being used, including the name of the provider.  If there are any known issues in the past with the sewer and waste water system, the seller must provide all details of the issue and what repairs were performed to correct the problem.  One of the final parts of this section requires sellers to disclose the last time an inspection was performed on the sewer or waste water system.

Other Conditions and Factors

The final section requires sellers to disclose any additional material information about the property that has not been included in the previous sections.  It can be common for sellers to dismiss this section and assume that previous sections cover all the important matters.  This is another place where the best practice is to share anything and everything that could potentially impact the long term value of the property.

Arizona also requires sellers of homes built before 1978 to include a lead-based paint disclosure notice.  Real estate contracts with Realtors must also include a comprehensive loss underwriting exchange report (CLUE) that details all insurance claims in the past 5 years (or as long as the seller has owned the home).

Arizona Laws on Property Disclosure

The state of Arizona does have some laws in regards to what does not need to be disclosed.  Sellers do not have to disclose if a death has occurred in the home or whether anyone residing in the home has HIV or other diseases.  Sellers are also not responsible for disclosing whether sex offenders live in the neighborhood, even if known to them.

Error on the Side of Caution and Disclose What You Know

It is common for sellers to ask if they really have to disclose certain details they think are small or unimportant.  They will commonly think that it will make it more difficult to sell their home or it will sell for a lower price.  This line of thinking opens the seller up to substantial legal risks.  When it comes to completing your property disclosure form, share absolutely everything that you can, unless Arizona law specifically addresses that you do not have to disclose.  All buyers have an opportunity to hire professional home inspectors and specialists to review everything of interest to them.  This allows them to assess if any additional specialists should be involved during the escrow process and reduces the risk of any future legal claims for non-disclosure.

Work with an Expert Real Estate Attorney in Arizona

The attorneys at Gottlieb Law focus on real estate law.  We work with buyers and sellers to protect their interests in real estate transactions of all types.  Our firm can review potential real estate disclosure forms and contracts.  Our attorneys can also assist in pursuing a claim if material facts were not disclosed during a home sale.  Contact our firm today at 602-899-8188 or schedule an appointment on our contact us page.

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The Most Common Reasons Why Commercial Real Estate Litigation in Arizona Occurs
The Most Common Reasons Why Commercial Real Estate Litigation in Arizona Occurs 624 416 Gottlieb Law

Before things come to litigation, most parties will try to resolve real estate issues beforehand using alternate dispute resolution forums such as mediation that are designed to present a solution to all involved parties without the need for court action. In the event that such an outcome is not possible, however, the dispute will typically need to be escalated to commercial real estate litigation in Arizona.

Regardless if you are the party bringing the litigation, or if you are defending yourself from litigation, the reality is that involving the courts can be time-consuming. In these instances, you’ll want an experienced commercial real estate litigation attorney in Arizona representing your best interests. In particular, you will want an attorney who has plenty of trial experience.

The most common reasons for commercial real estate litigation include things like: boundary disputes, breach of contract, breach of duty, financial disputes, breach of fiduciary duties owed, land use disputes, lease disputes, negligence of duties owed, fraud, disputes over joint ventures, insurance disputes, easement disputes, and even things like specific performance.

Finance Disputes

A common cause for commercial real estate litigation in Arizona are financial disputes. These can include elements such as disputes over escrows, sales and purchases, rescission, claims of fraud, lender claims and more. The reality is that financial disputes that are real estate related can hinder a company’s growth and footprint. Such disputes may be unavoidable and it is advisable to address these matters with urgency and with the right Arizona commercial litigation attorney, so you can get a swift and favorable outcome.

Commercial Lease Disputes

A dispute over a commercial lease can involve things like lease terminations, lease disputes, breach of contract or breach of lease, and even things like first right of refusal. Since commercial leases are typically for longer terms and higher amounts than residential lease agreements, these types of issues have complexities that will require the insight and experience of a seasoned commercial real estate lawyer in Arizona to resolve.

Breach of Duty & Negligence

Breach of duty and negligence generally occur when real estate actors do something wrong, for instance by failing to represent the best interests of a party that is owed a fiduciary duty. Breach of duty or negligence or contract can also apply to landlords or tenants that have not followed the obligations detailed in the lease agreement or expressed under state law. In some cases, this can result in litigation, if it can be established that breach resulted in a financial loss or a disadvantage.

Specific Performance

Litigation regarding specific performance takes place when one of the signers of a real estate contract fails to perform the obligations agreed to in contract. For instance, a property owner that executes a contract to sell a building attempt to back out of the deal without providing valid or legal reasons for the cancellation. In these cases, litigation can be brought forth to seek a court remedy for these actions and to ensure that the obligations of the contract are fulfilled by all parties involved. Specific performance is an attainable but difficult remedy to obtain in court.

Boundary Disputes

A boundary dispute takes place when property lines are not properly accounted for in between different properties. In many cases, these issues are resolved without a costly and time-consuming court action. A land survey and demand letter can typically suffice. But in some cases, they are a result of the failure to hire an experienced Arizona commercial real estate attorney to research and clearly identify property lines before a purchase takes place.

Breach of Contract

One of the most common causes of commercial real estate litigation in Arizona is breach of contract involving sales and leases. While each contract comes with its own set of enforceable terms and conditions, commercial real estate leases require that the party seeking the remedy establish that duties were breached resulting in failure to fulfill the terms and conditions of the contract. If you believe that you have been the victim of breach of contract, it is important to properly document the details of the breach and work with a commercial real estate attorney to properly notify the offending party before attempting to pursue litigation. Generally, the breach of contract clause in any lease agreement will detail the requirement for notification and the time period for curing the breach.

Find a Commercial Litigation Attorney in Arizona

The attorneys at Gottlieb Law have significant experience with commercial real estate litigation in Arizona. Our attorneys can assist you with any issues and help you understand your rights. If you anticipate a lawsuit, our attorneys can assist you in protecting your reputation and business. Contact us today at 602-899-8188 to schedule an initial consultation or Contact Us online.

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Gottlieb Law Founder Benjamin Gottlieb on AZ Big Media’s Real Estate Pulse Showcase
Gottlieb Law Founder Benjamin Gottlieb on AZ Big Media’s Real Estate Pulse Showcase 150 150 Gottlieb Law

Reposted from AZ Big Media: https://azbigmedia.com/real-estate/real-estate-pulse-ben-gottlieb-talks-legal-issues-to-watch-in-2023/

Ben Gottlieb, one of the most successful real estate attorneys in the Valley and founder of Gottlieb Law, says there are plenty of things buyers and sellers and developers should keep their eyes on heading into 2023. 

“We are in an interesting, evolving real estate dynamic right now,” Gottlieb says. “The law is a serious field, there are always a lot of moving parts. With that being said, there are a lot of real estate trends with legal implications that people should watch heading into 2023.”

In this episode of “Real Estate Pulse with Ben Gottlieb,” the law industry leader talks about some of the legal issues people need to know about heading into 2023 when it comes to all things real estate.

Gottlieb, 37, has racked up an impressive list of accomplishments during his 12-year career, a sampling of which includes:

• Selected to the Southwest Super Lawyers Rising Stars list for the past six years, a designation given to no more than 2.5 percent of the attorneys in any practice area;

• Named to the Top 100 Lawyers in Arizona list (2020-2022);

• AZ Big Media’s Arizona Business Leaders list (2020-2022);

• Arizona Business Magazine’s People to Know in Commercial Real Estate (2021);

• Best Lawyers List (2022).

“We will continue to use state-of-the-art technology to help solve legal problems faster,” Gottlieb says. “And by combining legal talent that has decades of successful experience in the law with its high-caliber collaborative approach and top-of-the-line technology, Gottlieb Law will continue to deliver superior legal services and outcomes for its clients.”  

Benjamin L. Gottlieb is the founding partner of Gottlieb Law. He has an unblemished trial record and is recognized as one of the top real estate attorneys in Arizona. He earned his bachelor’s degree in finance from the Eli Broad College of Business at Michigan State University, with high honors and his Juris Doctor from the Sandra Day O’Connor College of Law at Arizona State University where he was a Pedrick Scholar and served as the managing editor of the Arizona State Law Journal. In the latter capacity, Benjamin was the recipient of the Outstanding Managing Editor award. Gottlieb also is an Arizona Department of Real Estate-approved instructor and teaches continuing education courses on real estate law to realtors.

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A Useful Guide to Arizona Commercial Landlord Tenant Laws
A Useful Guide to Arizona Commercial Landlord Tenant Laws 1773 1182 Gottlieb Law

Commercial landlords and tenants owe each other certain responsibilities under Arizona law.  Likewise, commercial landlords and tenants owe each other certain obligations per the lease agreement as well.  A real estate attorney will generally start with the lease agreement itself when evaluating a potential case or dispute, then evaluate the client’s overall matter in the context of Arizona’s statutory and common laws.  To assist with understanding which party is responsible for what in a commercial lease, we put together this useful guide to Arizona commercial landlord and tenant laws.

Use and Adequacy of the Premises

Because the law presumes that commercial tenants are sophisticated contracting parties, commercial landlords generally do not have the same responsibilities as residential landlords and are at more liberty to freely contract with the tenant.  When it comes to acceptability and adequacy of the premises for the tenant, a court will resort to the lease agreement.  Many commercial leases have provisions regarding how a tenant can use the premises.  A commercial tenant should ensure that the premises are suitable for its needs and intended use and ready for occupancy when it signs a lease.  Both commercial landlords and tenants will benefit from clarity around this point in the lease agreement, including terms regarding which party will take responsibility for things like zoning and compliance with local laws to ensure the premises can be used as intended by the parties.  A commercial landlord has a responsibility to deliver the premises per the lease terms on the agreed-upon start date, although sometimes the parties will allow for a delayed commencement date.

Tenant Quiet Enjoyment of the Premises

Commercial landlords in general have a responsibility to provide tenants with quiet enjoyment of the premises, which means the landlord cannot unreasonably disturb the tenant’s intended use of the premises.  Simply put, landlords cannot cause any interruption to the beneficial use of the leased premises throughout the entire lease term.  This typically only applies to disturbances caused directly by a landlord, not those caused by a government agency or third party.  Some possible violations of this covenant may include entering the premises too frequently, restricting or interfering with essential services provided to a tenant, or allowing or causing the premises to become uninhabitable.

Handling Repairs and Defects

Commercial tenants generally have a duty to repair or replace items that were not defective at the time of occupancy unless the lease agreement states otherwise.  Both parties should carefully consider which party is responsible for fixing things like bathrooms, HVAC, windows or doors if they become defective during the lease.  If these items are not expressly included in the agreement, these responsibilities will likely fall on the commercial tenant assuming the landlord fulfilled its obligations in providing the premises in good condition.

Tenant’s Right to Assignment or Sublet in Arizona

Restraints on whether a tenant can sublease the premises is generally controlled by the lease.  Because commercial parties are deemed sophisticated by courts, a court will defer to the lease.  Some leases will allow a tenant to freely sublease the premises, other leases will require the landlord’s consent which shall not be unreasonable withheld.  Other leases may have more restrictive language for assignment or subletting the premises.  Some concerns of the landlord may include wanting valid evidence of financial irresponsibility, illegal or detrimental activities, and general unsuitability of the premises for a new intended use.

When Tenants Can Terminate Early in Arizona

The fact that a high percentage of businesses fail leads to a lot of potential reasons why a commercial landlord might want to terminate a lease agreement early.  These issues typically are detailed in the break clause of any lease agreement.  This is an important provision of the lease contract which details under what circumstances the landlord or tenant may terminate the lease prematurely.  These provisions may include an ability for a tenant to terminate the agreement when the landlord can find a replacement tenant.  Commercial landlords in Arizona have a duty to make all reasonable efforts to find a new tenant at fair market value when requested by a tenant.  It is also common for landlords to assess some penalty in a lease agreement for early termination, like loss of deposit or some additional payment term.  A tenant that wants to terminate its lease agreement can generally avoid or limit these penalties if they proactively find a suitable tenant to take over their lease.

Delinquent Rental Payments and Commercial Lockout Notices in Arizona

It should not be a surprise that failure to pay rent will result in the lease termination for commercial lease agreements.  Under Arizona Revised Statute 33-361, commercial tenants have the right to enter the premises and lock out a tenant when they are more than five days delinquent on rental payments if it is not expressly prohibited in the lease agreement.  Tenants should be aware that landlords even have the right to place a landlord lien on any personal property in the premises until full payment on past due amounts and penalties have been made.

Value of a Leading Commercial Real Estate Law Firm in Arizona

Commercial real estate law can be complicated for landlords and tenants.  Since lease agreements are typically for longer periods of time and higher rental payments than residential, it is especially important to utilize the representation of an experienced commercial real estate attorney before executing any commercial lease agreements.  Gottlieb Law was founded to deliver industry-leading expertise to our commercial real estate clients.  Our firm routinely works with commercial landlords and tenants to draft and review lease agreements, resolve disputes, and, when necessary, pursue litigation in our clients’ best interests.  Call us today at 602-899-8188 to schedule an initial consultation or make an appointment online here.

Gottileb Law published this article for information purposes only and it should not be considered as creating an attorney-client relationship.  Contact our firm if you need specific assistance on a related matter.

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