Real Estate Law

Gottlieb Law - Real Estate Due Diligence Checklist for Investors
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The Importance of a Thorough Real Estate Due Diligence Checklist for Successful Investors
The Importance of a Thorough Real Estate Due Diligence Checklist for Successful Investors 2160 1412 Gottlieb Law
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Due diligence is an important concept for any real estate investor to understand. It is the process of researching and evaluating a potential investment opportunity to determine if it is a wise investment. This includes researching the property itself, the local market, and the legal and financial aspect of any potential deal. Good due diligence requires a comprehensive and thorough evaluation of the investment opportunity to ensure that the investor is making a responsible and informed decision. 

When evaluating a potential investment, the investor must consider all the costs associated with the purchase and any potential issues that may arise. It is important to consider the condition of the property, any zoning or tax issues, and the current market value of the property. Furthermore, it is advisable for investors to conduct thorough investigations into the local market conditions to ascertain whether the property is situated in a region poised for substantial value growth.

Proper due diligence involves researching the seller, the property, and any potential tenants. It is crucial to confirm that the seller possesses the legitimate authority to transfer the property and that there are no unresolved claims, liens or encumbrances. Having an experienced real estate attorney and a good title company will help with this aspect of the process.  Every investor ought to examine the property to ensure its satisfactory condition and determine if any repairs or enhancements are required. Finally, the investor should research potential tenants to make sure that they are financially stable and will be able to pay rent.

Thorough and meticulous due diligence is imperative for every real estate investor in each transaction. This encompasses in-depth research into the property, the surrounding market, as well as the legal and financial facets of the deal. Real estate investors must be prepared to research the seller, the property, and any potential tenants. Taking the time to do due diligence can help ensure that the investor is making a responsible and informed decision.

Benefits of Thorough Due Diligence 

Due diligence is an important concept for all real estate investors to understand and execute. By investing the time and effort necessary to conduct thorough due diligence, a real estate investor can significantly reduce their risk, increase their efficiency, gain an improved negotiation position and maximize their potential return on real estate investments. 

One of the primary benefits of due diligence is that it reduces the risk associated with any real estate investment. By carefully investigating the details of a proposed transaction, an investor can identify potential issues that could have a negative impact on the investment. This acquired knowledge can subsequently be employed to facilitate wiser decision-making and prevent costly errors.

Establishing a detailed due diligence checklist for all real estate investments also increases the efficiency of the transaction process. By thoroughly researching the details of a potential investment, an investor can make decisions faster and more confidently, allowing them to capitalize on profitable opportunities when they arise. Moreover, diligent research can aid in the early detection of potential concerns, averting them from evolving into costly predicaments, thereby enabling investors to concentrate their resources on the most lucrative opportunities.

Due diligence also gives investors improved leverage in the inevitable negotiations that take place with real estate transactions. By having a detailed understanding of the proposed transaction, an investor can negotiate the best possible deal for themselves, ensuring that they are getting the most value out of their investment.  Completing a thorough analysis of the property will make the contracting process more efficient and help avoid common pitfalls that lead to legal and financial issues down the road.

Creating a Reliable Real Estate Due Diligence Checklist for Your Investments

Real estate due diligence can be time-consuming and complex, so it is important to have a thorough checklist to make sure nothing is overlooked. Any thorough real estate due diligence checklist should include a detailed financial analysis of the potential deal, an assessment of the property’s legal status, a review of the title and deed, an examination of the zoning regulations, an evaluation of the physical condition of the property, a review of the local market conditions, and an assessment of the potential risks associated with the property. Each of these topics is important and should be carefully researched before any real estate transaction is finalized. Here are some of the most important things to include in your due diligence checklist:

  • Research and Analysis: Research and analysis should be at the top of the list for any real estate due diligence checklist. Market research is an essential part of the due diligence process and should include researching the local economy and housing market. Property research should involve looking at the physical and legal aspects of the property in detail. It should also include inspecting the condition of the property, obtaining an appraisal, looking at zoning regulations, understanding the deed and title, and researching any potential environmental issues. Financial scrutiny should also be performed to gain insights into the economic feasibility of the property. This could include looking at financial statements, analyzing cash flow, and understanding the projected return on investment. While there are many other items to consider when completing a due diligence checklist, research and analysis should be at the top of the list. Investopedia put together a fantastic breakdown of the best real estate valuation method you can utilize in the financial analysis.
  • Documentation Review: When conducting due diligence on real estate, it is essential to review all relevant documentation. This includes title documentation, property documentation, and legal documentation. Title documentation should include all documents pertaining to the title of the property, such as the deed, title insurance policy, and any easements or restrictions in place. Property documentation should include any documents related to the physical property, such as survey maps, appraisal reports, and inspection reports. Lastly, legal documentation should include documents related to the laws and regulations that affect the property, such as zoning ordinances, land use restrictions, and enforceable covenants. Each of these documents is necessary to review in order to get a full understanding of the property and its associated risks. It is important to obtain copies of all documents to ensure that they are accurate and up to date. Furthermore, it is important to consult with an experienced real estate attorney who can review the documents and provide guidance on any potential risks associated with the property.
  • Property Inspection: When it comes to real estate due diligence, one of the most important things to include in your checklist is a property inspection with a professional real estate inspector in your area. This should include an exterior inspection to make sure the condition of the property is as advertised and that there are no issues that need to be addressed. The interior inspection should include a thorough examination of all fixtures, systems, and appliances, as well as any potential health and safety concerns. Lastly, it is essential to carry out a comprehensive structural assessment to verify the property’s structural integrity. This assessment should encompass an examination of the foundation, roof, walls, and all other significant structural elements of the building to confirm their good condition and absence of potential concerns. Taking the time to properly inspect a property prior to purchase is essential and should always be included in your real estate due diligence checklist.

How an Arizona Real Estate Attorney Helps with Due Diligence

Due diligence is a critical component of any real estate investment. It involves researching the property, understanding its current and potential value, and learning about the local market. The due diligence process also includes evaluating the financials, such as operating expenses and anticipated return on investment. It is vital to gain a thorough comprehension of any potential hazards, such as zoning regulations and the possibility of legal actions. As with all real estate deals, assessing the property location and surrounding area is a key part of the process too. Finally, it is essential to have a thorough understanding of the contract and any other legal documents related to the transaction.  Savvy investors understand they need a team of experienced professionals to assist with this process.  Professional real estate agents, mortgage brokers, inspectors, title companies and experienced real estate attorneys are crucial to developing an effective real estate due diligence checklist and executing on it efficiently as you consider each potential deal.  Gottlieb Law specializes in Arizona real estate law and works with real estate investors of all types to make sure that each potential deal goes through the proper due diligence process.  Contact our firm today at 602-899-8188 to schedule an initial consultation or make an appointment on our contact us page.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Forming an Arizona Limited Liability Company for Real Estate Investing
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Forming an Arizona Limited Liability Company for Real Estate Investing
Forming an Arizona Limited Liability Company for Real Estate Investing 2560 1707 Gottlieb Law
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

A limited liability company (LLC) is a business structure designed to give certain limited liability protections to owners under state law. An LLC is a popular choice for real estate investors because it provides a means of protecting their personal assets from legal liabilities that may arise from the operation of the business. Forming a limited liability company in Arizona for real estate investors offers a range of benefits, including asset protection, tax advantages, and flexible organizational structures. LLCs provide their owners with the same limited liability protection as a corporation, but with the added benefit of pass-through taxation, meaning the business’s profits and losses are passed through to the owners and reported on their personal tax returns. Real estate investors can gain significant tax advantages with an LLC. Additionally, LLCs offer a more flexible organizational structure than corporations, allowing the owners to customize their internal operations and management. Arizona LLCs offer their owners the ability to manage and operate their businesses remotely, which is an obvious benefit for those looking to invest from out of state.  Here are some of the key things to understand if you are considering the formation of a limited liability company for your real estate investments.

Benefits of Forming a Limited Liability Company in Arizona

Forming a limited liability company in Arizona is an attractive option for real estate investors due to its ability to protect their personal assets, provide certain state and federal tax benefits, and offer a flexible organizational structure.  The benefits of forming an LLC in Arizona for real estate investors are numerous. One of the most obvious is the protection of personal assets. LLCs provide a layer of protection for investors by generally limiting their liability exposure to only the assets held by the LLC. This means that investors have the assurance that their personal assets are safe if the LLC faces any legal or financial issues. Another benefit of forming an LLC is the tax benefits they provide. LLCs are able to pass profits and losses through to the individual investors, allowing them to pay taxes on their personal returns at the individual rate. Lastly, LLCs offer flexibility to investors. LLCs are not required to have a fixed number of members, which allows investors to easily add or remove members as needed. Additionally, LLCs can be structured to provide for different levels of management and decision making, which allows investors to customize their LLCs to suit their particular needs. All of these factors make LLCs an attractive option for real estate investors in Arizona.

Arizona’s Laws for Limited Liability Companies 

Forming a limited liability company in Arizona for real estate investors can offer many benefits that can help to protect personal assets and provide certain state and federal tax benefits. The formation requirements for an LLC in Arizona are relatively uncomplicated and can be completed with just a few steps. The combination of these fees helps to ensure that the LLC remains in compliance with Arizona laws and regulations. In addition to the fees, real estate investors should also be aware of the other responsibilities that come with forming an LLC, such as keeping accurate records and filing annual tax returns. By understanding the formation requirements, initial fees, and ongoing fees associated with forming an LLC in Arizona, real estate investors will be able to take advantage of the many benefits that come with this type of business structure.

Considerations for Forming a Limited Liability Company 

As detailed, there are many benefits to forming an LLC for real estate investments.  However, there are some potential disadvantages to consider before deciding to form an LLC in Arizona. The main disadvantage is that LLCs are subject to certain restrictions under Arizona law, including limits on the number of members and the types of business activities that may be conducted. Additionally, LLCs may be subject to additional filing requirements, including the need to register with the Secretary of State, file annual reports, and pay taxes or fees. Therefore, real estate investors should seek professional advice to ensure that forming an LLC in Arizona is right for their investment plans and goals. An experienced real estate attorney can help ensure that the LLC complies with Arizona law and can provide guidance on the various tax and other benefits that come with LLC ownership. Ultimately, forming an LLC can be a great way for real estate investors to protect their personal assets and take advantage of certain state and federal tax benefits, but it is important to weigh the potential advantages and disadvantages before making a decision.

Moving Forward with Forming an LLC for Real Estate Investments in Arizona

Most real estate investors understand that property investments can be lucrative, but they also come with significant costs and risks.  Purchasing residential or commercial real estate with plans to lease the property means there will be risks of issues with the tenants or facility that can create legal exposure for the investor.  Setting up the appropriate legal structure can help shield your personal assets from those risks, create flexibility for operations and make it easier to add strategic partners.  A limited liability company in Arizona will typically be the best structure to take advantage of the benefits and provide protection against personal liabilities in the future.  Additionally, LLCs provide certain state and federal tax benefits, including the ability to file taxes as a pass-through entity, which means LLC members can deduct business expenses from their personal taxes. Furthermore, LLCs can help investors save money due to the LLC’s simplified accounting and reporting requirements. Finally, LLCs provide investors with the flexibility to choose how the business will be managed and structured.

The attorneys at Gottlieb Law routinely represent real estate investors in Arizona and assist with strategic planning, company formation, asset management, and real estate transactions.  Our firm is also prepared to represent your interests if any legal issues arise.  Contact our firm today at 602-899-8188 to schedule a consultation on any Arizona real estate needs or make an appointment on our contact us page.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Arizona real estate transactions
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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
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Arizona Real Estate Disclosure Laws
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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
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Most Common Reasons for Commercial Real Estate Litigation in Arizona
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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
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Arizona Commercial Landlord Tenant Laws
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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
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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