All Forum Posts by: Laura Casner

I do condo plans as part of my W2, and these SF calculations can vary based on the coord with the attorney and owner as far as how the association is originally set up in its budgeting for dues. I recently worked on an amendment to some condo plans we did 15+ years ago and I had to re-calculate how we got to what was in the plans and the values changed over two or three iterations as the attorney represented what to include and exclude. 

The unit SF is one component of its size, but then we will sometimes add exclusive use common areas  as well as a pro-rated allocation of the common area. So your additional ~240 SF could be the foyer, hallway and bathroom spaces that are allocated by percentage to the unit. Sometimes if there are large structural components like columns running through a unit space, they could be excluded from the unit area itself like a donut hole in the middle, making the outside to outside measurement larger than what is in the condo plan. You can also not include those extra spaces, and then you simply have some association spaces that are excluded from calculating the percentage.

In my admittedly limited involvement with the leasing exhibits etc, my experience has been that again it depends. If you represent the leasable space as what's in the condo plan and they accept then that's the space they're paying for, I'm not aware of a legal obligation one way or another. If they think it should or should not include certain SF then they need to adjust the lease rate they're willing to pay, or revise the leasing exhibit/description to match their expectation of leasable SF.

On Wed this week I did an industrial outdoor lease exhibit for 3 Ac gross on a larger 20+ acre site. My client (the LL) directed to include the onsite frontage screening landscape outside the fence as part of the leasable SF even though it's not useable by the tenant. They acknowledged that if the tenant wants it adjusted to exclude that area then we'll revise, but they want to charge for the entire space...to them it is an integral component to leasing the yard since the City mandates screening landscape. To not charge for it is to cover a cost that any tenant for the entire yard would need to address themselves...from the tenant side they can say that including it reduces their useable area below their 3 Ac gross...neither is right or wrong, it's just differing perspectives on what is best for them. 

Wow, that sounds like a mess.  That is a significant (18%) difference that needs to be cleaned up. That will be a process.

If I were the injured party, I would be reaching out to the owner, title company, seller, and /or the developer for compensation.

If you are the current owner and renting out the space, you can not claim ignorance of the issue.  I would fully disclose the discrepancy.  This may result in lower rents and recoverable expenses, but it avoids a future lawsuit against you.

If you already have the deal under contract, I'd recommend protecting yourself with an affidavit of agreement (AoA), rather than an NDA.

For one thing, the AoA gets recorded on public record and should therefore show up in a title search, preventing someone from swooping in and stealing your deal. The NDA is a private agreement and won't by itself stop a sale to another buyer.

I'm happy to share an example of our AoA. See my BP profile for the best way to reach me!

@Laura Casner

If I may provide a different perspective………

I don’t go into a partnership with people I don’t already know.

It’s a recipe for disaster, an accident waiting to happen.

If you don’t already know the partner, how do you know his or her values, character, and integrity? if someone would “go around you” to take the deal, trust me, you don’t want them as a partner.

Partnerships can be difficult and need to be formed slowly and carefully.

I’d say find the partner before finding the property.

If you can’t trust your potential partner, it doesn’t really matter what any legal document says. In 46 years years in the industry, I’ve learned if one needs to get an attorney to enforce a document, everybody has already lost.

Say you get an NDA signed, and then your potential partner likes the deal, then you must form a formal partnership or ownership agreement - both you and the cash investor partner - would need to agree to the terms. Do you believe the cash partner will let you have control of the deal? I don’t. What then happens if you can’t agree on the terms of the partnership?    Do you negotiate the terms of the partnership before the NDA?

Even with an NDA signed by Sally, what’s to stop Sally from telling Jennifer about the deal? Jennifer buys it, then what’s your recourse? Are you going to retain an attorney and spend $50,000 $100,000 trying to prove your case? It appears you can’t bring the deal down by yourself, so it seems to me there is some risk to you no matter how you proceed. My response would be, if you can’t bring down the deal yourself, what’s to lose?

I can tell you as an investor with over 1000 units, I have NEVER gone around someone who brought me the deal. I’m not Mother Theresa but rather I understand it would not be in my long term interest to do so as I want that other person to bring me other deals in the future.

Your profile indicates “new to real estate” which is fine. We all started as newbies at one point. I’d say don’t be fearful, try to find a partner for the deal, but really pay attention to the vibes - is this someone you can work with long term? And hey if someone goes around you, it’s a learning experience and you move on wiser for the experience - not the end of the world, there will be other deals.

I just don’t think an NDA will offer you much protection against a more experienced more wealthy investor.

If the deal is really good, you could just wholesale it and make yourself $50,000 to $100,000 to provide capital for the next deal.

Good luck,

Arn