Real Estate

Glossary of Commercial Real Estate Investment Terms

If you own commercial real estate investments, there are a number of legal terms you should be familiar with. You don't need to become an expert, but an understanding of the language can help you decide whether you need the help of a lawyer.

Common Area Maintenance

When renting out commercial property, decide whether you or your tenants will be responsible for paying common area maintenance charges. CAM charges typically cover the cost to maintain areas of the property that are shared by all tenants, such as the parking lot in a shopping center. If a lease states that you're responsible, you'll be paying for snow plowing, repairs, painting, traffic signs, and so on.

Ground Leases

Many commercial real estate investors purchase land and lease it, without building anything on it. This is called a "ground lease" It usually includes your permission for the tenant to build something on the land. Negotiating and writing a ground lease is pretty difficult in comparison with other types of leases. The agreement will cover a lengthy period of time.

Subleases

As the landlord of commercial real estate, you may want to keep some control over your tenants. If you give a tenant the right to sublease, the tenant can find a different tenant to take over its space. Your original tenant, however, is still responsible for making all rent payments.

Sale-Leaseback

Suppose you need capital to invest in your business. A sale-leaseback agreement allows you to sell the commercial property you own and then lease it back from the new owners. This type of sale and lease agreement addresses a wide range of issues and must be written very clearly.

A Commercial Real Estate Lawyer Can Help

The law and the language surrounding commercial real estate is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. We hope you found it useful. For more detailed, specific information, please contact a commercial real estate lawyer.

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