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Orange County Business Law Blog

What knowledge can help you succeed in commercial real estate?

Whether you have some experience working with commercial real estate in California or you are new to this type of investment, familiarizing yourself with information that can help you succeed can be helpful in guiding you to make strategic and successful decisions. Carefully contemplating your decisions before you jump to any conclusions can help you to identify a direction to take that will lead you to an optimal outcome. 

If you have previous experience working with residential real estate, you can apply general concepts to your latest endeavor as you work with commercial real estate. However, you should be aware that commercial property presents unique challenges of its own that may not be present when working with residential property.

How long do you have to return a security deposit?

Owning a commercial property is a lot of work. There are many things to keep track of, especially when it comes to your tenants. You want to do everything in your power to do right by the law and your lease agreement.

When a tenant chooses not to renew their lease, you want to wrap up your relationship as cleanly as possible. There’s no doubt that one of the most common questions you’ll face in this time from your tenant is when they’ll receive their security deposit back. The answer? Well, that depends on your reason for collecting the deposit.

Preparing for a merger or acquisition

There may come a time when you need to consider agreeing to an acquisition or merger of your California business. When you are participating in a merger or acquisition as a seller, there are numerous aspects you need to consider before agreeing to a deal. At Cadden & Fuller, we understand the complex legal, financial and intellectual property issues that often accompany these types of business transactions.

Forbes indicates that some of the essential business factors to consider when preparing for an acquisition or merger relate to valuation, due diligence and intellectual property. For example, you may not have to accept a buyer's initial offering; you may be able to negotiate. Your company's industry, projected growth and share price may all affect the valuation. A potential buyer may request a large amount of financial documentation, including annual and/or quarterly statements, budget documents, investment information and lien paperwork.

Business court to hear state's lawsuit against drug companies

"Business litigation" might be a difficult topic for many people in Irvine to define (both due to their lack of knowledge of the law as well as the complexities involved with corporate and commercial law). If pressed, however, most might cite examples of insider trading, intellectual property theft or copyright infringement as being covered under this particular legal discipline. While such assumptions are often true, many might be surprised to learn exactly what falls under the purview of this branch of the law. Essentially, any questionable or unethical activity that has allegedly been perpetrated by a professional organization may invoke business litigation. 

This may even include business practices that threaten harm to consumers. At least that is what the state of Georgia has decided in its handling of a lawsuit filed by the state against a number of drug companies. The state's Attorney General is handling the matter on its behalf, and it was his request that it be moved to a special court that the state has established to handle business disputes. The reasoning behind his motion is that the specialty court has both the time and resources to handle the case appropriately (as it only hears a few cases every year). The state's lawsuit alleges that the drug companies have misled consumers about the addictive effects of their products, which has helped to create the state's current opioid epidemic. 

How can I ensure I'm not illegally evicting a tenant?

Real estate in California is expensive. Whether residents plan to buy or rent, they have to come up with a lot of money to make it happen. Not surprisingly, many landlords in California often find that tenants cannot make the rent. Sometimes this is temporary, due to medical bills, a car accident or losing their jobs. However, when it becomes regular or a tenant lapses for months on end, you may feel compelled to take legal action via an eviction.

To the new landlord, an eviction seems simple enough. They may believe they can just throw the tenant out, fix the place up and start showing it to someone else. The seasoned landlord knows it is never this easy. And, when it is, you could risk putting the tenant out illegally, which may come back to haunt you. So, how do you ensure you are following proper procedure?

When is a confidentiality agreement necessary?

An important part of managing your California company is protecting its assets and proprietary information. However, business transactions and other circumstances may require you to share some data with other businesses, organizations or individuals. In these situations, you may want to create a confidentiality agreement for the other parties to sign. This document, also known as a nondisclosure agreement, may help ensure your company's sensitive information remains secure.

Forbes lists several common situations where your business may benefit from an NDA. For example, if you want to sell your company, you may need to share sensitive financial data with a prospective buyer. A presentation about a new invention or product to an investor may include proprietary data you want to keep secure. If you hire a business consultant or marketing firm, you may need to share sensitive information as part of the work agreement. In cases such as these, having others sign a confidentiality agreement may reduce the chances of your company's private data becoming public knowledge.

Making your first million via commercial real estate

California has one of the strongest and most expensive real estate markets in the country. When it comes to commercial real estate, the opportunity to provide office spaces for tech companies and household names could help even small investors grow to millionaire status with time, dedication and the right opportunities.

According to Forbes, the first step to becoming a millionaire via this route is to focus on long-term holding of properties. Investors should also continue to build and diversify their portfolios and renter clientele. Rather than spend all the income generated from each property to live a more lavish lifestyle, consider keeping personal expenses low and reinvesting that into more and more properties.

How do you dissolve a business entity?

No matter what size your California business is, you may reach a point when it is time to end its legal status and move on. There are specific steps you need to follow and forms you must file to dissolve your business entity. Following the state's instructions carefully may help you complete the process quickly and avoid involvement with fraudulent organizations disguised as providers of legal assistance.

You may find information about terminating your business entity along with links to the proper forms on the California Secretary of State's website. According to the SOS, the legal form and fee requirements depend on the type of business you own. For example, if your business is a limited liability partnership, you must file a Notice of Change in Status and submit a fee of $30. Dissolving a California stock corporation usually requires both a Certificate of Election to Wind Up and Dissolve and a Certificate of Dissolution. These forms do not require filing fees.

The fluctuations of the commercial real estate market

One of the best industries to get involved in in California is commercial real estate. Yet, in 2018, CNBC wrote that there were bad signs ahead for the industry. The main indicator is a slowdown in building and architecture due to a decrease in demand for commercial real estate. However, one of the sectors that are still booming is rental real estate, making multifamily units a great business to invest in.

Business Insider notes that in response to the slowdown, banks ramped up commercial real estate loan extensions. In fact, they reached a record of high of $4.3 trillion in 2018. The price of commercial property has also reduced.

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