Commercial Real Estate Investment/getting security deposit back

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Expert: - 5/16/2011


Question
After a year and a half of losing money in a commercial space, we sold our business to another person at a huge loss two weeks ago. Our broker said the landlord had agreed to start a new lease with the buyers. When we got to the closing, the landlord sprang on us that he was assigning the lease to them but was keeping us on until the end of our original lease term (Oct. 2014), so we are liable if they default. We were stuck between a rock and a hard place, and felt like landlord was taking advantage of us, knowing we were desperate to stop losing money, so we felt like we had no choice but to agree. Then he collected a security deposit from new tenants and said we couldn't get ours back until the end of our original lease term and only if new tenants don't go into default. Is this legal??

Answer
Mairim:

It all depends on the specific terms of your current lease as to if this matter was resolved legally.

This is really a legal question, so you will need to find and retain an attorney that is familiar with landlord/tenant law in your jurisdiction to get an accurate answer.   Be prepared to provide the attorney immediately with a complete copy of your lease and any related written correspondence.  Your broker should also be able to provide the attorney with valueable detailed information also.

It sounds as if you may be short on available cash to hire an attorney, so you may need to find a suitable attorney to assist you on a pro-bono basis.   Go to the local landlord/tenant or civil court and ask around there how you can identify attorneys that will help you on a pro-bono basis.  You can also call the local office of the bar association to inquire about finding an attorney on a pro-bono basis.  Finally, if there is a law school at a university nearby, you can often find an organized group that can provide you with a law student that can assist you with this matter.

Good luck,

Jim

Commercial Real Estate Investment

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Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

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