With the commercial real estate market in flux because of the post-COVID-19 economy and changes in work patterns, owners of leased commercial buildings, such as office buildings and industrial warehouses, are considering how to make their properties and their investments in them more attractive. We have seen a good number of commercial properties being repurposed for residential use, either by reusing the existing structure of the commercial building and creating residential spaces in them, or by tearing down these structures and redeveloping them into residential uses.
Whether they were drafted 10 years ago by a developer or amended last week by an HOA’s Board of Directors. No matter how meticulously they hew to the letter of the law. Regardless of how long and technical – or brief and simple – the bylaws and rules of every Maryland homeowner’s association, they all have one essential trait in common. None of them are enforceable unless they have been filed in one of the HOA Depositories set up by the State.
As homebuilders in Maryland may already know, there has been a requirement in the State that homebuilders provide an option to purchasers of single family detached houses and town houses to add EV charging stations to new homes. Since 2021, builders were required to include a disclosure regarding this option in sales contracts.
If you are the developer of a multi-use project or are planning to develop a large real estate project with multiple owners, a reciprocal easement agreement (“REAs”) may be an appropriate avenue for the coordination of the development and future maintenance of the project.
If you are looking to rent space in a building or property for your business, you should start by looking for the appropriate location for your specific use. The business use category will also affect the language and conditions of the lease and certain requirements for approval of the use. A restaurant or retail lease will certainly address different issues than would be included within an office lease or medical lease and different regulatory issues than industrial, manufacturing or other types of leases. All commercial leases should have a general framework that is similar, to include such provisions as: (i) defining the premises to be leased, (ii) the length of the lease term, (iii) renewal options, (iv) apportioning responsibility between the parties for repair and maintenance and who pays the costs for the same, (v) assignment and sublease rights, (vi) insurance requirements, (vii) default provisions and remedies available to the landlord, and (viii) other standard lease clauses. However, as uses change between lease types, more specific language may be included to address such differences. The following are some lease issues to consider for the types of commercial lease scenarios, although some issues will overlap between the different uses and leases.
Under Maryland law (Md Real Property Code Annotated, Section 11B-110), a developer of improvements upon common areas owned or to be owned by a homeowners association remains responsible for certain aspects of such improvements under an implied warranty created by such statute. To determine how long the developer is responsible and to what the warranty applies requires a careful read of the statute.
During these times of COVID-19 related business and office quarantining and closures, companies and their employees are learning new ways to be efficient and productive. Remote working, while certainly a pre-COVID-19 option, has become the new normal. Workers have become adept at completing tasks and projects away from the office, using platforms like remote-desktop for access to business computer servers and Zoom, Microsoft Teams and others to hold meetings. There are certainly arguments for cost and time savings related to having employees work remotely, and to the extent a company has seen this be successful, they may be considering abandoning the physical workplace. Consequently, many are asking if this is the true wave of the future. Can online meeting platforms really replace the crucial connection that people get when having face to face interaction?
Many leases for retail spaces, including restaurants, include terms that require the tenant to pay to the landlord a percentage of profits earned from gross sales. This “percentage rent” payment is over and above the monthly base rent, operating costs and taxes that the tenant also pays the landlord under the lease.
If you rent space in an office building, strip retail center or some other commercial building, at some point in time, you may need to find someone else to share your space because you have too much space, or you may need help in making rent payments. In some circumstances, you may realize that you no longer have need for the space because you have outgrown it, or it is too much and you need to get out. Under most commercial leases, you cannot simply allow someone else to start using some or part of your premises, nor can you walk away from the lease obligations. You will need to look at your lease to see if you are permitted to either sublease or assign some or all of the premises, and if so, under what circumstances.
