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According to a good source, GSA and WMATA are working on a new policy to allow GSA to modify its rent caps for sites that meet certain transit oriented development criteria (i.e. sites within a certain proximity to Metro stations, etc.).  As many of our readers know, GSA caps its rents as a result of negotiations with OMB per rules created to implement the Budget Enforcement Act of 1990. OMB (through Circular A-11) created a set of rules which are used to determine whether a federal lease is an "Operating" or "Capital" Lease. To make a long story short, GSA and OMB have agreed to rent caps to make it easy to stay within "Operating Lease" guidelines. The current Operating Lease rent caps are $34/SF in Maryland, $38/SF in Virginia, and $49/SF in the District of Columbia.  With vacancies finally falling and rental rates starting to rise, the natural effect of these caps will be to push federal office space development away from mass transit locations, which yield the highest rental rates.  Currently, big chunks of space for federal agencies just aren't normally available below these price caps where there are mass transit services available.

Part I of this post focused on basic provisions found in commercial real estate leases such as assignment and subletting, use restrictions and the determination of the commencement date. Here in Part II, below, we will address other important issues from the tenant’s perspective including insurance, mutual waivers and defaults.

October 29, 2010
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An earlier blog post focused on important issues relating to the Letter of Intent. Assuming now that you have gotten past the letter of intent stage and are moving forward to a binding lease agreement, we will now focus on common legal issues reviewed from the tenant’s perspective. If your current lease is up for renewal or you are in the market for new space, the following is a list of important but basic issues to address with your attorney in connection with any successful lease negotiation with your landlord. 

This Part I will focus on basic provisions such as assignment/subletting, use restrictions and the commencement date, and Part II will address other issues including insurance, mutual waivers and defaults.

 

According to the Chesterfield Observer, Chesterfield and Hanover Counties intend to ignore the Attorney General's recent opinion (click here for our previous analysis when the opinion was issued) about the applicability of Code of Virginia Section 15.2-2303.1:1 and will continue to deman cash proferred prior to 15.2-2303.1:1's July 1, 2010 effective date.  The purpose of Section 15.2-2303.1:1 was to postpone the payment of cash proffers for residential developments from issuance of the building permit to issuance of the certificate of occupancy in order to give residential builders and developers some financial relief until 2014.

October 8, 2010
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A Letter of Intent is a document that outlines the general terms and conditions of an agreement between parties before the agreement is finalized.  In real estate deals, a Letter of Intent are typical before entering large leases or an agreement to buy or sell commercial real estate. Letters of Intent are typically not binding on the parties, but can be if the parties so desire. Other times, just certain provisions of the Letter of Intent will be binding and enforceable, such as confidentiality provisions, covenants to negotiate in good faith or covenants providing for the exclusive right to negotiate. We can save a discussion of what makes a Letter of Intent binding or non-binding for a later blog post. But suffice to say that Letters of Intent have been a common source of litigation, and that there is a wide spectrum between binding and non-binding Letters of Intent that depends on the language in the document.

Judge Gill of the Chesterfield County Circuit Court recently had the chance to review whether a homeowner was bound by a restrictive covenant obliging him to pay for his homeowner’s association’s common area maintenance and other fees.

October 5, 2010
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Back in August, I posted about Judge Williams’ decision in Kersey v. PHH Mortgage Corp. to kick a foreclosure case back to state court due to lack of subject matter jurisdiction. If you recall, the home owner in that case argued that PHH could not foreclose because they failed to provide a face-to-face meeting as required by the deed of trust.  Judge Williams refused to allow the lender to hang its hat on HUD or FHA regulations to invoke federal question jurisdiction. And faced with a $71,397 mortgage, Judge Williams refused to find the requisite $75,000 amount in controversy to allow diversity jurisdiction.

Per a request made by Delegate Christopher Peace (R - 97th District, who represents parts of Hanover, Caroline, King William, King and Queen, Henrico, Spotsylvania Counties and all of New Kent County), Attorney General Cuccinelli has clarified the position of the AG's office about the newly enacted Section 15.2-2303.1:1 of the Code of Virginia, which prohibits localities from collecting conditional zoning cash proffers.  As many of our readers recall, the General Assembly passed Section 15.2-2303.1:1 this past legislative session which, through July 1, 2014, prohibits localities from requiring payment of cash proffers until after completion of final inspections and prior to issuance of a certificate of occupancy for residential development in order to alleviate the financial hardship currently being experienced by the residential building and development community.  A number of localities in Virginia have taken the position that this statute does not apply to proffers made prior to the enactment of 15.2-2303.1:1, prompting the opinion requested by Delegate Peace.

September 1, 2010
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For those of you out there who are following whether commercial real estate can be taxed at a different rate than residential property, FFW Enterprises v. Fairfax County, et al. has been slated for the Supreme Court's September arguments docket.  Like most other states, in the Commonwealth of Virginia the Constitution contains a "Uniformity Clause" which was intended to prevent the General Assembly from allowing the taxation of different classifications of real property in an inequitable manner.  Specifically, Article X, Section 1 of the Constitution of Virginia provides:

"...All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, except that the General Assembly may provide for differences in the rate of taxation to be imposed upon real estate by a city or town within all or parts of areas added to its territorial limits..."

This year's proposed Constitutional Amendments are now up for review prior to being voted on during the November 2, 2010 General Election this fall.  There are three proposed amendments on the table: