| SECURING YOUR BUSINESS LOCATION |
PURCHASING REAL ESTATE
While occasionally a buyer will hire his own broker, in most cases the seller engages a real estate broker as his agent to market the property to prospective purchasers. The broker’s fee is computed on a percentage (usually 6% to 10%) of the purchase price. It is important to remember that the broker is the seller’s agent, and in working for the seller has an obligation to generate the highest purchase price possible.
Once the buyer identifies a property that fits his requirements, he tenders a written “Offer to Purchase” to the seller through the real estate broker. Oral agreements to buy and sell real estate are not enforceable. Some purchasers prefer to submit a “letter of intent,” which outlines the business terms. If the seller agrees to the offer, the seller will countersign the letter. Such letters of intent are usually, by their terms, not binding on either party. The Offer to Purchase is binding, although it often contains a condition that the parties will negotiate in good faith a fuller more complete contract called a “Purchase and Sale Agreement” that incorporates the terms of the Offer to Purchase. Financing will typically be obtained at that point from a commercial bank. The loan and the promise to repay the borrowed money is set forth in a ‘promissory note,’ which the buyer signs. The principal security for the repayment of the loan is a ‘mortgage’ of the real estate, or ‘deed of trust.’ By granting a mortgage to the lender, the buyer is, in effect, conveying the property to the lender as security for repayment of the loan.
LEASING REAL ESTATE
If the property is to be leased rather than purchased, there will be a fairly lengthy, complicated ‘lease’ document involved…these type of agreements must be in writing to be enforceable. Leases usually describe who is responsible for maintaining the property, obtaining insurance and rebuilding the property if there is casualty loss. Simpler lease arrangements, where the tenant pays rent in return for space, but the landlord manages the building, are called ‘space leases.” A “net lease,” on the other hand, is a lease where the tenant leases either all or a substantial part of a building and is responsible for all costs—repairs, replacements, insurance, real estate taxes---connected to the building. Most commercial leases are for five or ten-year terms, although shorter terms are available depending on the local real estate climate at any given point in time. The tenant often negotiates an option that requires the landlord, upon tenant’s request, to extend the term of the lease I the tenant agrees to pay a new rent equal to the then fair market rent for the premises.
FLEXIBLE OFFICE SOLUTIONS
One of the most popular office solutions for start-up or smaller businesses in recent years in the United States, has been the use of ‘executive suites’ or full-service offices. Several companies in the United States offer full service offices where you can rent individual offices of various sizes in prime locations in downtown areas with shared receptionist and administrative services. Use of receptionist services and mail handling services are typically included in the office rental fee while administrative services are typically charged on an hourly basis as used. Terms are available for fixed terms of 12 months or higher or on a month-to-month basis. Depending on the size of the office chosen, the types of services chosen on a fixed basis, and the contract term, the fees can range from only a few hundred dollars a month to several thousand dollars a month. Because of the flexibility of these full service office companies and the reduced need for fixed manpower, this is an excellent way to keep your company’s infrastructure costs down at the start-up phase of the US enterprise.
|
|