Contracts. That word typically elicits a couple of reactions from commercial real estate professionals. Avoidance or excitement. It can be a necessary evil one must endure, yet for others, tackling the legal aspects involved in transactions suits their professional proficiency.
For those who embrace the legal side of the business, you’re likely on top of changes and new regulations. But, for those who labor over the myriad of contracts involved in closing a transaction, AIR CRE understands. In fact, that’s one of the primary reasons the organization has built a robust library of more than 50 templated contracts for members.
What are AIR CRE Contracts?
Developed by top AIR CRE attorneys, brokers, property managers and other real estate experts, AIR CRE Contracts are recognized as the industry standard, and the most efficient way to close a deal. These contracts are customizable templates that cover all the necessary bases to close a deal, both legally and efficiently. AIR CRE Contracts users gain access to the array of completely party-neutral contracts.
AIR CRE just introduced new software that includes features that make using the contracts even simpler. Among the latest improvements are auto-population fields, change tracking, easy reuse of package templates, and execution of multiple contracts at once via multi-task functions. AIR CRE Members can receive the software for free, as part of paid monthly membership. To register and download the software please call (866) 946-2472.
Contracts Event Recap
AIR CRE’s most recent full-day contracts seminar was held in Orange County last week, and sold out with more than 200 attendees. Experts John Pagliassotti and real estate attorney, Bryan Mashian, shared deep insights on ways to best utilize the contracts. The seminars are intended to simplify the use of the documents, so that sale or lease transactions close as quickly as possible with the least amount of expense, while reducing as much risk as possible. The recent seminar covered purchase and sale agreements, purchase related forms, a detailed discussion and comparison of lease forms, and listing agreements.
“The spirit of the seminar is to break it down,” said Pagliassotti, who brings an owner and managers perspective to the conversation. “We try to explain each document, as well as the meaning of difficult or misunderstood concepts. We make contracts less intimidating by taking intimidating language and translating it into common, generic language.”
The three key areas that stood out this year included California’s dual agency disclosure laws enacted last year, ADA and accessibility regulations, and issues surrounding NNN leases.
Perhaps at the top of the list is the state law that requires brokers to disclose the nature of their relationship among various parties in a transaction. That new agency disclosure law brings significant change to the way commercial real estate brokers have operated.
“The agency disclosure law is a big hot button right now in California, and a lot of attention is being paid to it,” said Pagliassotti, who notes there’s been considerable confusion among brokers about it. Knowing when to disclose and to whom those disclosures must be made was one of the “most asked questions this year and generated the most robust conversation,” he said.
Unfortunately, the state didn’t provide absolute guidelines in its requirement, only indicating to notify parties “as soon as practical.” Pagliassotti notes, that ambiguity has increased the level of difficulty for brokers. It is not clear if the disclosure should happen when brokers first meet a potential client about a listing, or later in the process.
“First of all, we try to clarify when all the documents need to be signed and give some guidance about when and who [needs the disclosure],’ Pagliassotti said, who admits the state wasn’t very understanding of the day-to-day practice of real estate. “But there’s no elegant way to navigate through it. We try to offer the best advice we can to navigate through a process that’s pretty difficult.”
That makes using the resources AIR CRE provides, such as the contracts seminars, more valuable than ever for brokers. The seminars allow brokers to gain a better understanding of the contracts used with clients, which can lead to better client service.
Mashian says, “Brokers can reduce risk by using AIR CRE contracts on a property to help make the disclosures at the right time and properly.”
That is perhaps the biggest reason a broker should consider using AIR CRE’s Contracts. Pagliassotti says, “In the seminars, we show how to prevent making mistakes. Mistakes that would have been made if they had not attended the seminar, and mistakes can result in litigation. So it could potentially save a trip to court.”
Mashian says there are “standard contracts, but not standard transactions.” That’s another reason AIR CRE’s Contracts helps bring clarity, consistency and compliance to the process.
He cited the changing laws pertaining to ADA and accessibility as an example of where the contracts provide value. Property owners and users are being forced to gradually update their properties to bring them up to code compliance or handicap accessible. “Disclosures are required to inform the tenant from the landlord that a property may not be compliant,” he said. The tenant needs to know that, so they can make decisions and adjust plans accordingly.
Future Events
Ultimately, Mashian believes the key is to create a contract that “balances perspectives between parties interested in achieving a goal that’s not excessively protective of one side or the other.” That’s been the approach in developing AIR CRE’s Contracts, and a big reason why the contracts have become widely accepted and used by the commercial real estate industry.
Since the law changes each year, AIR CRE continues to update its contracts to stay current. The organization also plans to host future seminars to keep commercial real estate professionals informed and on top of new legal changes.
If you missed last weeks seminar, look for future AIR CRE Contracts events on the events page. In the meantime, AIR CRE’s 34th Annual AIR CRE Golf Classic on the renowned Eisenhower “Ike” Golf Course in the City of Industry is planned for September 19, 2017. Here is where to get more details and register: AIR CRE GOLF CLASSIC.
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