Categories
Real Estate Law

Commercial Real Estate Acquisitions: Key Considerations

Commercial Real Estate Acquisitions: Key Considerations

John Daskam

Share Post:

When considering a real estate acquisition, prospective buyers will face a host of issues that must be vetted to ensure the transaction is successfully executed. This blog post will focus on a few of the key considerations during this process.

1. Due Diligence Period

A key component of the purchase agreement is the period during which a prospective buyer will have the right to inspect the property while also having the right to a return of the earnest money pending its investigation. A buyer will need to ensure that there is adequate time to review all the relevant information related to the asset and to coordinate and review any third-party reports that are advisable or required to consummate the deal. For example, if there is a debt component to the purchase price (which is almost always the case), the lender will likely require a survey, lender title policy, property condition report, and environmental study. Though a buyer would be wise to obtain these reports, as applicable, in the absence of a loan, irrespective, the preparation of these various documents will take time. A seller will want to limit the time during which the earnest money is refundable, but ultimately the parties will need to agree to a reasonable period for due diligence to run its course.

2. Title & Survey

During the due diligence period, two key items for review will be the title commitment and survey of the property. These two reports work together and will give a buyer clarity regarding the status of the property. The title commitment (commitment by the title company to issue the insurance policy should the buyer meet all requirements) will include all instruments recorded in the public records against the property. Examples of these instruments include the plat, CC&Rs (restrictive covenants), easements, lease memoranda, etc. The surveyor will then plot any of these instruments that can be shown in the depiction, and a buyer can review how these recorded rights affect the property. An example of this is where a surveyor draws the area on the survey where a utility easement encumbers the property, and as a result, any incoming owner would have limited rights (or no rights at all) to the use of that portion of the property. This brings along questions related to access to the utility, and obligations to repair the surface of the land after any maintenance or replacement of the utility. Ideally, these third-party rights and obligations will be explained in the recorded instrument itself.

3. Tenant Estoppels

Typically, a commercial trade will implicate the current user or users of the real estate asset, and a prospective buyer will need to understand the status of the lease or leases in place at the property. Buyers use a tenant estoppel to ensure that any lease in place at the property meets certain criteria. A typical estoppel will be signed by the tenant and the seller and will reflect that the lease is in full force and effect, that there is no continuing default under the lease, the amount of the security deposit being held, the term and amount of rent, and any tenant rights of first refusal or extension rights. Though this is not an exhaustive list, a buyer will want to review any existing leases to properly request a tenant estoppel (as the lease will typically set forth the mechanism for obtaining an estoppel from the tenant) and to push for as much information from any tenant as possible.

There is much to navigate when acquiring commercial real property, and it is in the best interest of any prospective buyer to ensure that they have the right team to advise through the transaction

ABOUT THE AUTHOR

PARTNER

John Daskam joined Milgrom & Daskam as a Partner in January 2019. He focuses his law practice on real estate and corporate law. His real estate practice includes acquisitions and dispositions, landlord-tenant matters, leasing, financing, development, and contract preparation and negotiation.

More Articles

Business & Corporate Law

The Small Business Reorganization Act and Its Prolonged Adoption Through June of 2024

Chapter 11 bankruptcy code generally provides businesses with avenues and protections to reorganize and restructure obligations. This form of bankruptcy is very often more favorable than chapter 7 bankruptcy because it allows business owners to stay in the driver’s seat while attempting to negotiate a plan that complies with the bankruptcy code. In contrast, filing a chapter 7 petition results in full relinquishment of control of the business and the appointment of a third-party trustee whose primary obligation to is to liquidate estate assets for the benefit of unsecured creditors.

Read More »
Business & Corporate Law

Beneficial Ownership Disclosure: New Reporting Requirements for Small Businesses

On September 30, 2022, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued its highly anticipated Final Rule establishing a beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) of 2019. These rules significantly change the obligations of business entities to disclose previously private information regarding the ownership and control of these entities. The primary purpose of the CTA, enacted as part of the Anti-Money Laundering Act of 2020 is to protect the US financial system from being used for illicit purposes, including preventing corrupt actors, terrorists, and criminals from hiding assets in anonymous shell companies. Background for this rule was addressed in prior blog posts including The Corporate Transparency Act (1/31/22) and FinCEN and Real Estate (8/2/22).

Read More »
Miscellaneous

When Shares are Not Cares

As attorneys representing startups, Milgrom & Daskam knows that early-stage businesses often have many needs and not much capital to meet them. This often results in startups bartering for services using whatever currency they have. Sometimes this results in interesting exchanges (two hundred pounds of Valencia oranges in exchange for a logo design being our personal benchmark); more often it results in founders giving away the most freely available form of credit they have—equity in their company.

Read More »
Categories
Intellectual Property

What to Expect When You Register a Trademark

What to Expect When You Register a Trademark

Sophi Robbins

Share Post:

The process of protecting your intellectual property can be daunting, especially for first-time business owners. However, a legal expert can navigate the nuance of trademark law and get you an application without too much headache or strain on your pocketbook. Any successful company has trademark registrations. If you go through this process at the onset, it is much less expensive than spending a lot of time and money branding your company only to realize that you are infringing upon someone else’s mark and must rebrand. The following steps are laid out to explain the process of registering a trademark.

Ensuring Success

The first step when filing a trademark application is to research potential competition and threats to the success of your marks. This is referred to as a Knock-Out Search. Your attorney will do a comprehensive search of the current and pending trademarks within your industry, as well as anything else that could pose a threat to your ability to register your mark. The search will look for similar words, shapes, and spellings. It might be the case that your intended applications aren’t strong contenders, and though disappointing, it’s best to make rebranding choices at this early stage of the process before time and resources have been spent on a name that you will eventually have to change.

Filing for Registration

Once you’ve worked with your attorney to determine what marks you will file, it’s time to file your application for registration with the United States Patent and Trademark Office (USPTO). You can file the mark after having used it in commerce as a 1(a) application, or you can file a mark that you intend to use as a 1(b) application. The process is largely the same, with a few small differences that your attorney can walk you through. For a use-in-commerce application, you must show proof that you are currently using the mark on the goods specified in your application. For an intent-to-use application, you can provide that evidence later.

Waiting It Out

Once your attorney has filed your application, an examining attorney from the USPTO will review your application. If they do not identify any problems, the mark will be published for opposition. If the examining attorney does identify an area of concern, an Office Action will be issued. Often, the reason for this is a likelihood for confusion with a prior registration, a mark being merely descriptive, or the need to disclaim part of the mark like the words “bar & grill” from a restaurant’s name. There are numerous reasons why an application would be initially rejected, and office actions are not uncommon. In the case of an office action, there is typically 6 months from the date of issuance to respond.

If the PTO examiner determines there are no reasons to object to your mark, they will approve it for publication, and it will be published in a public-facing gazette. Third parties will have 30 days from the date of publication to file an opposition or extension of time to oppose the registration of your mark. This is relatively rare, but it does come up in 3-4% of cases. If it should occur, your mark will take a detour from the typical registration process and your attorney will walk you through those steps.  

If a mark passes opposition, you should have very few obstacles between you and the finish line! A 1(a) mark which has passed will be placed in a queue to be officially registered, without you or an attorney needing to take any additional action. Again, with the current back-ups, this could take several months. A 1(b) mark which passes opposition will eventually be issued a Notice of Allowance (NOA), which indicates that as soon as you can prove your use in commerce, the mark can be registered. From the date of NOA, you have 6 months to file a Statement of Use, which includes specimens of your mark. If you are still not using the mark at that time, extensions can be filed every 6 months up to 5 times (or 3 years from the date of NOA.) If you don’t use the mark in that time frame, you’ll lose the application and be required to start over again if you later change your mind.

Registration at Last

When your mark finally reaches registration, you will have exclusive rights to the use of the mark. This is when you will begin using the ® symbol. Your responsibilities now are to maintain documentation and file periodic renewals. The first deadline is in between the fifth and sixth anniversary of the date of registration, followed by renewals every 10th year. It is also a good idea to keep a “watch” on your mark so that if other marks are published, which you might want to oppose, you are alerted. There are automatic services that will notify you of such activity, and your attorney’s likely use something of the sort.

So, Are You Ready for the First Step?

Knowing what you’re up against will prepare you but having the right team to work with is essential. Whether you’re a first-time small business owner or part of a growing company that’s ramping up its product lines, relying on a strong legal team is going to make the trademark process much more approachable. If you are interested in starting this process with your own marks, reach out to us and we’ll be happy to answer any questions.

ABOUT THE AUTHOR

OFFICE ASSISTANT

Sophi has a background in office management and small business management and has had the pleasure of seeing multiple small companies grow with her. Since graduating with a BA in Environmental Studies and Business Marketing, she has worked in both office jobs and the service industry, finding ways to learn new skills and gain responsibilities. She puts those skills to good use with her own small business, an etsy craft store. She is also a skilled barista and mixologist, and enjoys trivia games and baking (she usually doesn’t even use a recipe, thanks to her time managing a bakery).

More Articles

Copyright Law

Should You Seek Foreign Intellectual Property Protection?

If you plan to conduct business abroad or have an online business that reaches customers abroad, you should consider seeking international intellectual property protection. Intellectual property protection is often limited to the country where you conduct business and/or where you file for protection with the respective foreign intellectual property office. For example, a U.S. trademark registration will not protect you against trademark disputes that arise in other countries. As another example, a U.S. patent prevents others from making, using, selling, offering for sale, and importing your patented invention in the U.S., but does not prevent others from doing the same in other countries.

Read More »