Selected Issues of Importance to Commercial Real Estate Brokers, Property Managers and Owners in a Down Economy

1. Presented to the RIAOC
Orange County
April 21, 2009
4/21/2009 Howard F. Kline, Esq. (949) 888-7708 1

2. TRUST DEED GUARANTOR

LIABILITIES
NEGOTIATING TERMS WITH DEEP

POCKET TENANTS
SUBORDINATION, ATTORNMENT &

NON-DISTURBMENT LEASE
PROVISIONS
LANDLORD BANKRUPTCY EFFECT

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 2

3. Early to mid 90’s

Changing economic conditions

Not limited to real estate

Not limited to residential real estate

Stagflation

Prices going up

People spending less

Retail downturn

Overleveraged property

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 3

4. Prevalence of ownership in LLC;

Non-Recourse Loans

Guarantees of principals of LLC

Limited or unlimited

Non-Judicial Foreclosure

Anti-Deficiency Rules

Judicial Foreclosure

Fraud

Deficiency

Receivership

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 4

5. Recession Proof Tenants

Fast Food

 Discount
Retail

Co-Tenancy Provisions

Landlord Financials

Marketing Provisions

Previously second tier tenants

Long Term Leases with Tenant’s right to terminate early

 Long Term Protections from Foreclosure
Franchisee Leases

Purchase as an option

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 5

6. Paragraph 30 of Win AIR Multi-Tenant Gross

Lease
More significant in slowing or weakening

economy
Foreclosures

 Tenant or subtenant may lose rights to long term
lease!!!!!!!
 Modifiable
4/21/2009 Howard F. Kline, Esq. (949) 88-7708 6

7. Delay Foreclosure

May terminate unwanted leases,

notwithstanding attornment provisions
Landlord may assume or reject executory leases

Should not be a concern to tenant unless a long term,

very favorable tenant lease;
Tenant must still perform unless lease has been

rejected
Brokers better collect commissions early

Secure commissions if delayed – Good luck

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 7

8. Tenants

Lease Terminations?

Stave off foreclosure

Brokers

Get paid as soon as possible

Can record commission obligation as a lien on

property – Good Luck
Property Managers

Recession Proof

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 8

9. Any Thoughts?

4/21/2009 Howard F. Kline, Esq. (949) 888-7708 9

10. Howard F. Kline, Esq.

949.888.7708

949.767.5611 Facsimile

hfk@hfklegal.com

hfk@hfkesq.com

hfklaw@cox.net


Linkedin Profile:

http://www.linkedin.com/in/howardkline

Commercial Real Estate Herald

Blawg: http://ocrealestate.blogs.com/commercialpro
pertyherald/
4/21/2009 Howard F. Kline, Esq. (949) 309-2394 10

11. 4/21/2009 Howard F. Kline, Esq. (949) 888-7708 11