AAAARRRRGGGGGGGGGHHHHHHHHHH !!!!!!!!
My level of disgust for lawyers has just increased enormously.
Had previously agreed with fabulous new industrial tenant on a nice big fat lease that will make the property zing. Shook hands whilst looking them in the eye with both the elderly Owner of the business and the General Manager and agreed everything was acceptable….as I believe honourable gentlemen should do. Then the lawyers got involved….
There is no haggling over the lease term or lease nett rental with escalations…all of that is in the bag. We had agreed on all conditions and improvements they were going to make…not a problem either.
Their lawyers wanted the ‘right’ to place a caveat on my title deed for anything they deem necessary to protect their clients interests. I shot that one down in flames and said my title was off limits.
They (the happy lawyers) then came back and said they wanted the right, and me to agree, as a consequence of not being able to slap a caveat on my title, to sue my company for unlimited and unspecified damages if I ever sell the property and the new owner doesn’t recognise the Lease. Aren’t they wonderful…this was worse than the caveat carry-on I rejected previously. No harm in trying I suppose.
I consider the protection of the status of the Lease to be reasonable and their rights to enjoy the tenure preserved…no problem…and have recognised that in a standard clause where I warrant to obtain a deed recognised in the sales contract whereby the new owner recognises the Lease…once again no problem…or so I thought. That wasn’t good enough for the lawyers.
These solicitor clowns have now come back and insisted that they wish to add to the clause by saying that if I don’t obtain the deed they have the right to rape and pillage my company for untold amounts.
I laughed at both the elderly Owner and General Manager and said I hoped they didn’t pay too much for that c*ap legal advice….as it was going to fly about as much as a lead brick.
My major trouble is that the people with the real authority in the deal almost always subjugate their responsibility to some wormy solicitor….it’s advice people…that’s all…you don’t need to take it !!! Trouble is, the more you pay for this c*ap legal advice, the more people are inclined to follow it blindly, to the detriment of all parties concerned….to the point where the agreed deal that benefits everyone is destroyed. Really constructive and productive these lawyer chaps.
Anyway, I’ve learnt NO is a very powerful word and stops lawyers in their tracks stone dead.
I wish to lease it out, and the tenants really want to lease it from me. Reasonable gentlemen agreeing and then being undermined by these legal clowns. I’m sure they serve a purpose somewhere, just haven’t figured it out yet…
A large lease which was very beneficial to both parties and was 100% agreed now is hanging in the balance. I’m happy to ditch the whole thing….I won’t play ball with pedantic and supercilious argumentative lawyers.
Any suggestions ??
End of whinge.
Cheers,
Darryl Moore
“No point having a cake if you can’t eat it.”
Originally posted by Dazzling:They (the happy lawyers) then came back and said they wanted the right, and me to agree, as a consequence of not being able to slap a caveat on my title, to sue my company for unlimited and unspecified damages if I ever sell the property and the new owner doesn’t recognise the Lease.
Wouldn’t that be the case whether or not that was actually specified in the contract? If you don’t hold up any part of your side of the contract, they’re going to sue you.
Can’t think of any helpful suggestions though.
Munjy
It’s a game Dazzling, whereupon the lawyers have to justify thier positions (if employed by the company) or try and prove some worth (if external) I’ve seen it bog down many a good deal..
It seems to be worse the bigger the company you deal with IMHO, I can undersatnd protecting a clients interests, but I’ve seen lawyers want to make changes to a contract, then when the changes are done they ‘suddenly’ find new obstacles..to the displeasure of both parties trying to get on with the job..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorI agree Redwing. It most certainly is a game. I’m imagining a General Manager asking his legal counsel to review a contract, and the feedback is everything is just fine and dandy…nothing to do…I don’t think so, he’d get his a$$ run off for that.
Anyway, some really good news this morning, after my stern email informing them that their legal counsels insistence had been totally and utterly rejected, and if they took his advice the whole deal was off.
The tenant eventually came to his senses and ignored his lawyers advice. NO is a really big word.
We are now both free and happy to sign off on the lease and get on with our respective businesses.
1. Our title is clear and specifically protected.
2. We get a great long term tenant.
3. They add enormously to the value of the property.
4. They get to peacefully enjoy the warehouses.Happy days. Life would be marvellous without these clowns. Arguing for the sake of arguing seems to be the name of the game but is clearly very unproductive.
Anyone else had to go through this ??
Cheers,
Darryl Moore
“No point having a cake if you can’t eat it.”
Update….
I have just returned from the warehouse and have two signed and executed copies of the lease in my hot little hand. Both the tenant and ourselves are extremely happy with the way things turned out…probably because the lawyer wasn’t there to stuff everything up.
Well, that’s that property all signed up and out of our hair for the next 6 years. CF+ve in the first year on a 100% lend basis, and will become more so as the years tick by.
This is a massive turnaround from the rusty shed we bought 5 months ago with a recalcitrant tenant that hadn’t paid rent to the previous Landlord for 6 months and had left 3 dead trucks and 28 tonnes worth of rubbish for me to pick up. All of that has now gone and we are on relatively easy street.
Writing the 40 page lease document myself and going head to head with the tenant’s solicitor has been marvellous experience and shall stand our group in good stead for the next 70 years of our investing career.
We have our Banker coming around to see us on Monday morning to discuss another 100% loan for the offices and warehouses next door to our warehouses. Metro CF+ve landbanking….it doesn’t get any better….
We intend on getting completely blotto tonight on cheap champagne to celebrate !!!! Yippee. Hope you all have a great weekend.
Cheers folks,
CONGRATULATIONS Dazza..you’ve earnt it!!
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorCongratulations Dazzling!![thumbsupanim]
Good on you for standing up to the lawyers.
Regards
Regrow
You are a fool for 5 seconds if you ask a question, but a fool for life if you don’t.
Hi Dazzling,
Well done on reaching a conclusion that seems to have made everyone happy.
It sounds to me that you are learning that negotiation is a team sport. Each team sends in different members to perform certain roles and achieve certain ends. I don’t know the details of your situation so it may not apply to you.
My gut tells me that the situation you speak of probably relates more to being part of a “tactic” than the lawyers being unnecessarily involved without a reason.
Usually solicitors will act on the instructions of their client and not contrary to them. This is the hope anyway.
Again without knowing the details after all this smoke and mirrors and techniques used you were happy to sign the documents and ready to cellebrate.
These tactics create presure where there is none and urgency where there is none usually in order to motivate a party in the negotiation.
You know all this I suppose but when you are “in” the situation it could be harder to see.
What you may also get is a bit of good cop bad cop. The new tennant knows that he will have a long term relationship with your organisation. He may also think that at the 11th hour there is a chance that he can gain some advantage by the caveat etc.
He does not want to go in hard against you and risk you spitting the dummy and booting him or walking away from the table. He does not want to sour any future potential relationship.
So it is possible that as a shrewd business man he can see an opportunity and sends in the “boys”to see what he can get out of it. These advocates have nothing to loose. It matters not to them if you hate them.
However, your relationship with your tenant is very important. Sending in the advocates asking for more allows the tenant to walk back to the table all smiles and confused and take the original position without loosing face or making any consessions to you for the “experience”of the negotiation.
He may even apologise for their behaviour but this is a hollow type of statement and really serves to increase his position of authority with you. ie you now place him in higher steed because he is a civilised man and not like these hounds that were falsely representing his wishes.
Of course it may not be like this at all but it is possible. If lawyers consistently acted against the wishes of their clients in this way it would not take long before they had none.
If it was that the solicitors were acting against the tenants wishes as soon as he found out about it then the position would change. If he is made aware and the position stays the same for some time you would have to thinks that the tenants is aware of a potential gain and is “having a go”or trying to gain a commercial advantage using the solicitors as the “bad cops”.
Cheers
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NZ Investors & Property Spotters
Renovations & Project Management
Email now to receive info on the lastest deals!Hi guys, thanks for your kind thoughts.
Yes Don & Liz, you are right, these lawyers were definitely acting in their clients interests. They were certainly following their clients instructions…no harm in trying as you say. Having rejected their pleas and quasi-threats to walk away from the deal, I feel I have stood on equal footing with them. One needs to be prepared to sacrifice the lot though, and stand at the edge of the cliff to go toe to toe with these boys.
The surprising thing for me before the signing took place, I learnt that the owner of the business, who signed on behalf of the Lessee and also was the Personal Guarantor to the Lease…did not even read it. I turned and asked the General Manager of the Lessee (who used to sell commercial real estate) if he had thororughly read the Lease and been advising the Owner. He also said no, he hadn’t specifically read the document, but was sure that everything was OK….I nearly fell off the perch. The only person from their side who had read the document thoroughly was their lawyer, who wasn’t at the signing.
As it turned out, their lawyer had slipped in a clause in something like section 9.2.(d) (ii) that wasn’t agreed prior. It said that the Lessor (me) was responsible for maintaining the lawns and gardens and general look of the property. I quickly scrubbed all of that nonsense out and we both initialled off to recognise the Lessee was responsible for all of that. I asked him how that slipped there, and he was most embarrassed saying naturally of course the tenant would take care of that and never expect me to look after it. Damn straight I wouldn’t. He went a bit red, knowing that he had been caught out.
The tenant thought he got a bargain out of me, with a big warehouse and plenty of laydown area for his trucks and storage facilities. I think I got a bargain having a national tenant in their paying all of my outgoings, spending 60K doing renovations on my prop. and paying a nett rent that more than covers my 100% finance interest bill in the first year.
Win-Win….I like it.
The only thing I don’t understand is why these companies simply don’t purchase the warehouse themselves, and not subject themselves to all of the onerous conditions imposed on them as tenants ?? Mine is not to question this however, as it is fundamental to my property strategy.
The only thing I don’t understand is why these companies simply don’t purchase the warehouse themselves, and not subject themselves to all of the onerous conditions imposed on them as tenants ?? Mine is not to question this however, as it is fundamental to my property strategy.
Good point Dazzling.
Lets not encourage them.
Pete
Big D.,
would it not be that they can recouperate more of the rental and improvement costs to them than the purchase price of the property?!?
Furthermore, should they up-size/down-size they can easily get out of the costs of the property – well easier than risking a loss at forced sale due to finances… so I’ve been told.Makes sense tough, if you loose business and have to carry a hughe fiancial burden while looking for another place to operate from which is more cost effective. Then possibly pay for that place while trying to sell the other bigger place….
Most commercial leases can be bought out say for 30 to 50% of the total value and, hence, makes moving on much more cost effective.
Just a thought!
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edison
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