Real Estate Law Uncovered: Protecting Your Investments
- laurie2769
- Apr 23
- 7 min read
As part of our legal advice series, Regina M. Campbell, Esq., managing partner of The Campbell Law Group P.A. (thecampbelllawgroup.com) in Coral Gables, Florida, explains the complexities of real estate transactions, ranging from commercial acquisitions to lease agreements. We sat down with Regina M. Campbell, Esq. to gain valuable insights into real estate law and learn how to best protect your investments.
Miami Living: What are the most common pitfalls people face in commercial real estate transactions, and how can they avoid them?
Regina M. Campbell: Some of the most common pitfalls people face in commercial real estate transactions relate to a lack of due diligence, underestimating the true cost of the lease or purchase and ignoring zoning laws as well as land and building restrictions. Such restrictions and cost that may greatly affect a business or use of the commercial property include not understanding noise or operating restrictions and limitations on use of the common area, parking cost, pass through expenses, relocation rights and/or limitation on subletting whether directly or indirectly.
These types of common pitfalls are best resolved by doing your homework prior to purchasing or leasing any commercial property. Most of these pitfalls cannot be resolved after you have purchased the commercial property or entered into a lease. The lack of knowledge or due diligence on the part of the tenant or buyer of these pitfalls does not provide you with a defense to the purchase or lease agreement, unless the landlord or seller specifically stated that you can use the property in a certain manner and then the circumstances were different after entering into an agreement. However, most landlords and sellers disclaim any responsibility for prohibition of use of the property based on zoning or city ordinances and clearly place the burden on the tenant or buyer to know better before they enter into an agreement. Further most landlords and sellers of a commercial property also provide you with a copy of the common area rules and you agree to be bound by them if you enter into the agreement.
Ultimately, the best way to avoid these types of pitfalls is to thoroughly do your due diligence prior to entering into a commercial real estate transaction. Understanding all of the moving parts necessary for running your business, including any hidden expenses beyond the rent, limitations on the use of the property that may affect your ability to generate revenue such as zoning or city ordinances and landlord restrictions before purchase or leasing a commercial building is the best defense for these common pitfalls.
ML: How does The Campbell Law Group help clients with the due diligence process during real estate acquisitions?
Campbell: We can help clients in the due diligence phase by running title and lien searches, reviewing association or landlord rules for any restrictions on the client’s anticipated use of the property. For instance, some of our clients want to purchase property to turn it into an Airbnb rental property. Many clients are unaware that many cities have instituted restrictions or additional taxes on these types of rental properties that may add to the cost of the rental and make it unprofitable or simply prohibit use of the property in that manner.
Our firm also helps with reviewing easements or zoning restrictions that are on the property and any financials integral to the intended purpose of the property such as rent rolls, tax assessments, CAM and tenant’s contractual rights. Our firm also can help review any environmental site concerns that may exist, whether it be due to the property being in a flood zone or possibly contaminated with hazardous materials that would make our client responsible for damages and clean up that is unknown to them at the time of purchasing the property.
Finally, our firm can also help resolve any lender requirements that are needed to close and draft any documents or amendment to purchase agreement to memorialize changes in the nature of the transaction after due diligence such as shifting the risk or cost of indemnifying a party based on conditions found during due diligence.
ML: Can you walk us through a recent case where your firm successfully protected a client’s property investment?
Campbell: The Campbell Law Group successfully protected a client’s property investment that was under an assault by alleged members of the clients’ company. In the lawsuit, several members of the clients’ family alleged that they were owners of the clients company and that the company was the true owner of the property which was in our clients individual names. The alleged members placed a lis pendens on the property and attempted to hold the property hostage as part of their member lawsuit, despite the fact that the property was not even in the company’s name.
After a year of meritless litigation, the alleged members dismissed their case as they lacked any evidence of being a member of the company and no merit or basis whatsoever to allege that the property in question belonged to the company.
ML: How do you ensure that lease agreements are fair and protect both parties involved?
Campbell: The best way to ensure that a lease agreement is fair and protects both parties is by knowing our client and its business well and ensuring that the lease agreement and its terms are in line with what our client needs.
We understand the nature of all provisions and how it affects our client and their business specifically. By doing so, we can immediately assess whether a particular lease agreement is suitable for our client’s needs and whether the agreement on its face contains what we call deal breakers.
If there are any deal breakers, we first attempt to discuss them with the landlord to see whether the landlord has any flexibility as to the deal breaking terms. If they don’t, then we advise our client to seek another location. If there is some flexibility, we continue discussions with the landlord to see if the parties can reach a middle ground on the terms.
However, this is more difficult with commercial leases as these types of leases are known to be one sided and protective of the landlord. Notwithstanding the foregoing, our office attempts to gauge the landlord’s interest and flexibility to see if we can reach an agreement that meets our client’s needs and spreads the risk and concerns a little more evenly between the parties.
If the client truly wants the property, despite terms that may not be ideal or a compromise (i.e. very one sided), we attempt to negotiate the best contract for our client and ensure that the client understands the additional risk and concerns and is making a knowingly informed decision to move forward with the lease despite the very one sided nature of the agreement.
ML: In today’s market, what are the most critical legal considerations for someone looking to invest in real estate?
Campbell: In today’s market, vital legal considerations that should be considered before investing in today’s real estate market include city, county and state zoning regulations, limitations on use of the property, insurance requirements, and cost of renovations or living. Investors should also consider any existing lease agreements or requirements the landlord has put into place for tenants such as association rules. Taking these factors into consideration can help mitigate legal risk and warrant lasting success.
ML: How does your team assist clients in resolving disputes that arise from property ownership or leasing?
Campbell: Our team would approach the dispute by first attempting to resolve the matter peacefully and without the need for court intervention. In doing so, it is often important to take into consideration pragmatic solutions to the problem and contract terms that the parties have already agreed to. In providing informed advice, it usually helps the client understand what the legal parameters are in resolving the dispute i.e. if they choose not to settle it and reminding them of possible legal obligations they had that they were unaware of and take into consideration finding a remedy to the problem without court intervention.
Should a peaceful resolution fail, then our office will draft the necessary demand or default notices, followed by starting litigation on behalf of the client.
ML: How do Florida’s property tax laws impact real estate investments, and how can investors protect themselves from potential tax liabilities?
Campbell: It is very important to take into consideration the property tax implications of purchasing a real estate investment as property taxes, particularly in Florida, are high and ever increasing. Further, some cities, counties and states are planning further tax assessments that may not be readily understood at the time of your purchase but should be investigated prior to the purchase. In some instances, a buyer will be able to review proposed tax increases and be informed as to what increases can be expected in the up-and-coming years. This is one of the best ways investors may protect them from property taxes in Florida.
Investors may also want to review any possible tax incentives that may be available in certain areas when deciding where to purchase a property.
ML: Florida has unique rules regarding homestead exemptions and property rights. How do these laws affect real estate transactions, particularly for out-of-state investors?
Campbell: Florida has unique rules and regulations regarding homestead exemptions which can have unknown consequences particularly for out-of-state investors. First, out-of-state investors cannot claim homestead exemption (for creditor protection or for tax purposes) unless Florida is their primary residency. As a result, out-of-state investors may face higher property taxes, particularly if they purchase a property from a prior seller who had homestead exemption and paid lower taxes (due in part to the Save Our Homes amendment which limits the increase in property taxes to three (3%) per year). This is often referred to as the “recapture rule”. Investors when purchasing a residential property in Florida should be aware of their actual tax liability of owning the property prior to purchasing and not assume they will be paying the same taxes as the prior owner.
ML: Given Florida’s vulnerability to hurricanes and natural disasters, how do you assist clients in ensuring their property investments are adequately protected from environmental risks?
Campbell: We advise our clients to consider the location of the property on which they are seeking to purchase. Understand whether it is a flood zone and/or prone to hurricane landfall. We also advise our client to have a plan in the event of a hurricane. For instance, how they will operate, what measures do they need to take to find work around for issues which are inherent in hurricanes such as lack of power and access to the property. Clients are advised to have a contingency plan in place and to become familiar with what the landlord is responsible for as to preparations for the hurricane and after landfall. Clients are advised to have copies of all insurance policies and the lease agreement, as well as any commercially sensitive documentation with them or to secure them in a safe location during the storm. Finally, it is strongly recommended that all businesses have business interruption insurance.
For more information, visit:
The Campbell Law Group P.A.
2121 Ponce de Leon Blvd, Suite 540
Coral Gables, FL 33134
Phone: (305) 460-0145
Email: info@thecampbelllawgroup.com