Is it helpful to have a Realtor® in the family?
Your cousin’s best friend’s sister is a baker and wants to rent a storefront so, naturally, your cousin asks you to help his best friend’s sister. Sure, you’re happy to get a lead, but do you know anything about commercial real estate?
On June 1, the new commercial forms will be added to the Standard Forms Library. A welcome change for a sorely outdated document, the Commercial Lease (Form CL) will replace the Non-Residential Lease Parts I and II (Forms LC1 and LC2), and it will introduce the Operating Expense Addendum for Commercial Lease (Form OXA). Both forms reflect the style of the other forms which should give you a sense of familiarity when filling out the form. However, if you are not a regular commercial agent, that is where the familiarity may end.
The Commercial Lease was drafted with a focus on simplicity, with a first-time commercial renter/small business owner, who may not have much knowledge of commercial real estate transactions, as a “target” client. The goal was to keep the form simple enough for this first-time renter to use and understand. In order to do that, it is implied that the agent will fill in the gaps where needed. It should then go without saying that it is unwise to attempt to guide a client through this complicated process without an understanding of it yourself. While the form is sufficient for some transactions, and the task force tried to address most issues in the lease itself, the nature of the business can require different considerations that are not contained in a standard form.
Fortunately, NAR offers several niche education courses that can start you off in the right direction. One course is Discovering Commercial Real Estate, which offers an introduction into your duties as a professional, the differences between commercial and residential real estate transactions, the types of commercial real estate, the types of commercial real estate transactions, and a look at commercial documents.
As always, you should consult with your broker and/or brokerage counsel to assist you in completing the transaction successfully. Both the Commercial Lease and the Operating Expense Addendum will have guidelines for you to refer to, as well, to supplement your professional education.
At the end of the day, even though you want your cousin’s best friend’s sister as a client, what you really want is to have your cousin’s best friend’s sister as a happy client.