Economic Rent[ edit ] The parties may arrive at the rental value which the property commands in the economic circumstances of the time or which the parties consider to be fair in the circumstances. Nominal Rent[ edit ] This occurs where the parties intend to establish the legal relationship of lessor and lessee, but where the lessor is content not to make a profit out of the transaction because he has an overriding religious, social or even economic objective in view. Voet says that rent cannot take the form of "a single coin. The court must still consider the true nature of the transaction, however, as it is not legally impossible to have a lease with a nominal rent.
A critical element of that strategy for commercial tenants, as well as landlords, is making sure the real property chosen for operation is properly tailored to the intended use, and is flexible enough to anticipate various adverse scenarios that can and will arise in a dynamic and rapidly changing legal landscape.
Here are some points to consider towards that end: Stop using form leases.
Save yourself the trouble and plan ahead by working with an experienced real estate attorney who understands the proposed use and the industry in California, and can write a proper lease to fit the tenancy. Specifically describe the permitted use and define applicable law.
There are important legal consequences under state and federal law for adult use cannabis operations vs. And of course, there remains the issue of federal illegality overhanging everything.
To save everyone time and headaches down the road, make sure the parties are in clear agreement on exactly what categories of licensed activity will be allowed under the tenancy, specify that in the lease, and restrict it to that use. When it comes to applicable law, local law and state regulations should be front and center, and there should be a carve-out for inconsistent federal law, lest a tenant be in violation of the lease from day one.
Entanglement issues such as profit-sharing arrangements and equity-as-rent may be lucrative, but they require a higher risk tolerance.
Clarify insurance obligations and anticipate increased operating expenses. Regardless of whether the landlord or the tenancy will be responsible for maintaining and paying for building and property insurance, the parties should realize that: Do due diligence on the property first.
Doing things like zoning and title analysis would more typically be associated with a new purchase than a lease. The parties should consider including a due diligence period in the letter of intent, as well as including an early termination option for a variety of land use restrictions that could be triggered by cannabis use, including changes in zoning laws.
But similar to a zoning and title analysis, parties looking to start a commercial cannabis tenancy can and should factor the neighbors into the equation before deciding to commit to a lease.
This is particularly relevant for business parks or multi-tenant buildings with non-cannabis tenants that might complain about the effect of cannabis odors or otherwise on their business operations.
Better to know now than 3 years into a year lease term. The parties can also consider including an early termination option in the event that neighbors bring a civil action. Consider the federal government. Anticipate the license timeline.
California has just started issuing temporary licenses to applicants who already have local approval.A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. Property, buildings and vehicles are common assets that are leased.
Industrial or business equipment is also leased. The Law on Leases from a Legal Concept of “Property” Property in the legal sense is a collection of legal rights over a “thing”. This thing is a relationship that can be described as a power relationship within “real property” concerning legal rights and interests in land.
Choose the right law, venue, and dispute resolution process.
Limiting interpretation and enforcement of the lease to California law, restricting venue to state courts, and including a well-drafted arbitration clause are all important aspects of a cannabis tenancy that are typically missing from a form lease.
The agency’s attempt to apply a “unitization framework” from oil and gas law to geothermal leases would “allow dozens of nonproductive leases to tie up thousands of acres of public land. Commercial leases are not subject to most consumer protection laws that govern residential leases -- for example, there are no caps on security deposits or rules protecting a tenant's privacy.
No standard forms. In a residential property rental situation, leases and rental agreements define the respective rights and responsibilities of tenants and landlords.
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Choose a link from the list below for state-specific laws related to leases and rental agreements, including limits on security deposit amounts, and prohibitions on discrimination against tenants.