That appraiser can be hired by the landlord or the tenant, or negotiated between them according to a prearranged system. Sometimes this will have been specified in the initial agreement, and sometimes not. This is probably the simplest method, but also the one most prone to poor outcomes. The landlord and the tenant each hire an appraiser to determine fair market rental value based on a set of common criteria.
This method is fairly unsophisticated, and also prone to manipulation. Either party, for example, could game the system by submitting an abnormally high or low valuation. Conversely, her landlord could employ an appraiser whom he knows will return an astronomical valuation. Moreover, it is entirely possible that an average of two appraisals could result in a rent that is not at all consistent with comparable leases of comparable properties.
For that reason, many experts warn against adopting the Average Method. Because the Average Method is inherently problematic, some leases opt instead for a slightly adapted version. In the Three Broker Method, Meredith and her landlord each hire an appraiser. If the two appraisers agree on a fair market rent, the process is at an end.
If, however, they cannot agree, then the two appraisers will instead agree on a third, impartial appraiser, who will independently calculate fair market rental value. This is a popular option, as it incentivizes both the landlord and the tenant to choose reasonable appraisers in the first place to avoid further cost. Furthermore, there is no guarantee that the third appraiser will not make an unreasonable valuation or an arbitrary decision. Certainly the Three Broker Method is preferable to the Average Method, and it is very common in commercial leases, but if either party can foresee that the negotiation process might become contentious, they might be best served by the final method.
Few organizations are better at complex negotiations around value than Major League Baseball, and this final method is based in their player arbitration system. In the Baseball Method, the landlord and Meredith would each submit an estimate of fair market value to a neutral arbitrator whom they have mutually selected: what does Meredith think a fair rent would be, and what does her landlord think is fair? The arbitrator must select one of the two proposals. He or she cannot average them or suggest an alternative, but is required to accept one option on the table, which then becomes binding.
Choosing a good arbitrator can mean that this method is most likely to produce an equitable and reasonable result, but it is also by far the most likely to be expensive, lengthy, and difficult. Because it is a binding arbitration process, each party typically hires an attorney, and has legal fees, arbitration costs, and potentially appraisal costs as well to consider.
On the other hand, baseball arbitration incentivizes both parties to submit reasonable estimates. The lack of compromise in this method is what drives both parties to be less partisan in their estimates. No matter which method of establishing FMRV is chosen, the best method to avoid future conflict is to specify it in the original lease.
Language like this, for example, would ensure that Meredith and her landlord undergo the Baseball Method when it comes time to re-negotiate her rent:. Understanding the various methods, their pros and cons, and specifying one preferred method in the original leasing language can save both parties a tremendous amount of money, time, and trouble down the line. In many areas of California - and in many other rapidly developing areas across the country - real estate values are rising sharply year over year. This is exactly the point that fair market rental value FMRV appraisals seek to answer.
Concerns about fair market rental value arises most commonly in two scenarios. First, it comes into play when there is the option to extend a lease beyond its current terms.
Should the rent go up, go down, or remain the same? A FMRV appraisal can help create a fair outcome for both parties. FMRV appraisals are also often ordered when a new landlord inherits a building, perhaps from the terms of a will or trust. Are the rents that are currently charged fair? An FMRV appraisal can help establish that.
Meet Meredith. She envisions a comfortable, neighborhood space where customers can enjoy a cup of coffee and a delicious pastry, and where she can also feature local jams, artisanal food products, and occasional live music or cooking demonstrations. Meredith signs a modified gross lease. That means that she pays her rent in one lump sum, which can include property taxes, insurance, and common area maintenance.
Modified gross leases tend to be more tenant-friendly, since they are easier to set up and manage. This also allows Meredith to predict her expenses. Meredith and her landlord agree that she will have the option to renew her lease in 10 years, in Because neither of them want to set a specific dollar amount given the unpredictability of the California real estate market, they agree that the renewal rate will be mutually determined in the future based on fair market rental value FMRV — a very standard provision in many commercial leases.
But what does that actually mean? Here is the first critical element to understand: fair market rental value is established based on comparable leases of comparable spaces.
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Fair market rental values are established by looking at similar commercial spaces that are leased in the same area, in the same way that one establishes the value of a property before selling it by comparing similar properties in the area. So if Meredith is located in North Hollywood, comparable leases of comparable spaces would include commercial leases on similar square footage, for similar uses, with roughly similar features and agreements.
That means that a sq ft Chinese takeout two blocks away on a 3 year modified gross lease would be a useful property to consider, while a sq ft bakery located in Santa Monica would not. After all, he could presumably find a new tenant who would pay much more than Meredith is paying. But Meredith points out that her cafe and its success and attractiveness to customers is an integral part of why the area is more desirable than it was ten years ago.
It is obvious, then, that establishing an impartial appraisal is critical to an equitable FMRV. Part Three will outline other considerations that landlords and tenants should bear in mind when establishing agreements, leases, and negotiating new rental rates. The law is set to sunset in , and opinions remain divided on whether or not it will do so. Thus, many estate planners are encouraging that families, trusts, and individuals take advantage of strategies based in gifting, like:. REIT dividends and distributions from publicly traded partnerships are not be subject to the wage restriction.
That project — a long-term strategy for combatting homelessness — is underway. However, in the interim, the city is proposing two additional ordinances to ease the transition into permanent housing and to address the immediate need for shelter. Under the PSH, normal zoning laws and parking regulations would be relaxed to allow construction to proceed more rapidly.
The ordinance is also proposing allowing by-right construction of multifamily units on land that is currently already zoned for public facility providing that there are other existing multifamily developments already in existence nearby.
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Each permanent supportive housing project could receive up to four zoning concessions, including:. While the PSH seeks to streamline the construction process, the second ordinance is designed to address the immediate and urgent needs of those who lack shelter. The Interim Motel Conversion Ordinance would allow existing residential structures, like hotels, motels, and hostels, to undergo interior renovations and repurpose themselves as transitional housing for homeless people.
According to an article by Urbanize.
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The IMC ordinance would permit these buildings to serve as transitional housing over a half year to two year period for people who are moving off the street or out of shelters and into permanent supportive housing. The largest increases were in younger people, between the ages of 25 and According to the Homeless Services Authority, the major culprit for the dramatic rise has been the economic stress on renters in the LA area.
As the LA Times reported :. And as housing prices continue to rise in Southern California, the problem of homelessness motivated by economic distress and the inaccessibility of affordable housing seems likely to only intensify. In , the LA City Council passed some of the nation's most stringent seismic regulations, requiring the retrofitting of some 15, commercial buildings mostly multifamily apartment structures.
While that form of construction was a timely solution to a space crisis as the city expanded during the second half of the twentieth century, it also proved to be a deadly condition during earthquakes. In a large enough quake, flimsy wood or metal supports collapse, bringing the building down and flattening the ground story.
Those requiring the retrofit typically are both:. Skip to main content. What is an Indian Land Lease? The landowner conveys the right to use and occupy the property in exchange for rent. There are 1, commercial leases, 7, residential subleases and 11, time shares on Indian land leases under the jurisdiction of the Bureau of Indian Affairs - Palm Springs Agency. What is the role of the BIA? The Bureau of Indian Affairs-Palm Springs Agency provides technical assistance to Indian landowners on matters of real property management.
The Bureau of Indian Affairs does not represent developers, homeowners or those who lease the land; however the Palm Springs Agency staff is available to answer questions regarding leasing of federal trust lands on the Agua Caliente Indian Reservation. What is the difference between trust land and fee land? I have a residential lease, does that mean the land is in trust? Not necessarily. Residential leasing is not exclusive to Indian trust lands.