To read the full article published, click here: The Expert Institute
As the science and technology fields grow, so will the need to find knowledgeable experts as new litigation arises. The Expert Institute has released an article focusing on four new areas expert witnesses will be called upon. Cyberpsychology, biotechnology, 3D printing and IP software, and UAVs, or unmanned drones, are just some of the new fields in which they foresee a rise in the need for expert testimony. Applying knowledge from these new disciplines to traditional disciplines is what will keep these experts sought after. An interesting question posed is whether the legal rules governing expert witness testimony will be able to keep up and adjust with the times.
To read the full article published, click here: The Expert Institute
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What is an Estoppel Certificate...and When Should You Sign An Estoppel Certificate is a common document often used in commercial real estate transactions. It is typically used when the owner of a commercial property wants to sell or refinance the property, and the buyer or lender requires confirmation of the status of all leases in the property to ensure that the lease is valid, and that the tenant(s) do not have any claims against the landlord which would allow the tenants to offset or withhold future rent payments. A third party, such as a prospective buyer or a lender, may require the landlord to obtain one from the major tenants of the property or a majority percentage of them. The importance of an estoppel certificate is significant as it is part of the third party's due diligence on the property. They are used as independent verification by said party on rent payments, cash flow, lease defaults, or anything else that may cause issues after the closing of the sale or refinance. The contents of an estoppel certificate typically include terms of the tenants lease and whether they have been amended or modified in anyway, whether the landlord has satisfied the terms of the lease, security deposits or lack thereof, rents or payments made in advance or the date to which they have been paid, required landlord contributions to improvements made by tenant, any possible defaults on the lease by either party. As you can see in the image, an estoppel can be a form document one can use to simply "fill in the blanks". However, one must be careful in reading the wording of the document. Either as a tenant or landlord, not reading or understanding the terms and provisions fully can have substantial consequences. As a tenant, you may be asked to certify that the statements contained in the document are true regarding your lease with the landlord. If it turns out that you signed the document and anything in there is not true, you may be considered liable towards the third party for any damages that they may incur. Be sure to review the certificate along with the lease. If you receive the estoppel without the lease attached, request to have it attached. As a landlord, you may be held liable if information deemed pertinent is withheld or inaccurate. The inaccurate information may have been a mistake, but it can be a costly one. How can we help you with estoppal certificates? We can help explain or review the document you are signing before you sign it, or help you or your lawyer after you have signed one. As a landlord, you want to be sure the estoppel you are handing over to your tenant is completely accurate and reflects the lease and any amendments in its entirety. If a buyer finds the document to have erroneous information, the seller and the seller's realtor can be held liable. In either case, It is important to contact an expert witness early so you can maximize their expertise and avoid possible litigation. Call or email us today to speak with us about your real estate expert witness needs. Many times commercial real estate terms can seem foreign if you have never seen them or don't use them on a daily basis. Here we can compiled a short list of some common terms and their definitions. Whether you are looking to invest in commercial real estate, lease a space for your retail store or restaurant, or have run into a legal issue you need to resolve, you may come across one or more of these terms and may be unfamiliar with them. Instead of just guessing or not bothering to understand a document fully, familiarize yourself with these terms so you have a better understanding of what you may be getting yourself into. Further, legal terms can be quite different than what is used in daily commercial real estate transactions. A commercial real estate expert can help navigate lawyers and their clients navigate these waters by report writing, editing, and case consultations.
Commonly Used Commercial Real Estate And Economic Terms and Definitions: · Leading indicators: Economic activity that consistently turns before the economy does. · Coincident indicators: Economic activity that turns in step with the overall economy and tracks the business cycle's progress. · Lagging indicators: Economic activity that turns after the economy turns, and play a confirming role. · 1031 Exchange: A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes. Taxes on capital gains are not charged on the sale of a property, but “deferred”, if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment. · Asset Manager: One who is charged with supervising an owner’s real estate assets at the investment level in addition to real estate management responsibilities that include maximizing net operating income and property value. An asset manager may recommend or be responsible for or participate in property acquisition, development, and divestiture and may have only superficial involvement with day-to-day operations at the site (e.g., supervision of personnel, property maintenance, tenant relations). Compare property manager. · Capitalization (Cap) Rate: A percentage that relates the value of an income-producing property to its future income expressed as net operating income divided by purchase price. · Certified Property Manager (CPM©): Individuals recognized as experts in real estate management, issued by the Institute of Real Estate Management (IREM©). The CPM© is considered in the real estate industry to be at the top of the profession. Has the experience and skills to operate real estate and understands the fundamentals of business management. The person who is responsible in a fiduciary capacity for the operation of a property, making sure it is properly leased, well maintained, competitive with other sites, and otherwise managed according to the owner’s goals and objectives. · Due Diligence: The process of examining a property, related documents, and procedures conducted by or for the potential lender or purchaser to reduce risk. Applying a consistent standard of inspection and investigation one can determine if the actual conditions do or do not reflect the information as represented. · Full Service Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating expenses and real estate taxes, as well as the tenant’s utilities and janitorial services. · Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all or most of the property’s operating expenses and real estate taxes. · Gross Rent Multiplier (GRM): Simple measure of investment performance used to compare alternative investments. The gross rent multiplier formula is calculated as price divided by potential gross income. · Internal Rate of Return (IRR): Long term annualized rate of return on invested capital over time that an investment generates. · Modified Gross Lease: A lease in which the landlord receives a stipulated rent and the payment of the property’s operating expenses are divided between the lessor and lessee via specified terms in the lease; depending on the degree to which the tenant or landlord are responsible for operating costs. · Multi-tenant Office Building: A building for which there are multiple lease obligations and less than 90% of which may be owner occupied. · Net Lease: A lease in which the tenant pays all property operating expenses in addition to the stipulated rent. Disclosure of the specific expenses to be paid directly by the tenant is required. · Net Operating Income (NOI): Gross Operating Income less sum of all operating expenses representing the property’s profitability before taxes, financing, or recovery of capital. · Net Present Value (NPV): The discount of all future cash flows discounted to present value and less the initial investment. · Owner Occupied Office Building: Buildings that are occupied by the owner and generally not counted in total investment inventory. · Return on Investment (ROI): Most commonly used profitability ratio. Cash-on-cash return on an investment based on net cash flow divided by the invested capital. · Single-tenant Building: A building for which there is a single lease obligation or is 100% owner occupied. · Single Tenant Net Leased Investment (STNL): A building leased to a single tenant where the tenant is responsible for paying base rent to the landlord, and the tenant handles all property maintenance and expenses. Often the tenant is responsible for the parking lot, HVAC, building, roof, and structure. · Tenant Estoppels Certificates: An estoppels certificate is typically used when the owner of a commercial property wants to sell or refinance the property, and the buyer or lender requires confirmation of the status of all leases in the property to ensure that the lease is valid, and that the tenant(s) do not have any claims against the landlord which would allow the tenants to offset or withhold future rent payments. · Triple Net Lease (NNN): The tenant pays its pro rata share of taxes, maintenance, and property insurance and all costs associated with their occupancy, including personal property taxes, janitorial services and all utility costs. The landlord is responsible for the roof and the structure and parking lot. Rethinking Traditional Spaces into More Creative Spaces Key for IndustryAccording to a recent article published on RenTv.com, the commercial real estate industry in California is seeing a favorable forecast in the next few years provided industry professionals recognize the transition from typical use spaces to more creative, multi-use spaces. Additionally, millenials are demanding their spaces be energy efficient while offering more amenities. Staying on top of these trends will be crucial for any commercial real estate owners and property managers. To read the full article, visit rentv.com... Common Mistakes Expert Witnesses Make in Their Reports and How To Avoid Them:When it comes to report writing, there are some common mistakes many expert witnesses make. Here we talk about a few and how you can avoid the.
1. Avoid getting out of your true area of expertise. If an expert is called to report on property management, they shouldn't start talking about other aspects of commercial real estate. Staying focused is crucial or it can leave you exposed and vulnerable. 2. Choosing your words carefully when writing your report or speaking live is also just as important. Try to steer away from using "absolute" or misleading words. Examples of "absolute" words would be "always" or "never". Under cross examination, the opposing lawyer can accuse you of exaggeration and, again, leave you open to attack. 3. Lastly, it is so important to avoid sloppy mistakes. Typographical errors, inconsistencies, and easily avoidable mistakes can make you look sloppy and untrustworthy. The confidence in your testimony can be destroyed. With your reputation and name on the line, you don't want to get caught under attack and have the jury or lawyers lose confidence in you as an expert. All of these simple mistakes are 100% avoidable but can be devastating to an expert witness's career. The Expert Witness and the Daubert StandardHow To Survive a Daubert Challenge: What every Expert Witness Needs to KnowExpert witness' testimony can be challenged as admissible evidence to determine the reliability of the expert's conclusions and the soundness of their scientific methodology. Learning how to survive this challenge is key to getting hired again as an expert witness and keeping your name and reputation clean within the legal community. In a challenge, it is imperative that each issue or allegation upon which the motion to strike is based is addressed. You can do this by providing additional information that sustain your methodologies or data analysis. Address any and all inherent weaknesses in your report or opinion by citing more articles in support of any controversial or unusual methodologies or application of those methodologies. Cite your findings- even if they are based on new scientific knowledge. In other words, be prepared to meet the burden of admissibility with a preponderance of evidence. When hired as an expert, the hiring attorney should begin gathering Daubert-style proof from the outset. Do not assume that a Daubert hearing will automatically be granted on the motion. If the hearing is granted, consider whether or not it is in the best interest to bring the challenged expert. This is a strategy for the hiring attorney to consider. Remember- a Daubert hearing is NOT an evidentiary hearing. Commercial Real Estate Witness Blog:Early Engagement of an Expert Witness is keyIf you think you may need a commercial real estate expert witness, the earlier you hire and engage that expert the better. The attorney litigating the case may not have a clear understanding of the meaning of terms and how they apply to and impact the evidence. Without a background in the applicable
field, this case being commercial real estate, only the professional experience and expertise of a well-qualified Expert Witness can provide this assistance. The litigation support from this expert is crucial well before deposition of fact witnesses. Further, hiring an expert early can even help you determine if you even have a case. A good expert has the commercial real estate industry experience to immediately spot where standards and practices have been violated and can explain why these departures are important for your case. Waiting too long to hire the expert can damage your case considerably if you do not have this valuable litigation assistance before filing a claim. Lastly, be sure to hire your expert witness before the discovery period closes. What may not seem important or relevant or simply not thought of can be very revealing for your case. Document requests will never be obtained or released. Those documents may have contained crucial information for your case that before was not realized to be relevant but recognized as such by an expert in that field. The Expert Witness and the Daubert StandardWhat every Expert Witness needs to know about the Daubert Standard. The Daubert Standard provides a rule of evidence regarding the admissibility of expert witnesses' testimony during United States federal legal proceedings.The Daubert Standard is the test currently used by federal and state courts and has replaced the Frye Standard. It is used by a trial judge to make a preliminary assessment of whether an expert’s scientific testimony is based on reasoning or methodology that is scientifically valid and can properly be applied to the facts at issue. Under this standard, the factors that may be considered in determining whether the methodology is valid are: (1) whether the theory or technique in question can be and has been tested; (2) whether it has been subjected to peer review and publication; (3) its known or potential error rate; (4) the existence and maintenance of standards controlling its operation; and (5) whether it has attracted widespread acceptance within a relevant scientific community. The term comes from the 1993 U.S. Supreme Court case, Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in which the Court articulated a new set of criteria for the admissibility of scientific expert testimony. In its 1999 Kumho Tire v. Carmichael opinion, the Court extended Daubert's general holding to include non-scientific expert testimony as well. A Daubert challenge is a hearing conducted before the judge where the validity and admissibility of expert testimony is challenged by opposing counsel. The expert is required to demonstrate that his/her methodology and reasoning are scientifically valid and can be applied to the facts of the case. In part II of our Daubert excerpt, we will further discuss the Daubert challenges and how expert witness' can be prepared to defend their testimony. **References include: http://en.wikipedia.org/wiki/Daubert_standard http://www.law.cornell.edu/wex/daubert_standard |
Author:Robert Kehiayan, CPM provides Commercial Real Estate Expert Witness and Litigation Consultant Services in South Orange County, CA. Archives
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