Real Estate - Seddiq Law Firm PLLC

The Healthcare Lease Is a Business Decision, Not Just a Space Decision

Seddiq Law Firm PLLC — Mon, 07 Sep 2026 01:15:48 GMT

A medspa signs a five-year lease, completes a $150,000 buildout, and is two weeks from opening, then learns the landlord’s ‘general office use’ clause does not cover the injectable services the business was built around. The lease is signed. The buildout is done. The options are limited.

Healthcare is moving closer to where patients live, work, and shop. Medical offices, urgent-care-adjacent clinics, therapy practices, medspas, wellness clinics, and specialty practices are no longer limited to traditional hospital campuses.

That shift creates opportunity for healthcare professionals and practice owners. It also makes the lease more important. The space you choose can affect patient access, staffing, buildout costs, compliance, future growth, and personal financial exposure.

Healthcare real estate remains a strong sector. Cushman & Wakefield reported continued strength in the medical outpatient building sector, driven by healthcare demand, an aging population, and the shift toward outpatient care. It also reported that first-quarter 2026 medical outpatient building absorption reached 3.8 million square feet, a 71% year-over-year increase, with occupancy at 92.5% across the top 50 U.S. markets.

In Virginia and the D.C. region, healthcare real estate is also treated as a specialized space. Healthcare-focused brokers commonly work with medical and dental practices on leasing, relocations, expansions, acquisitions, and property strategy. That makes sense. A healthcare lease is not just about square footage. It must support how the practice actually operates.

For a healthcare practice, the lease is part of the business plan.

The Lease Should Fit the Practice

A healthcare lease should match the services the practice plans to offer.

A pediatric urgent care clinic does not use space the same way as a medspa. A therapy practice does not operate like a primary care office. An IV hydration or wellness clinic may need different rooms, storage, plumbing, privacy, patient-flow arrangements, and safety protocols.

The permitted-use clause matters. A broad “office use” clause may not be enough. The lease should allow the tenant to operate the intended medical, wellness, therapy, aesthetics, diagnostic, or healthcare-related services.

This matters before signing. If the lease does not fit the use, the practice may face problems with the landlord, zoning, licensing, insurance, buildout, or future expansion.

Buildout Terms Can Change the Economics

Healthcare spaces often need more buildout than ordinary office space.

A practice may need exam rooms, treatment rooms, sinks, ADA-accessible features, secure records areas, medication or supply storage, specialized flooring, lighting, sound control, or private consultation rooms. Some practices may need additional plumbing, electrical, ventilation, signage, or waste-disposal planning.

The lease should say who pays for the work, who owns the improvements, who controls the contractor, when the work must be completed, and what happens if permits or approvals are delayed.

A tenant improvement allowance can help. But the details matter. The allowance may not cover all costs. It may be paid only after work is complete. It may require landlord approval. It may also leave the tenant responsible for overruns. And pay attention to whether the landlord can recover or “claw back” tenant improvement allowances, free rent, or rent abatement if the tenant defaults or terminates early. A generous buildout package may create real exposure if the lease requires repayment later.

A healthcare practice should understand the buildout obligation before it commits to rent.

Commencement Date and Rent Start Date Matter

The lease should clearly define when the lease starts, when rent begins, and what must happen before the tenant has to pay full rent.

This matters because healthcare buildouts can take time. Permits, inspections, equipment installation, utilities, and landlord work may delay opening. If the rent commencement date starts too early, the practice may owe rent before it can see patients or generate revenue.

The lease should address delivery of the space, landlord work, tenant work, permit delays, inspection delays, rent abatement, and whether the rent start date is tied to possession, completion of work, or opening for business.

Personal Guaranties Can Create Real Exposure

Many landlords ask small business owners and practice owners to personally guaranty the lease.

That is a serious issue. A personal guaranty can make the owner personally responsible for rent, default charges, legal fees, CAM charges, buildout costs, repayment of tenant improvement allowances, rent abatements, and other obligations if the practice cannot perform.

The guaranty should be reviewed carefully. The owner should understand whether it is unlimited, capped, reduced over time, tied to buildout costs, or released after assignment or sale.

Assignment Rights Affect Growth and Exit

Healthcare practices change. A solo practice may add providers. A medspa may add services. A therapy practice may expand to a second location. A practice owner may sell the business, bring in a partner, restructure ownership, or move the lease into a different entity. The assignment and sublease provisions control much of that flexibility.

If the lease is too restrictive, the tenant may not be able to sell the practice, add a partner, sublease unused space, or transfer the lease without landlord consent. In a healthcare setting, that can affect the value of the business. The lease should support the practice’s growth plan, not block it.

Institutional Landlords Have Different Priorities

Many medical office buildings and commercial properties are owned by institutional landlords, including real estate investment trusts. These landlords often use detailed lease forms. They may take strong positions on assignment rights, guaranties, insurance, indemnity, operating expenses, signage, construction control, and default remedies.

That does not mean the lease cannot be negotiated. It means the tenant should understand the landlord’s priorities and focus on the terms that matter most for the practice.

A healthcare tenant should not assume the lease is “standard” simply because the building is professional or well-managed.

Frequently Asked Questions About Healthcare Practice Leases in Virginia

Should I sign a letter of intent before legal review?

Not without understanding the key terms. A letter of intent may be nonbinding in some respects, but it often sets the business terms for the lease. Rent, term, buildout allowance, permitted use, guaranty, renewal rights, and delivery condition should be reviewed early.

Why does the permitted-use clause matter?

The permitted-use clause controls what the practice may do in the space. A healthcare tenant should make sure the clause fits the actual services, including medical, therapy, wellness, aesthetics, diagnostic, or other intended services.

What should I review in a healthcare lease?

Review the use clause, buildout terms, rent, CAM charges, personal guaranty, assignment rights, renewal options, default provisions, insurance, indemnity, signage, parking, and compliance obligations. These terms can affect cost, operations, growth, and exit options.

Should I personally guaranty the lease?

It depends on the landlord, the business, and the lease terms. If a guaranty is required, the owner should understand whether it is unlimited, capped, reduced over time, limited to buildout costs, or released after assignment or sale.

Can I add new services or providers later?

Maybe. The lease may limit the permitted use, assignment rights, subleasing, signage, hours, or alterations. A practice that plans to grow should review whether the lease allows future services, new providers, expanded hours, or related healthcare and wellness offerings.

What are CAM charges?

CAM charges are common area maintenance expenses. They may include taxes, insurance, repairs, utilities, management fees, administrative fees, and other operating costs. A healthcare tenant should know what costs the landlord can pass through and whether increases are capped or auditable.

When should I involve counsel?

Involve counsel before signing the letter of intent, lease, guaranty, or buildout agreement. Early review gives the practice more room to negotiate and reduces the chance of accepting terms that do not fit the business.

Build the Space Around the Practice

A healthcare lease should support the practice, not trap it. Before signing, practice owners should understand how the lease affects services, buildout, cost, compliance, growth, sale, assignment, and personal exposure.

Seddiq Law Firm assists healthcare professionals, startups, and practice owners with commercial lease review, healthcare practice leasing, entity structure, and operational planning in Virginia and Washington, D.C.

Schedule a consultation with Seddiq Law Firm to discuss your healthcare practice lease, medspa lease, therapy practice lease, wellness clinic lease, or medical office lease before you sign.

Call (703) 558-9311, email info@seddiqlawfirm.com, or click here to contact us to schedule a consultation.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading this article does not create an attorney-client relationship with Seddiq Law Firm. You should not act, or refrain from acting, based on this article without consulting an attorney or other qualified advisor regarding your specific situation.

Estate Planning for Physicians and Business Owners Before Year-End

Seddiq Law Firm PLLC — Sun, 06 Sep 2026 13:53:52 GMT

For many physicians, business owners, healthcare professionals, and real estate investors, estate planning is not simply about having a will or trust. It is about making sure the legal documents, beneficiary designations, business interests, real estate holdings, life insurance, and family goals all work together.

That coordination becomes especially important for clients with growing wealth, professional liability exposure, ownership interests, or increase in net worth. Even when federal estate tax is not the immediate concern, poor coordination can still create confusion, unnecessary cost, family conflict, tax issues, or disruption to a business or professional practice.

As fall begins and families return to school, work, and business routines, September is a good time to review whether your estate plan still reflects your current life, assets, and responsibilities.

A Higher Estate Tax Exemption Does Not Eliminate the Need for Planning

The federal estate and gift tax exemption remains historically high. The IRS has stated that the basic exclusion amount increases to $15 million for 2026.

For many families, that may sound like estate tax is no longer a practical concern. But estate planning is not only about federal estate tax. Physicians, business owners, and high-net-worth families still need to plan for incapacity, asset control, business continuity, family decision-making, trust funding, beneficiary designations, real estate ownership, and how assets will pass after death.

A client may be below the federal estate tax threshold and still have a very serious estate planning problem if the plan does not address who can manage the business, how a practice interest transfers, whether real estate is properly titled, or whether retirement accounts and life insurance are coordinated with the trust.

Business Interests Need to Be Coordinated with the Estate Plan

For business owners and practice owners, the estate plan should not be reviewed in isolation. The operating agreement, shareholder agreement, buy-sell provisions, employment obligations, succession plan, and management structure may be just as important as the trust itself.

A trust may say who receives an ownership interest, but the business documents may control whether that interest can transfer, who has voting rights, whether the company can buy back the interest, and how value is determined. If those documents do not work together, the family may inherit uncertainty instead of stability.

Recent commentary in Bloomberg Law has noted that trust and estate disputes increasingly involve business-law issues, especially when family wealth includes closely held companies, partnership interests, real estate, or governance rights. For business owners, that is a reminder that estate planning should address not only who inherits an asset, but how ownership, management, buyout rights, and decision-making authority will work after death or incapacity.

For SLF clients, this is why our estate planning services often overlap with business ownership, real estate, and long-term family planning.

Physicians and Healthcare Professionals Have Additional Planning Concerns

Physicians, dentists, medspa owners, therapy practice owners, and other healthcare professionals often have a different planning profile than a typical family.

They may have professional liability exposure, practice ownership, employment or independent contractor agreements, disability insurance, life insurance, retirement accounts, and commercial leases. They may also have minor children, aging parents, charitable goals, or family members who should not receive assets outright.

For these clients, the question is not simply, “Do I have a trust?” The better question is: Does the trust actually coordinate with the client’s professional life, assets, and risk profile?

For example, a physician or healthcare practice owner may need to review:

whether business or practice interests are properly addressed;
whether life insurance and retirement beneficiaries match the estate plan;
whether disability and incapacity planning are strong enough;
whether commercial lease or guaranty obligations create personal exposure;
whether real estate is titled correctly;
whether successor decision-makers understand the client’s professional and financial responsibilities.

This is also why estate planning may connect with healthcare law and practice counsel for clients who own or operate healthcare businesses.

Virginia Trust Law Continues to Evolve

In 2026, Virginia amended provisions relating to qualified self-settled spendthrift trusts, including sections of the Virginia Code addressing qualified interests, trustee powers, disbursements, and protections for trustees and advisors involved with these trusts.

For most clients, the takeaway is not that every person needs a self-settled spendthrift trust. These are specialized planning tools and must be considered carefully.

The more practical point is this: trust planning is not static. For physicians, business owners, and real estate investors, asset ownership, risk exposure, creditor concerns, and family goals should be reviewed together. A plan that made sense several years ago may not reflect current law, current assets, or the client’s current professional and financial life.

Real Estate Should Not Be Left Outside the Plan

Many families own real estate outside the primary residence. That may include rental property, commercial property, medical office space, family-owned property, or investment real estate held through an LLC.

These assets should be reviewed carefully. The estate plan should account for how the property is titled, whether it is owned individually or through an entity, who has management authority, how expenses are paid, and what happens if a co-owner dies or becomes incapacitated.

For clients with significant real estate holdings, the estate plan should coordinate with deeds, LLC operating agreements, partnership arrangements, financing documents, and long-term family goals. That is especially important where real estate is expected to remain in the family or be used as part of a broader investment strategy.

This is where estate planning often overlaps with commercial real estate and investment counsel.

When Should You Review Your Estate Plan?

An estate plan should be reviewed when your life, assets, family, or professional responsibilities have changed in a meaningful way. The need for review is not limited to a specific net worth. A family with minor children, a physician with professional liability exposure, a business owner with a closely held company, or a real estate investor with multiple properties may all need coordinated planning even if federal estate tax is not the primary issue.

That said, as wealth grows, coordination becomes more important. Clients with substantial retirement accounts, life insurance, business interests, real estate holdings, or estates approaching several million dollars should be especially careful that their trust, beneficiary designations, business documents, and asset ownership all work together.

A review may be appropriate if:

your income, assets, or net worth have grown significantly;
you are a physician, healthcare professional, business owner, or real estate investor;
you acquired or sold a business interest;
you opened, expanded, or restructured a professional practice;
you purchased commercial or investment real estate;
you signed a commercial lease, loan document, or personal guaranty;
you changed life insurance, retirement accounts, or beneficiary designations;
you had a marriage, divorce, birth, death, or major family change;
your children are older and successor roles should be reconsidered;
your trustees, executors, or agents are no longer the right people; or
your trust was prepared, but assets were never properly coordinated with it.

For higher-earning professionals and families with growing wealth, the question is not simply whether they are above or below the federal estate tax exemption. The more practical question is whether their legal documents, asset ow

Coordinated Planning Is the Goal

Estate planning is strongest when it is coordinated. The trust, will, powers of attorney, advance medical directive, beneficiary designations, business documents, real estate ownership, and tax planning should support the same overall plan.

For physicians, business owners, healthcare professionals, and real estate investors, that coordination can make the difference between a plan that merely exists and a plan that actually works when the family needs it.

Seddiq Law Firm helps clients in Virginia and Washington, D.C. review and create estate plans that reflect their family, professional responsibilities, business interests, real estate holdings, and long-term goals.

Schedule a consultation to review whether your estate plan, trust, business interests, and assets are properly coordinated before year-end.

Call (703) 558-9311, email info@seddiqlawfirm.com, or click here to contact us to schedule a consultation and bring clarity to your plan before small gaps become larger risks.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or financial advice. You should not act, or refrain from acting, based on this article. Consult an attorney, tax advisor, or financial advisor regarding your specific situation.

Estate Planning vs. Succession Planning vs. Asset Protection: Why Your Trust or LLC Is Not a Complete Plan (Virginia Guide)

Seddiq Law Firm PLLC — Fri, 06 Feb 2026 22:46:34 GMT

Many Virginia physicians and business owners assume that having a will, trust, or LLC means their estate is protected, their business is covered, and their assets are shielded from lawsuits. In reality, estate planning, succession planning, and asset protection are three entirely different strategies and mixing them up often leaves serious gaps.

This guide breaks down the differences in clear, practical terms so you understand what your current documents actually accomplish and what they do not.

1. Estate Planning: What Happens When You Die or Become Incapacitated

Estate planning answers one question: What happens if I die or lose the ability to make decisions?

A Virginia estate plan typically includes:

Wills and trusts
Powers of attorney
Advance medical directives
Probate and guardianship planning

These documents determine:

Who inherits assets
Who can act on your behalf
How decisions are made during incapacity or after death

What Estate Planning Does NOT Do

Your estate plan does not:

Govern how a business operates during life
Decide who manages your business day to day
Provide general protection from creditors or lawsuits

Estate planning is essential, but it is not a business strategy and not a liability shield.

2. Succession Planning: What Happens to the Business When an Owner Steps Away

Succession planning answers a different question:
What happens to the business when an owner steps away by choice or unexpectedly?

Succession planning focuses on:

Who will control the business
How ownership interests change during life
How to preserve or transfer business value

Tools commonly involved include:

Operating agreements
Shareholder agreements
Buy–sell provisions

Many Virginia business owners discover too late that:

Their operating agreement says little (or nothing) about succession
Their trust does not govern business operations
Their estate plan does not solve governance issues

If your business lacks a clear succession plan, you are relying on luck, not strategy.

3. Asset Protection: Shielding Yourself From Lawsuits and Creditors

Asset protection answers a third and very different question:
What happens if something goes wrong while I am alive?

For physicians and business owners, risks often include:

Lawsuits
Creditor claims
Business liabilities

Effective asset protection considers:

How assets are owned
How business and personal risks are separated
Which legal structures reduce exposure

A few important clarifications:

An LLC may limit certain business liabilities, but not all.
A trust, by itself, does not guarantee creditor protection.
Timing and legal structure matter especially in Virginia.

Asset protection works best when implemented before a claim or lawsuit appears.

4. Why People Confuse These Different Strategies

Estate planning, succession planning, and asset protection often get discussed together, which leads to widespread assumptions such as:

“My LLC covers succession planning and protects my assets.”
“My trust governs how my business runs.”
“My estate plan protects me from risks during life.”

In reality, each tool solves a different problem and relying on one to do the job of another creates dangerous gaps.

5. The Real Risk: Thinking You Are Protected When You Are Not

Many high‑earning professionals and business owners in Virginia discover the truth only after a triggering event: death, disability, dispute, or lawsuit. By then, it’s too late to fix the gaps.

A trust is not a lawsuit shield.
An LLC is not a succession plan.
An estate plan does not manage your business.

A complete strategy requires all three areas working together.

6. How Seddiq Law Firm Helps You Protect Your Family, Business and Assets

If you are unsure whether your current will, trust, LLC, or operating agreement actually protects your family or business the way you think it does, you are not alone. Most clients discover critical gaps they didn’t know existed.

We help Virginia physicians and business owners by:

Reviewing existing estate plans and trusts
Analyzing LLCs and operating agreements
Creating comprehensive succession plans
Implementing proactive asset protection strategies

You deserve clarity, not assumptions.

Frequently Asked Questions

Does an estate plan protect me from lawsuits?

No. Estate plans control what happens at death or incapacity, not liability exposure. Asset protection is a separate strategy.

Does an LLC provide asset protection in Virginia?

An LLC may shield you from certain business liabilities, but it does not automatically protect personal assets or provide full lawsuit protection.

Does a trust control how my business operates while I am alive?

No. A trust may own business interests, but it does not govern operations. That is the role of an operating agreement or shareholder agreement.

Is a buy–sell agreement part of estate planning?

No. Buy–sell agreements are succession planning tools that control what happens to business interests during life events (retirement, disability, disputes, etc.).

Ready to Protect What You’ve Built?

If you are a Virginia physician or business owner, you need more than a will or trust.
You need a coordinated plan that addresses estate planning, succession planning, and asset protection together.

Call at (703) 558-9311, info@seddiqlawfirm.com; or click here contact us to schedule a consultation call to get clarity, close the gaps, and protect your family, your business, and your legacy.

Commercial Lease Pitfalls: Lessons from a Real-World Discussion with Business Owners

Seddiq Law Firm PLLC — Sun, 21 Dec 2025 20:12:11 GMT

Seddiq Law Firm Team

On December 17, 2025, I had the opportunity to speak at a small dinner gathering of business owners at Anatolian Bistro about a topic that arises far more often than it should: commercial leasing pitfalls that could have been addressed upfront.

The discussion focused on commercial leases from both tenant and landlord perspectives, and on why the most successful outcomes occur when both sides approach the lease as a long-term business relationship, while still negotiating risk thoughtfully and transparently. A commercial lease is not simply about rent; it is a risk-allocation document that determines who absorbs pressure when real-world circumstances intervene.

For example, many leases state that rent is due on the first of the month and that any delay places the tenant immediately in default. From a landlord’s standpoint, particularly one managing dozens or even hundreds of tenants, this structure is understandable. Clear deadlines reduce administrative burden and create consistency in enforcement. From a tenant’s perspective, however, the reality of running a business may look different. A tenant may be traveling, dealing with illness, waiting on incoming revenue, or simply experience a brief administrative delay, not because they are unwilling to pay, but because timing did not align perfectly. In those situations, a short grace period of five or seven days can preserve the business relationship while still protecting the landlord’s interests.

This type of provision illustrates how negotiation at the outset can balance operational realities on both sides and prevent a minor timing issue from escalating into a technical default with significant legal and financial consequences.

Many of the issues discussed were drawn from real situations where unclear or under-negotiated provisions such as permitted use, zoning compliance, repairs and maintenance obligations, operating expenses, default and cure periods, personal guarantees, or exit rights later turned into unnecessary disputes or financial loss. In practice, these outcomes are often avoidable with the right conversations and structuring decisions made at the beginning of the lease process.

A recurring theme throughout the evening was the misconception that commercial leases are non-negotiable or that pushing back will jeopardize the deal. In reality, leases are negotiated every day, and leverage often depends less on market conditions than on industry-specific realities including build-out requirements, permitting timelines, licensing, inspections, and regulatory compliance. When those factors are understood and addressed early, they can materially shift risk and improve outcomes.

For business owners and professionals considering a commercial space, the key takeaway is this: optimism is not a legal strategy. Whether you are opening a restaurant, medical practice, professional office, or retail operation, the lease you sign will shape your exposure to liability, cost overruns, and operational disruption long after the excitement of securing the space has passed.

The most expensive problems in commercial leasing rarely arise from bad intentions. They arise from assumptions left unexamined and clauses left unquestioned. Thoughtful legal review and strategic negotiation at the outset remain one of the most effective ways to protect a business before problems arise.

If you have questions about a commercial lease you are considering or concerns about a lease you have already signed, you may contact at (703) 558-9311, email info@seddiqlawfirm.com, or reach us through the Contact Us page on our website. December 17, 2025, Shafeek Seddiq had

Key Considerations for Commercial Retail Tenants Before Signing a Lease Agreement

Seddiq Law Firm Team — Mon, 31 Jul 2023 17:11:39 GMT

For aspiring entrepreneurs and business owners, leasing a commercial retail space is a significant milestone. However, entering into a lease agreement without thorough consideration can lead to unforeseen expenses and legal complexities. To safeguard your interests and ensure a successful venture, it is essential to understand the crucial aspects of a lease agreement before signing on the dotted line. In this blog post, we will explore the factors that every commercial retail tenant should look for before finalizing a lease agreement.

Location and Visibility

The old adage “location, location, location” is particularly applicable in the retail industry. The success of your business often hinges on how accessible and visible your store is to potential customers. Before signing a lease, assess the surrounding area, demographics, foot traffic, and proximity to other complementary businesses. A prime location can significantly impact your revenue potential and brand exposure.

Lease Term and Renewal Options

Commercial retail leases can be long-term commitments. Carefully review the lease term, understanding the start and end dates, as well as any renewal options. While longer leases provide stability, they can also limit your flexibility if your business needs change. Negotiating favorable renewal terms can provide you with security and the ability to plan for the future.

Rent and Additional Costs

The rental cost is a critical factor that influences your financial viability. Apart from the base rent, you must be aware of additional costs, which can significantly impact your bottom line. These costs may include utilities, property taxes, insurance, maintenance fees, and common area expenses. Triple Net leases, in particular, deserve special attention in this context.

Understanding Triple Net Leases

A triple net lease is a type of lease arrangement where the tenant assumes responsibility for three main types of expenses:

Net Real Estate Taxes: The tenant pays a share of the property taxes assessed on the leased space.
Net Building Insurance: The tenant covers a portion of the insurance premiums required to protect the building.
Net Common Area Maintenance (CAM): The tenant contributes to the costs associated with maintaining shared spaces in the commercial property, such as parking lots, lobbies, and common restrooms.

In a triple net lease, the base rent is typically lower compared to other lease types. However, tenants must be prepared to bear these additional costs on top of the base rent, which can lead to substantial financial commitments. As a retail tenant, it’s crucial to analyze the estimated triple net expenses and their potential impact on your business’s profitability before committing to such a lease.

Permitted Use and Zoning Restrictions

Ensure that the lease clearly defines the permitted use of the retail space. Verify that the business activities you plan to conduct align with the zoning regulations and that the landlord approves of your intended use. Violating zoning restrictions can lead to legal consequences and the termination of your lease.

Repairs and Maintenance

Understand your responsibilities for repairs and maintenance of the premises. While some leases may require the landlord to handle major structural repairs, tenants are generally responsible for day-to-day maintenance and minor repairs. Clarify the maintenance expectations to avoid disputes down the line.

For commercial retail tenants, signing a lease agreement is a significant commitment that should not be taken lightly. Seeking legal advice from experienced commercial real estate attorneys can also be invaluable in navigating the complexities of lease agreements and ensuring a smooth and secure business journey. If you need assistance reviewing a commercial lease, call us today at 703-558-9311 or complete the contact form here to schedule an initial consultation with our office.

Key Considerations for Buyers When Negotiating a Purchase and Sale Agreement

Seddiq Law Firm Team — Thu, 20 Jul 2023 15:50:02 GMT

Purchasing a property or a business is a significant undertaking that requires careful consideration and attention to detail. A crucial step in this process is reviewing and negotiating the purchase and sale agreement (PSA). This legally binding contract outlines the terms and conditions of the transaction and protects the interests of both the buyer and the seller. For buyers, it is essential to thoroughly understand the PSA and be aware of certain key provisions that warrant close attention. In this blog, we highlight important elements that buyers should look out for when reviewing a purchase and sale agreement for a property and business.

Purchase Price and Payment Terms:

The purchase price is a critical component of any PSA. Buyers should ensure that the agreed-upon purchase price is clearly stated in the agreement, including any adjustments or allocation of the price between the property and the business assets. Payment terms, such as the deposit amount, the schedule for the remaining payments, and any contingencies related to financing, should be carefully reviewed to ensure they align with the buyer’s financial capabilities and expectations.

Due Diligence and Representations:

A comprehensive due diligence process is essential before completing a property and business acquisition. Buyers should closely examine the representations and warranties made by the seller regarding the property’s condition, financial statements, contracts, and legal compliance. The PSA should clearly outline the scope and timeframe for due diligence investigations, as well as any remedies or contingencies available to the buyer if significant issues are discovered.

Assets and Liabilities:

Identifying and defining the assets and liabilities being transferred in the transaction is crucial. Buyers should ensure that the PSA includes a detailed list of the property and business assets being sold, such as real estate, equipment, inventory, leases, intellectual property, and customer lists. Similarly, it is essential to address any existing or potential liabilities, such as outstanding debts, pending lawsuits, or environmental concerns, and determine the allocation of responsibility between the parties.

Closing and Transition Period:

The PSA should outline the closing process, including the date, time, and location of the closing, as well as any specific requirements for transferring ownership. Additionally, it is important to consider the transition period after the closing, during which the seller may assist the buyer with operational matters, training, or customer introductions. The agreement should define the duration and terms of this transitional support, if applicable.

Non-Compete and Non-Disclosure Clauses:

To protect the buyer’s investment and business interests, the PSA should include non-compete and non-disclosure provisions. A non-compete clause restricts the seller from engaging in a similar business or competing within a defined geographic area for a specific period. A non-disclosure clause ensures that confidential information, trade secrets, customer data, and other proprietary details remain confidential even after the transaction is complete.

Dispute Resolution and Governing Law:

The PSA should specify the method of resolving any disputes that may arise between the parties, such as mediation, arbitration, or litigation. Additionally, it should clearly state the governing law that will apply to the interpretation and enforcement of the agreement. Careful consideration of these provisions can help buyers anticipate and mitigate potential conflicts.

When purchasing a property and business, buyers must exercise caution and thoroughness in reviewing the purchase and sale agreement. By paying close attention to these key provisions, buyers can safeguard their interests and minimize the risk of future conflicts. Engaging the expertise of a qualified attorney who specializes in business transactions can provide invaluable guidance throughout the negotiation and review process, ensuring a smooth and successful acquisition.

If you need help reviewing or negotiating a Purchase and Sale Agreement, call us today at 703-558-9311 or complete the contact form here to schedule an initial consultation with our office.

You May Rescind That Foreclosure Sale by Claiming You Can Cure the Default

Seddiq Law Firm Team — Thu, 30 Apr 2020 04:53:13 GMT

By | Shafeek Seddiq

No doubt, COVID-19 has hit every sector of our economy, including real estate. Economists predict a recession is more likely to happen resulting in widespread unemployment and loss of national income. Some economists predict the economic impact on the real estate market, particularly in Virginia, will not be as severe as the 2008 recession for a variety of reasons, including stricter lending regulations and low interest rates. This unique situation has given rise to both challenges and opportunities.

But for those who have lost their jobs or businesses, it is hard to predict how they will be able to save their homes from foreclosure if we are unable to reopen the economy soon. For now, we can take guidance from the opinions of the Virginia Supreme Court to prepare for saving our homes from foreclosure.

On April 2, 2020, the Supreme Court of Virginia in Young-Allen v. Bank of America may have made it easier for lenders to foreclose, but have also provided a hint to homeowners to prove that you can cure the default and the foreclosure sale may be rescinded. Otherwise, you are out of luck.

Foreclosure and Trial Court

Tamara Young-Allen borrowed money from Bank of America and secured that loan with a deed of trust to the property, stating that in the event the borrower defaults on the mortgage, the bank through a trustee has the right to sell.

Unfortunately, a time came when Young-Allen was not able to pay the mortgage and so she defaulted. Bank of America asked its trustee, Equity Trustees, LLC (“Equity”), to start foreclosure proceedings. Equity sent a notice of foreclosure to Young-Allen informing her when the sale will take place. A day after the notice, she emailed Bank of America requesting “reinstatement of Loan quote” or “reinstatement figures” pursuant to the terms of the deed.

Bank of America did not respond to her email. Meanwhile, Young-Allen advised Equity (the trustee) to cancel or postpone the scheduled foreclosure sale because Bank of America breached the terms of the deed. That is Bank of America did not provide “reinstatement figures” and “time for her to cure the default.” Equity also did not comply with this advice and request.

Young-Allen filed a complaint against Bank of America and Equity. She also filed lis pendens — a notice that litigation is pending on this property. In her complaint she alleged that:

Bank of America breached the terms of the deed of trust by failing to provide the requested reinstatement figure (to pay an amount that will bring you current on the loan) or notice to cure the default; and
Equity breached its fiduciary duty by not canceling or postponing the scheduled foreclosure sale.

She asked the court to declare that Bank of America and Equity did not have the authority to conduct foreclosure sale, and rescind any foreclosure sale that might happen during the pending litigation.

Meanwhile, Equity sold the house to an investment company despite the pending litigation.

Bank of America filed a demurrer (failure to state a cause of action) arguing that Young-Allen failed to allege injury or damage as a result of the alleged breach of the deed of trust. In other words, even if Bank of America did not provide the figures she requested, so what? How did Bank of America not providing the information she requested harm her or injure her? The court agreed with Bank of America and asked Young-Allen to amend the complaint.

Young-Allen filed the amended complaint and this time she asked the court for:

Equitable rescission (as a remedy to undue the sale of the property to the investment company) of the foreclosure sale because Bank of America breached the terms of the deed of trust, and its failure to satisfy conditions precedent to foreclosure; and
Again, claimed that Equity breached its fiduciary duty.

Bank of America and Equity demurred, stating that Young-Allen failed again to state a valid claim for equitable rescission, and Equity argued that she failed to allege sufficient facts to support how the fiduciary duty was breached when it conducted the foreclosure sale. The court agreed again with Bank of America and dismissed the case with prejudice. Young-Allen appealed to the Supreme Court of Virginia.

The Supreme Court’s Reasoning

The Supreme Court agreed with the Circuit Court and affirmed its decision. The court said to Young-Allen that her case is based on contract law. And to rescind — a remedy, or undue — the sale of her home, she must make a claim of breach of that contract accordingly.

The Supreme Court outlined the “elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant’s violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation. Thus, the present claim requesting the remedy of equitable rescission presupposes a breach of contract that has caused the plaintiff some form of harm.”

The Court reasoned that Young-Allen failed to allege the third element of the breach of contract. The third element requires the non-breaching party, Young-Allen, to show that she suffered harm because the breaching party, Bank of America, did not provide her the notice to cure default as required by the Deed of Trust. If the bank had given her a notice, she might not have sustained the injury. In this case, the harm, the Court said, was her ability to show that she could cure the default. And because Young-Allen did not allege anywhere that she had the ability to cure the default, Bank of America’s failure to give her notice did not cause her harm. Furthermore, the court said even if Bank of America provided the notice, it would not have made any difference because Young-Allen did not allege that she can cure that default. In a footnote the court explained:

We note that the complaint also failed to allege that Young- Allen could avoid another foreclosure sale if she obtained the remedy of rescission. Therefore, the remedy requested by Young-Allen may has ultimately been futile.

Takeaway for Homeowners

The uncertainty containing Corona-virus has paralyzed the economy and our ability to make mortgage payments. The Young-Allen decision can guide us how to plan in the event we are faced with a foreclosure notice or post-foreclosure fight. Because this case deals with the most difficult remedy of equitable rescission, the burden to prove the three elements is higher. The idea is to take every step of the foreclosure proceeding seriously and prepare accordingly. That means replying to notice, per-foreclosure notices and post-foreclosure planning. And finally, if the home is foreclosed, make sure to show harm by showing that you can pay the amount in default.

Commercial Lease

Seddiq Law Firm Team — Sun, 16 Feb 2020 10:35:19 GMT

By | Shafeek Seddiq

Factors to consider before signing that commercial lease agreement

You formed a new business – restaurant, convenience store, used car dealership, real estate brokerage firm, so on – and now you’re ready to lease a new space and make money. The landlord gives you a 30-page commercial lease contract, most likely drafted by the landlord’s lawyer, and you wonder what to do with it, how to read and understand it.

You also know that rent takes a lot of your initial investment and continued business operation budget, so you want to consider leasing your commercial space carefully. This article outlines some of the key issues or terms you should consider before signing that commercial lease agreement.

Leasing a commercial space depends on many factors including the type of business, your long- and short-term goals, the neighborhood, size of the space and your budget. Still, before you consider signing that agreement, consider some of the most important terms outlined below. Remember, in Virginia, commercial leases are governed by common law, in the form of contracts, and not governed by statute.

Key terms to consider in a commercial lease agreement

Rent: Regular payment to the landlord. Pay attention to the amount and make sure it is what you expected over the term of the lease, i.e. 3 or 5 years with option years, the acceleration clause, grace period for late fees and penalties.
Premises: The space you are renting. Get the blueprint of the space, especially if you are in common area type of space, i.e. shopping mall, to ensure the space is what you are getting.
Use of Demised Premises: Another item to watch out for is the usage of the space. Understand that you can conduct your business in that space, and perhaps learn if you can offer other services and products other than the one for which you are getting this space.
Maintenance: Generally, the landlord is responsible for structural maintenance of the premises and the tenant is responsible for normal wear and tear. Pay attention to what items (air conditioning, heater, windows, etc.) the lease outlines that the tenant must maintain.
Insurances: Depends on a variety of factors; the lease may require several different types of insurances the tenant must get to protect the landlord. So, pay close attention to the insurance clause on what coverage it requires you to provide, which varies from the more common property damage and liability coverage, to the more specific loss of rent or business interruption coverage.
Security Deposit: Sum of money required at the start of a lease agreement. This is a tricky one as there is no limit on the amount of deposit a landlord could ask for in Virginia. The landlord would want to receive as much security from the tenant to recoup its costs in case of default or otherwise. You should then leverage the amount of deposit you can afford and willing to pay the landlord to get other concessions, i.e. improvement cost, free first month’s rent, reduced or eliminate personal guarantee.
Notice to Cure: The landlord will issue you one if you violate a term in the lease agreement. No one is perfect, and we all make mistakes. For this reason, it makes sense to ensure that a reasonable time period is given to you to remedy the problem. A notice to cure of 3 or 5 days, especially if the notice is given in writing and by mail, is not a reasonable time period for solo and small business owners. So, make sure you negotiate for a reasonable time period of notice to cure.
Release from Lease: To ask the landlord to be released from the lease agreement. It will not be easy as landlords generally want to protect themselves and their money, but it does not hurt to negotiate a release from lease that is based on reasonable factors and terms that are beneficial to both.
Personal Guarantees: The landlord will ask for personal guarantees if your business is brand new to ensure they get their money promised in the lease agreement. A personal guarantee is another legal promise you make to the landlord that you will pay from your personal assets if your company is unable to pay the rent or any other cost outlined in the lease agreement. It is always a good idea to negotiate terms to limit your risk of personal guarantee, i.e. specify a point that will trigger it, decrease it with improved business performance, specify terms of relief, etc.

Conclusion and Recommendations

There are more terms worth considering when negotiating a commercial lease, and the above key terms also depend on several other factors, but these paint a good picture of what to look out for. The landlord usually has the upper hand, but consider the following situations when negotiating a commercial lease agreement:

The current economy and commercial lease market in Virginia, but particularly in the city and county of where you are thinking of opening your business. It allows you to determine how much negotiation you can do.
Your long and short-term goals for the business, i.e. expand or contract your business.
The nature of your business, including your customer base, clients exclusive to that city, town, county.
Cost of moving and relocation.
Goodwill of your business.

It is also recommended for solo and small business owners to understand the basics of commercial leases. Understand how to work with real estate agents, landlord’s agents and attorneys. Most importantly, learn about the standard lease which may enable you to negotiate with landlords on key terms such as rent, space, use restrictions, maintenance cost and personal guarantee.

As mentioned, commercial leases are typically one-sided and favor the landlord. It is prudent to engage an attorney to advise, counsel, and negotiate these leases on your behalf that may save you and your business from future headaches and possible business failure.

I would be happy to advice, counsel, review, draft or negotiate on your behalf your existing or new commercial lease agreement.

Call me at (703) 558-9311 or visit the website at www.seddiqlawfirm.com to send me a message so that I can set up a free consultation to discuss your specific business goals.