5 Key Features of AIR Forms
Standard templates are not always created equal. Many brokers and owners choose to use the AIR Commercial Real Estate Association forms when it comes to both leasing and sales transactions, and these forms have been treated as fairly standard within the industry. However, having read hundreds of these so-called "template" forms I have learned that they are not always indeed standard. I recently attended a workshop that was all about these forms. I know it probably doesn't sound fun, but for a real estate nerd like myself, it was a blast.
The workshop was organized by AIR and the attorneys who have helped draft these forms and changes over the years. I've then compiled the top 5 impacts you should be aware of.
1. New Apartment Form
Apartment owners and brokers can rejoice. There is a new AIR Form for Residential Income Properties to be used with 5+ unit buildings and incorporates items related to residential properties.
2. Closing Waives Rights
Under Section 12.3 of the Standard Purchase of Real Estate (Non-Residential) Form, if you find out during the close of escrow some item related to the property but decide to close anyway, you waive your rights to sue - because you decided to close anyway. So if you find something that is important, speak-up and try to resolve it during escrow.
3. Office is Not Like the Others
The Office lease form introduces the concept of rentable square footage in Section 1.2, which per certain standards such as BOMA, means that when calculating the square footage of a unit it may not be the same as if you took your tape measure. The Commercial/Industrial form does not use this difference. When leasing space keep in mind before signing on the dotted line, to be comfortable with what you see i.e. what you see is what you get and paying for it.
4. Gross v. Net Leases Oh My
Be careful when reviewing the Gross lease form as it does not necessarily mean that the Landlord is responsible - in fact, many items in the Gross lease form still has the Tenant responsible, such as how roof replacement and capital expenditures is treated. Therefore, it is important to review the leases including but not limited to Sections 4.2, 4.3, 7.1, and 7.2 carefully and not just rely on the title of the form.
5. Common Area Maintenance is a Sticky Subject
Just because an item is not referenced in Section 4.2 does not mean the Landlord can not pass it through as a Tenant expense. This section is all about the common area maintenance (CAM), and what expenses can become the Tenant's responsibility to pay for when dealing with Commercial/Industrial and even Office uses. Pay close attention, or if the owner says an item is not part of CAM, then be sure to mention it specifically.
*Note this list is not exhaustive, or to be in lieu of legal advise. Please consult with your attorney and advisors for any matters pertaining to buying, selling, and leasing real estate.