Commercial Real Estate Question (multiple owners/conflict of interest) - 1 views

• 
  #1 wilova on 04 Oct 22

   

  I and several family members constitute a 50% ownership of a commercial building and land in California. We inherited this real estate in a trust from a family member who was also previously a partner in the building. We (the trust) sold our interest in the business a few years ago to the other partner but have retained 50% ownership in the property (partner holds the other 50%). We have been doing a lease approximately every 3 years, and have paid for a commercial real estate appraisal to set the rent based on the comps of property values and rents of similar property in the area. The company we used for the appraisal has been utilized twice in the past and was acceptable to all parties before.
  
  It is time to do a new lease. We offered a monthly rent roughly equivalent to 0.7% of the appraised property value, consistent with the area and previously executed lease agreements. We have been relatively passive in the past with raising the rent; but this time we proposed an increase of roughly 20%. Our "partner" has pushed back, saying the business is still not recovered and the appraisal is not accurate. He has not offered anything supporting this and we are now at an impasse.
  
  The family opinion (we are in consensus in everything except how hard to go on this) is that the other owner is operating with a conflict of interest. As the sole owner of the business now, we do understand that the tenant has a legitimate interest in keeping the rent low. When he corresponds with us, he uses the business letterhead and employees rather than engage directly. We would rather not engage legally if we can come to a solution, but that appears to not be happening.
  
  Questions:
  
  Are we stuck? We would be happy to sell our interest in the property but the co owner has said he can't afford to buy us out.
  
  Can we force the issue informally, looking for ideas like Dexter MI Homes for Sale. Or are we to the point that we need to go to court or mediation (is that a thing here)?
  
  Thanks to anyone who reads this and has some insight. We are frustrated. Happy to answer questions, without getting too specific.

   

  <div class="cArrow"> </div><div class="cContentInner">I and several family members constitute a 50% ownership of a commercial building and land in California. We inherited this real estate in a trust from a family member who was also previously a partner in the building. We (the trust) sold our interest in the business a few years ago to the other partner but have retained 50% ownership in the property (partner holds the other 50%). We have been doing a lease approximately every 3 years, and have paid for a commercial real estate appraisal to set the rent based on the comps of property values and rents of similar property in the area. The company we used for the appraisal has been utilized twice in the past and was acceptable to all parties before. <br /> <br /> It is time to do a new lease. We offered a monthly rent roughly equivalent to 0.7% of the appraised property value, consistent with the area and previously executed lease agreements. We have been relatively passive in the past with raising the rent; but this time we proposed an increase of roughly 20%. Our "partner" has pushed back, saying the business is still not recovered and the appraisal is not accurate. He has not offered anything supporting this and we are now at an impasse. <br /> <br /> The family opinion (we are in consensus in everything except how hard to go on this) is that the other owner is operating with a conflict of interest. As the sole owner of the business now, we do understand that the tenant has a legitimate interest in keeping the rent low. When he corresponds with us, he uses the business letterhead and employees rather than engage directly. We would rather not engage legally if we can come to a solution, but that appears to not be happening. <br /> <br /> Questions: <br /> <br /> Are we stuck? We would be happy to sell our interest in the property but the co owner has said he can't afford to buy us out. <br /> <br /> Can we force the issue informally, looking for ideas like <a rel="nofollow" href="https://www.arbormove.com/dexter-real-estate">Dexter MI Homes for Sale</a>. Or are we to the point that we need to go to court or mediation (is that a thing here)? <br /> <br /> Thanks to anyone who reads this and has some insight. We are frustrated. Happy to answer questions, without getting too specific.</div>

  ...

  Cancel

To Top