USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
anti-money laundering rule for residential real estate and enjoining its enforcement nationwide. The follow - ing day, FinCEN issued updated guidance stating that, in light of the court’s decision, compliance with the Residential Real Estate Reporting Rule is presently suspended, pending further developments including appellate review of the case or additional regulatory guidance. 5.6 Annual Entity Maintenance and Accounting Compliance Forming and organising a business entity in the USA varies by state, costing several hundred dollars for filing documents and for using a filing agent. Some states such as New York require publication of forma - tion documents, which adds further filing costs. Main - taining an entity involves the filing of annual reports, the payment of additional small filing fees, and fran - chise taxes, with accounting compliance costs vary - ing based on entity type, income, assets and the entity’s state of operation. Attorneys and accountants typically charge for their services in forming, filing and advising in connection with these matters. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The most common arrangements to occupy and use real estate for a limited time without buying it outright
A ground lease (or land lease) is an agreement in which a tenant is permitted to develop a parcel of real property during the lease period, after which the land and all improvements are turned over to the property owner. Typically, ground leases involve leasing land for a long period, often between 50 and 99 years, to a ten - ant who will develop, construct and operate a building on the property during the lease term. Ground leases are typically financed by tenants in a manner similar to how property owners utilise mortgage financing. A commercial sublease is an agreement between a commercial tenant, which has a lease with the land - lord, and a subtenant. In a sublease, the tenant (sub - lessor) rents out part or all of the leased space to the subtenant (sublessee), on either a short-term or long- term basis (but the term may not exceed the remaining term of the tenant’s lease with the landlord), and the tenant-sublessor remains responsible for fulfilling its obligations under the original lease with the landlord, even if the sublessee defaults. A sublease differs from a lease assignment in that the assignee of the lease “becomes” the tenant, whereby with a sublease the sublessor “remains” the tenant. While a lease grants possession of real estate, a licence grants only the right to engage in specific activities, typically for a limited (sometimes brief) peri - od. Examples of licences include the right granted to a vendor to sell its product(s) on the licensor’s property, or the right to hold an event such as a concert or to place a vending machine(s) on the licensor’s property. An easement is a legal right that allows the holder of the easement to use property that it does not own or possess, for a specific purpose. For example, an easement may allow a utility provider to enter onto a property in order to install or maintain electrical infra - structure. Some easements are said to “run with the land” so that they continue, or “run with the land”, upon the property’s transfer. Other easements are referred to as being “in gross”, meaning that the ease - ment is “personal” to the easement holder and does not “run with the land” upon the property’s transfer. 6.2 Types of Commercial Leases Commercial leases generally include absolute leases, gross leases, net leases, percentage leases, variable
include: • leases; • ground leases; • subleases; • licence agreements; and • easements.
A lease is a contract outlining the terms under which the tenant or lessee is permitted to use and occupy the premises, and which provides that the landlord will receive regular payments of rent for a specified period of time (typically, monthly). Commercial leases are commonly used to rent retail space (stores, res - taurants, etc) or to occupy an office, warehouse or industrial space.
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