USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
agent. Some states such as New York require publication of formation documents, which adds further filing costs. Maintaining an entity involves the filing of annual reports, the payment of addi - tional small filing fees, and franchise taxes, with accounting compliance costs varying based on entity type, income, assets and the entity’s state of operation. Attorneys and accountants typi - cally 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 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, restaurants, etc) or to occupy an office, warehouse or industrial space. A ground lease (or land lease) is an agreement in which a tenant is permitted to develop a par - cel 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 tenant who will develop, construct and operate a building on the property during the lease term. Ground leas - es 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 landlord, and a subtenant. In a sublease, the ten - ant (sublessor) 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-subles - sor remains responsible for fulfilling its obliga - tions 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 spe - cific activities, typically for a limited (sometimes brief) period. 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 hold - er 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 pro - vider to enter onto a property in order to install or maintain electrical infrastructure. Some ease - ments 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 -
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