20A — October 11 - 24, 2013 — Mid Atlantic Real Estate Journal


M id A tlantic R eal E state J ournal

DE permits commercial real estate broker’s liens

Philadelphia - based industrial expert Cbre’s Terkanian joins the teamof Mcdemott &Ranalli

non-residential portion. The Act’s lien cannot be imposed on residential condominiums, town homes, mobile homes or other homes sold or leased on a unit-by-unit basis even if part of a larger building with more than four residential units. Unlike in Maryland and Pennsylvania, under the Act the “brokerage agreement” must meet certain require- ments for the lien right to ap- ply: it must state the amount or calculation of the broker’s compensation; that it is a binding contract under state law; and identify the real estate by description or tax parcel number. This could be a stumbling block for brokers wishing to claim liens, so they should dust off their broker- age agreements to make sure they are in correct form. The commercial broker’s lien is established by re- cording the required form of affidavit and notice with the recorder of deeds in the county where the commer- cial real estate is located. To guard against spurious filings, the recording must be made by an attorney ad- mitted to the Delaware bar. The lien must be recorded within 90 days of the failure to pay upon completion of the broker’s duties (which means the performance of the duties of the broker per the brokerage agreement except for completing settlement) or the agreed-upon payment schedule. As in Pennsylvania, for selling brokers the lien has to be recorded prior to the actual conveyance of the real estate to the buyer; un- like Pennsylvania, there is no additional requirement of providing a notice of intent to claim a lien to the owner and buyer prior to the con- veyance. A lien for a buyer’s broker is instead filed after the deed of the commercial real estate is recorded and does not attach to the seller’s interest in the property. The lien for tenant brokers at- taches only after the signing of the new lease and only to the tenant’s interest in the property. Liens for leasing commis- sions due upon renewal of lease terms (which in my ex- perience are the commissions least likely to be paid) do not need to be filed until before the end of the 90-day period following the failure to pay the required compensation. The broker must send a continued from page 6A

copy of the affidavit and notice of broker ’s lien to the owner by certified mail, return receipt requested, or may use a process server for notice. There is no need to commence a legal action to establish the lien, such as is the case in Maryland, unless the owner demands that the broker file suit in Delaware Superior Court; the lien is deemed released if the broker does not sue within 20 days of demand. The owner also has the right to release the lien from the real estate by depos- iting funds in escrow equal to the full amount stated in the notice of the lien plus 10%. The conditions for the release of such funds in escrow can be agreed upon in the broker- age agreement or otherwise; if not the disposition of the escrow is determined a court interpleader action. The priority of the broker’s lien (which attaches only to the commercial real estate that is the subject of the bro- kerage agreement) is based on when the notice of lien is recorded, except the lien is subordinate to and payable after all mortgages (when- ever recorded), mechanics liens, other liens imposed or created by statute, and taxes, and similar liens of the federal government, state government and political subdivisions. The Act does put the broker’s lien ahead of judgments subsequently entered against the owner. Finally, the broker cannot waive its right to claim a broker’s lien, under written agreement or otherwise, and the lien is effective only for a period of one year following the date of filing and during any active litigation regard- ing the lien. The broker can enforce the lien by filing a debt action in Superior Court. Supporters of Delaware’s Act have said that the Act will “level the playing field” for commercial brokers en- countering last-minute pre- settlement pressure to re- negotiate their commissions. Only experience will tell if the Act achieves this goal, and in a way that does not unduly interfere with the sale and leasing of real estate. Brent C. Shaffer is a partner in Young Con- away Stargatt & Taylor, LLP, Wilmington, Dela- ware, practicing trans- actional commercial real estate law. n


hiladelphia, PA — CBREGroup, Inc. (CBRE) announced

brokerage team of Joseph McDermott and Vincent Ranalli , which has completed 98 transactions totaling more than 16 million s/f over the past five years. Terkanian will concentrate on business development and client rela- tions in occupier services for multi-market clients. “We are extremely pleased to welcome Jake to our team,” “A truly outstanding com- mercial real estate and property management company is not simply judged by occupancy rates, square footage or prof- itability; rather it should be judged by how we treat and invest in our tenants,” said Jef- frey Cohen , president of BECO Mgmt. “With 18 years of experi- ence with the company and her extensive work throughout our rent rate. Nobody really knows when a significant rate increase might actually happen, so most potential buyers should as- sume a significant increase is really a matter of when – not if. Investors should be focusing on getting the best financing deals they can, as quickly as they can,” said Hartstein, who has more than 18 years of situ- ational-lending experience. Q: Which geographic markets offer some of the best value-add opportunities? A: “We believe there is a high concentration of opportuni- ties throughout the Northeast and Mid-Atlantic regions for funding and acquiring loans between $5 million and $25 million secured by commercial real estate. For a situational lender like Case, we want to be the vehicle that gets bor- rowers into a long-term hold position. Each loan is evaluated on its own merits, based on the borrower’s unique situation and local market conditions. We are nimble enough to pierce through a property-specific is- sue in order to minimize risk and achieve value – a win/win for the borrower, us and the neighborhood in which the now stabilized property is located,” said Herrick. Q: How has situational fi- nancing changed the commer- cial real estate landscape? A: “Speed and decisiveness are inherent to today’s com- mercial real estate investments

said Joseph McDermott, Se- nior VP. “He has the right bal- ance of technical abilities and experience with fully integrat- ed delivery models that will be an unparalleled value-add for our clients. Our industry is dynamic and Terkanian’s industrial expertise will allow us to provide superior strategy and tailored comprehensive real estate solutions.” n portfolio, Kris is ideally suited to serve as an advocate for our tenants and a champion of the BECO brand experience.” In this new role, Broder will serve as the leading brand ad- vocate throughout the company and directly to tenants, and be responsible for cultivating and sustaining tenant, prospect, broker and vendor relation- ships. n and have become synonymous with situational lending. Expe- rienced owners and developers are financing their transi- tional assets with these types of loans, which are structured to render the asset conven- tionally financeable within a defined period of time. Terms range from as short as 8 to 12 months, to 18 or 24 months or longer. Borrowers cite the streamlined underwriting and due diligence process as their top reason for partnering with a situational lending platform,” said Milona. Q: How can risk be minimized for transitional assets? A: “Every deal needs to stand on its own. More importantly, so does the business plan. Even if the original strategy is not realized, the borrower must ac- count for alternatives to ‘right the ship’ through an alternative means like adaptive reuse or some level of renovation or re- hab to increase cash flows and values. Over the course of the next few years, we do not expect there to be a shortage of com- mercial property buyers. How- ever, we do expect there to be an enduring shortage of money, particularly within the middle markets,” said Hartstein. Based inRochellePark,NJ Case is targeting all transi- tional asset types, including multi-family, land, retail, of- fice and industrial, through- out the Northeast and Mid- Atlantic region. n

the appoint- ment of Jake Terkanian as VP of indus- trial broker- age services. Te r k a n i a n will join the i n d u s t r i a l

Jake Terkanian BECO Mgmt. establishes new executive position

ROCKVILLE, Md — BECO Management, Inc. announced that Kris Broder will assume a newly established position as vice president of brand and tenant experience. BECO Man- agement created the position as part of a company-wide mission to bring five-star service and amenities to tenants through- out its 6.1 million square foot portfolio. properties are transitional situations in middle markets. Financing needs to run the full gamut, from short timeframes to complex situations, like sto- ried assets and restructurings. We’re also seeing turnaround scenarios involving litigation, contaminated sites, non-cash- flowing properties, weak credit history, bankruptcies, foreclo- sure and property reposition- ing, as well as development or redevelopment. All of these require the swift, efficient infu- sion of capital,” said Milona, who has more than 10 years experience making complex commercial real estate loans. Q: While many traditional lenders and investors continue to balk in a marketplace still filled with uncertainties, are financial markets and lending institutions paying any atten- tion to these opportunities? A: “In general, many are more comfortable and aggres- sive with putting money into first-class real estate in top- tier markets – not the middle markets. Despite this divide, the number of real estate as- sets sold in the past year has increased across the board and we believe that trend will con- tinue. This, in turn, has driven up the prices of these assets in general, a trend that should continue as more investors who can obtain financing return to the market, especially if inter- est rates remain at their cur-

continued from page 2A Awindow of opportunity, particularly for . . .

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