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Welcome to
A.I.R.* Forms Practitioner!

AIR CRE Contracts are excellent contracts!  They typically speed up the closing of a deal and lower transactions costs. Parties signing AIR CRE Contracts sometimes have a limited understanding of the terms of those contracts.  Some obtain unjustified comfort in signing a document they do not understand because it is a “standard-form” document that is widely accepted in the industry.

This site intends to increase the understanding of AIR CRE Contracts, and explain legal aspects of:

  1. leasing transactions;
  2. purchase/sale transactions; and
  3. landlord-tenant disputes (including commercial unlawful detainer).

*A.I.R. Forms Practitioner is not affiliated with or sponsored by the AIR CRE.

Popular Articles & Resources

Many Owner-Users To Pay Increased Property Taxes Under Prop. 15

By | September 2nd, 2020|Leasing, Purchases/Sales|4 Comments

Background on Prop. 15: On November 3, 2020, California voters will decide whether to adopt the “Split Roll” Initiative, Prop. 15.  If passed, many commercial and industrial properties would lose “Prop. 13 protection,” and would be re-assessed and taxed based upon market value.Properties can be reassessed as early as the July 1, 2022 – June 30, 2023 fiscal tax year, as discussed in California’s Controversial “Split Roll” Initiative (Prop. 15): The Basics. Question: Under Prop. 15, will an owner-user of a commercial or industrial property in California have its property re-assessed (and pay property taxes based on the market value of its property)? Answer: Yes, [...]

“Split Roll” Initiative (Prop. 15): Will Tenants Pay the Increased Property Taxes?

By | August 26th, 2020|Leasing, Purchases/Sales|6 Comments

On November 3, 2020, California voters will decide whether to adopt the “Split Roll” Initiative, Prop. 15.  If passed, many commercial and industrial properties would lose “Prop. 13 protection,” and would be re-assessed and taxed based upon market value. Properties can be reassessed as early as the July 1, 2022 – June 30, 2023 fiscal tax year, as discussed in California’s Controversial “Split Roll” Initiative (Prop. 15): The Basics. If a tenant enters into an AIR CRE lease today, would it be required to pay the increase in property taxes resulting from the potential passage of Prop. 15? Short Answer: Yes, except under the rarely-used [...]

California’s Controversial “Split Roll” Initiative (Prop. 15): The Basics

By | August 5th, 2020|Leasing, Purchases/Sales|2 Comments

The “Split Roll” Initiative recently qualified for the November 2020 ballot, and is numbered Proposition 15.  If passed, many commercial and industrial property owners would lose their “Prop. 13 protection,” and their properties would then be assessed at market value. This article is the first in a multi-part series discussing Prop. 15.  In this first part, we will start with the basics of Prop. 15. When is the Vote on Prop. 15 and is it Likely to Pass?: Californians will vote on Prop. 15 on November 3, 2020.  In order for Prop. 15 to pass, only a simple majority is required.  It is unclear whether [...]

BREAKING: SB 939 Fails To Advance

By | June 18th, 2020|Landlord-Tenant, Leasing|8 Comments

On May 13, 2020, a bill numbered SB 939 became a lighting-rod in California.  It proposed that certain Covid-impacted tenants could terminate their leases. Authored by Senator Wiener, SB 939 gained momentum when it passed the Judiciary Committee by a vote of 5-1 in favor of the bill.  It then moved to the Appropriations Committee of the Senate. During the June 18, 2020 Appropriations Committee hearing, SB 939 failed to advance. Amendments Not Enough: According to Senator Wiener’s office, before the June 18 hearing, Senator Wiener proposed amendments to SB 939, but it was not enough to generate the required support.  Based on prior comments [...]

SB 939’s New Controversial Provision: Eviction Protections For Covid-Impacted Tenants In ALL Industries (Not Limited To Restaurants, Etc.)

By | June 2nd, 2020|Landlord-Tenant, Leasing|7 Comments

SB 939 was recently amended to provide additional eviction protections for Covid-impacted tenants in all industries.  To be clear, this provision is not limited to restaurants, bars, places of entertainment, etc.  This updated section of SB 939 provides, in part: 12-Month Repayment Period: “Covid-impacted” tenants have 12 months after the state of emergency ends to repay rent that became due during the state of emergency period. No Eviction For Unpaid Rent Accrued During State of Emergency: “Covid-impacted” tenants cannot be evicted for unpaid rent that accrued during the state of emergency period. Note: It appears that this unpaid rent could be pursued by landlords in [...]

SB 939 Lease Termination Right Narrowed To Restaurants/Bars and Places of Entertainment

By | June 1st, 2020|Landlord-Tenant, Leasing|2 Comments

On May 13, SB 939 became a lightning rod in California – if passed, it would give certain Covid-impacted tenants a right to terminate their commercial leases.  It initially applied to all California small businesses.  However, SB 939 was just amended and the termination right was narrowed substantially. SB 939's Termination Right Now Applies To Only Eating Or Drinking Establishments, Places of Entertainment, and Performance Venues: The most significant change to SB 939 is that the lease termination right would apply only to the following businesses: Eating or drinking establishments Places of entertainment Performance venues These businesses do not automatically qualify for this termination right.  [...]

SB 939 Update: Key Hurdle Passed; Obstacles Remain

By | May 28th, 2020|Landlord-Tenant, Leasing|7 Comments

SB 939 provides certain Covid-impacted tenants with the right to terminate their leases if they experience 40% monthly revenue declines (for details on the bill, see California Proposes Lease Termination Right For Covid-Impacted Tenants).  Below is an update on the current status of SB 939. SB 939 Approved By Judiciary Committee By 5-1 Vote: Last Friday, SB 939 faced its first key test when it was reviewed by the Senate Judiciary Committee.  It passed by a 5-1 vote in the Committee.  All five members who voted for the bill were Democrats, and the one vote against came from a Republican. The 5-1 Vote Masks Some [...]

California Proposes Lease Termination Right For Covid-Impacted Tenants

By | May 18th, 2020|Landlord-Tenant, Leasing|9 Comments

Under a proposed California law, certain tenants that experience declines in revenue as a result of Covid-19 can terminate their lease if their landlords do not agree to a rent reduction.  This Senate Bill 939 (SB 939) has been introduced in the California Senate, but has not been enacted.  Does this termination right in SB 939 apply to AIR CRE Leases? Short Answer/Summary: Yes, it applies to all commercial leases, including AIR CRE Leases.  It applies only to tenants that experience 40% monthly revenue declines.  For restaurants/bars and places of entertainment to qualify for this termination right, they must also experience a 25% decline in [...]

Can Lessee Pay Rent “Under Protest” in the AIR CRE Leases?

By | April 28th, 2020|Landlord-Tenant, Leasing|0 Comments

Some tenants are asserting defenses to the obligation to pay rent, particularly where their businesses are closed entirely because of the Covid-19 pandemic.  However, if a tenant does not pay rent, it may lose the ability to exercise an option to extend, it may lose future rent abatement, or there could be other repercussions.  Under the AIR CRE Leases, can Lessee pay Rent “under protest” and retain its right to reimbursement? Short Answer: Yes.  Lessee can pay “under protest,” however, it must file a lawsuit within 6 months, otherwise it waives its right to protest such payment. Lessee’s Right To Pay “Under Protest”: If there [...]

Does Lessee Lose its Extension Option if it Did Not Pay Rent During COVID-19 Pandemic?

By | April 9th, 2020|Leasing|2 Comments

Many businesses did not pay rent or paid partial rent in April 2020, because of the COVID-19 pandemic.  Under certain circumstances, a Lessee that is not complying with the AIR CRE Leases can lose the right to exercise its Option To Extend the Lease term.  If a Lessee failed to pay rent for April 2020, does Lessee automatically lose any Option To Extend it may have in its Lease? Short Answer: No, there is no automatic forfeiture of the Option To Extend for failure to pay rent.  If Lessee becomes current at the time of exercise, it retains its ability to exercise an Option.  After [...]

Late Charges And Interest Under the AIR CRE Leases

By | April 2nd, 2020|Landlord-Tenant|8 Comments

Many businesses in California are struggling to pay April 2020 rent as a result of the impact of COVID-19.  Under the AIR CRE Leases, is Lessor entitled to late charges and interest if Rent is not paid on time? Short Answer: Yes.  A late charge of 10% (or $100, whichever is greater) is due if Lessor does not receive Rent within the 5-day “grace period.”  Interest at 10% begins to accrue on the 31st day after the Rent was due. 5-Day “Grace Period” Before 10% Late Charge: Under Paragraph 13.4 of the AIR CRE Leases, if Lessee does not pay Rent on time, a late [...]

Can Lessor Demand Financial Statements From Lessee Under the AIR CRE Leases?

By | March 28th, 2020|Landlord-Tenant|0 Comments

In light of COVID-19 closures, many Lessees are requesting rent relief from their Lessors, in the form of deferral or abatement.  Lessors are more curious than ever to understand the financial situation of Lessees.  Under the AIR CRE Leases, is Lessee required to provide financial statements upon Lessor’s demand? Short Answer: Yes, but only in connection with a sale, finance, or refinance by Lessor.  In such cases, Lessee is required to provide financial statements “reasonably required” by the lender or purchaser. Only Required For Finance, Refinance or Sale: Pursuant to Paragraph 16(c), financial statements can be requested from Lessee only in connection with a “finance, [...]

Does the “Force Majeure” Event of COVID-19 Excuse April 2020 Rent Payment Under AIR CRE Leases?

By | March 24th, 2020|Landlord-Tenant|0 Comments

Publisher’s Note: We are experiencing difficult times in California with the Coronavirus. I hope all is well with you and your loved ones, and our best wishes in the recovery of any of your businesses that have been impacted. Many California businesses have temporarily closed as a result of COVID-19.  Does the closure of a business as a result of COVID-19 constitute a “Force Majeure” event under the AIR CRE Leases that excuses payment of Rent? Short Answer: No.  There is no Force Majeure provision in the AIR CRE Leases.  Force Majeure provisions in many custom leases would also not excuse (or even delay) the [...]

AIR CRE Leases Require Business Interruption Insurance. Will it Cover Losses for Coronavirus Closures?

By | March 20th, 2020|Leasing|8 Comments

Publisher’s Note: We are experiencing difficult times in California with the Coronavirus. I hope all is well with you and your loved ones, and our best wishes in the recovery of any of your businesses that have been impacted. California businesses have been suffering and many have closed, either by direct mandate of the government or “voluntarily” for health/business reasons.  Most AIR CRE Leases require Lessees to obtain “business interruption” insurance.  For Lessees whose businesses are interrupted or closed as a result of the Coronavirus, does their “business interruption” insurance cover them for their loss of income? Short Answer: Business interruption coverage typically requires “physical [...]

Is Earthquake Coverage a Pass-Through Expense In AIR Leases?

By | July 25th, 2019|Leasing|7 Comments

Southern California recently experienced a magnitude 7.1 earthquake.  Well before the recent quake, our clients have been increasingly considering earthquake coverage for their buildings.  Under the various AIR Leases, if a Lessor obtains earthquake coverage for its building, can it charge this cost to Lessee? Short answer: Sometimes.  In the AIR “Net” leases, it is a pass-through to Lessee, but only if the earthquake coverage is required by Lessor’s lender.  (See the excerpt from an AIR “Net” lease below.) In the commercial/industrial “Gross” leases, Lessees pay only “Insurance Cost Increases” above the premiums paid for Lessor’s insurance at the time of lease commencement.  Any increased [...]

New Single-User Restroom Law – Is Lessee Responsible To Comply?

By | February 23rd, 2017|Leasing|2 Comments

Effective March 1, 2017, California businesses with a single-user restroom must identify such restrooms with signage as “all-gender” restrooms.  Under the AIR lease, is it Lessee’s responsibility to comply with this new law, and is Lessee responsible for the cost to comply? Yes, according to many Lessors.  Lessors are contending that, pursuant to Paragraph 6.3 of the AIR Lease, it is Lessees’ responsibility to comply and Lessees are responsible for the cost.  An excerpt of Paragraph 6.3 is below.  Please note that the term “Applicable Requirements” below includes applicable law (such as this new California law). Lessees may not be aware of this new law.  [...]

AIR Updates Leases For 2017 Disability Access Law

By | January 4th, 2017|Leasing|0 Comments

The AIR Commercial Real Estate Association has updated its lease forms to account for a new California disability access law effective January 1, 2017.  The new law was approved by Governor Jerry Brown on September 16, 2016. As the new year begins and you get ready to close deals, make sure you update your AIR forms.  You may update them at the AIR’s website here.  The advantages of the AIR’s industry-leading lease forms are summarized here. The following is a summary of certain key provisions of the new law (Civil Code section 1938): Lessor’s Disclosure Requirement: Lessors must state on every lease executed on or [...]

3 Tips To Evict Tenants Quickly

By | August 29th, 2016|Landlord-Tenant|0 Comments

If the most frustrating event for an owner of commercial property is a tenant not paying rent, the second most frustrating event must be a delay in evicting that tenant. If the lease at issue is an AIR lease, here are three tips to facilitate a quick eviction: 1. Careful Preparation of the 3-day Notice: The 3-day notice must be carefully prepared.  If it is not, the landlord may have to start the process over, or the landlord may lose an unlawful detainer case.  Although California law gives a tenant 3 calendar days to pay the amount demanded in the notice to pay rent, Paragraph [...]

Lessor’s Rights When Lessee Breaches the AIR Lease

By | April 12th, 2016|Landlord-Tenant|0 Comments

If Lessee does not perform an obligation in the AIR Lease, Lessee typically has the right to cure its Default.  However, if it fails to cure on time (or if the Default cannot be cured), Lessor may terminate Lessee’s right to possession of the Premises and require Lessee to pay Lessor all of the following 9 items: Brokerage commissions applicable to the unexpired term of the Lease. Rental loss for the period of time prior to termination of Lessee’s right to possession. Rental loss for the remainder of the lease term (however, Lessor must attempt to promptly lease the Premises to another party). Free rent [...]

Modifications to the AIR Purchase Agreement (Part 3)

By | February 4th, 2016|Purchases/Sales|2 Comments

After you sell a property, do you want to ensure that the buyer does not make a claim against you?  Part 3 of this series discusses the most effective modifications Sellers make to the AIR purchase agreement to avoid (or limit) post-Closing claims by Buyers. “Cap” on Liability: Many custom purchase agreements will include a “cap” on the maximum amount of liability in the event that Buyer sues Seller after the Closing. This “cap” can limit Seller’s liability for claims Buyer may make against Seller (for breach of a Seller representation, etc). Some Sellers that use the AIR purchase agreement add a similar “cap” on [...]

Think Twice Before You Click “Send” – AIR Allows Notices By E-mail

By | December 15th, 2015|Leasing, Purchases/Sales|0 Comments

Could a quick e-mail from a Buyer’s broker to a Seller’s broker stating “Buyer finds the environmental report unacceptable” accidentally terminate a purchase and sale agreement? Could an e-mail from a tenant's broker to a landlord's broker stating "tenant is going to exercise the option” be an unintentional exercise of an AIR option to extend a lease? The answer to both questions is yes – now that AIR leases and AIR purchase agreements (and many lawyer-drafted real estate contracts) have recently been revised to allow notices to be sent by e-mail. Attorney-drafted real estate contracts increasingly allow parties to send notices by e-mail. The AIR [...]

AIR Option – 2 Key Provisions You Should Know

By | November 11th, 2015|Leasing|6 Comments

The AIR Option To Extend Addendum is frequently an afterthought when completing AIR lease documents. This Addendum is a well-drafted form and relatively straight-forward. Nevertheless, there are at least two key provisions that every real estate professional should know. 1.  Fair Market Rental “Floor” Provision: If it is a fair market value option, the Addendum contains a “floor” for the benefit of Lessor. That is, the Addendum provides that the new fair market value cannot be below the Base Rent immediately prior to the rent adjustment. This provision can be problematic for certain Lessees. If the market rent at the time of renewal is below [...]

The Automatic Security Deposit Increase Provision

By | June 23rd, 2015|Leasing|4 Comments

The AIR leases contain an often overlooked Security Deposit provision. When there is an increase in the Base Rent, the Security Deposit increases proportionately. Therefore, if Base Rent increases by 3%, the Security Deposit also increases by 3%. This landlord-friendly provision is not the standard in custom leases drafted by attorneys. Nevertheless, when lawyers are involved in negotiating the AIR lease, this provision often remains in the final lease. Tip: If you represent a tenant, consider informing the tenant of this provision during lease negotiations. At the minimum, advising the tenant of this provision will prevent the tenant from being surprised by the increase. In [...]

Modifications to the AIR Purchase Agreement (Part 2)

By | June 16th, 2015|Purchases/Sales|6 Comments

In Part 1 of Modifications to the AIR Purchase Agreement, I discussed four areas of the AIR purchase agreement that Sellers frequently modify. Part 2 focuses on perhaps the greatest area of liability to Seller after the Closing – Seller’s 12 representations and warranties that it makes to Buyer. Paragraph 12.1 of the AIR purchase agreement contains the representations Seller makes to Buyer. Every Seller should carefully read Paragraph 12.1 to ensure that each representation is true. The following are 3 modifications that Sellers sometimes make to limit the likelihood that they will be sued after the Closing if a representation is untrue, or if [...]

Modifications to the AIR Purchase Agreement (Part 1)

By | June 3rd, 2015|Purchases/Sales|6 Comments

In a prior article, I addressed the issue of Should You Use the AIR Purchase And Sale Agreement? Some sellers believe that the AIR purchase agreement does not contain protections afforded sellers in custom agreements. It is correct that a custom agreement drafted by a seller’s attorney will typically favor Seller more than the AIR purchase agreement. Nevertheless, to make the AIR purchase agreement more favorable to Seller, Seller can modify the AIR purchase agreement to include some of the provisions found in many custom agreements. The AIR Commercial Real Estate Association has of course designed its forms to allow modifications. Here are some changes [...]

Usman Mohammed, Esq.

About Me:

Real estate is my passion, and it is in my genes.  In addition to owning commercial real estate, my family co-founded IDS Real Estate Group.

I represent landlords and tenants in office, industrial, and retail leasing transactions, and have used the AIR CRE Contracts in hundreds of these transactions. I’ve also represented purchasers and sellers of properties in the various asset classes, and also frequently use the AIR CRE Contracts in those situations. My practice includes representing landlords and tenants in lease disputes, including unlawful detainer litigation.

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A.I.R. Forms Practitioner is not affiliated with or sponsored by the AIR CRE. This site is intended for educational purposes as well as to give you general information and a general understanding of the law, not to provide legal advice. Neither I nor Consensus Legal provide legal advice through this website or by messages directed to or from this site. By using this website, the reader agrees that the information on this website does not constitute legal or other professional advice and no attorney-client or other relationship is created between the reader and Consensus Legal or its attorneys. This website is not a substitute for obtaining legal advice from a qualified attorney. The information on this website may be changed without notice and is not guaranteed to be complete, correct or up-to-date.