Leasehold and Other Valuation Disputes
Lease disputes regularly turn on valuation issues, and the Nossaman Eminent Domain and Valuation team is uniquely qualified to address such issues. Nossaman has represented landlords and tenants in various types of commercial lease disputes, including rent adjustment disputes, breach of contract actions, and unlawful detainers.
Rent Adjustment Cases
With respect to rent adjustment disputes, many long-term commercial leases (and, particularly, long term ground leases) contain complicated formulas for adjusting the rent at various intervals throughout the term of the lease. While each formula is different, the concept generally revolves around determining fair market rent for the property. Nossaman has a strong track record handling such disputes. Our knowledge of valuation issues and our contacts with the best appraisers for such tasks has led to successful negotiated solutions and, where necessary, litigation outcomes. For example, we have litigated repeatedly over an old, Irvine Company ground lease, some version of which encompasses significant land in Orange County. That lease from includes a highly technical, complex formula and out-dated procedure for implementing rent adjustments, and we have assisted clients in navigating that arcane language to achieve successful rent adjustments.
Other Leasehold Disputes
Many lease disputes are, fundamentally, valuation questions. Whether the dispute involves the calculations of damages resulting from a failed landlord-tenant relationship, the calculation of common area maintenance ("CAM") charges, or other lease disputes, Nossaman attorneys have litigated the issue. For examples, Nossaman recently represented the landlord in an unlawful detainer and breach of contract action against a tenant of a 50,000 square foot building in Burbank. The tenant vacated the premises, but refused to pay more than token damages, despite having years left on the lease. Nossaman ultimately negotiated a favorable settlement after presenting the tenant with a valuation analysis that demonstrated the likely outcome were the case to proceed to trial.
All development projects face substantial entitlement fees. For large-scale development, these fees can run into the tens of millions of dollars. Often, the calculation of these fees turn on the underlying value of the property being developed; this is where Nossaman's expertise can save a developer substantial money. For example, Nossaman represented developer Makar Properties against the City of Huntington Beach in connection with a dispute regarding the value of Makar's Huntington Beach property for purposes of establishing the eventual park-in-lieu fee Makar will be required to pay. The parties were nearly $50 million apart in their valuation figures. After an arbitration, the three-judge panel awarded a value exactly at Makar's appraised value. This decision yielded a $20 million savings in park fees.
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