Owning a small business is a challenge. California business owners constantly face financial difficulties, legal challenges, and logistical demands– and that’s before you even worry about the day-to-day details of running a small business. Often, your commercial property remains a low priority. So long as it basically serves your needs, it’s good enough, right?
Wrong. Property is a major asset, and whether you own or rent your real estate, equipment, and other property, there are many legal issues that you need to carefully address to avoid its becoming a major liability. The following are five key legal issues all California business owners should know about their property.
1. Leases and contracts of sale should be in the business’s name, not yours. Small business owners generally are good about protecting themselves from liability through incorporation and other maneuvers. Unfortunately, if you rent or purchase property in your own name for the business, it can pierce the liability shield– and leave you personally responsible for accidents, debts, and many other problems involving the property. All leases and purchases of major assets must be in the company’s name, which means you have to incorporate first.
2. You need the right insurance. All property should be fully insured against accidents and damage. This needs to include general liability insurance that covers employees and customers, too. A lack of proper insurance can cost California business owners big, something no small business owner can afford.
3. Commercial leases don’t protect you like residential leases would. Before you sign any commercial lease, you must always get it vetted by an experienced property attorney. Unlike residential leases, commercial leases are not standardized by consumer protection laws, which means it’s easy for landlords to slip in costly clauses that do your business harm. A commercial lease can have virtually any demands, so you should ensure that your legal interests are protected.
4. You should make sure that your corporate attorney has experience with commercial real estate law. If you work with a single corporate lawyer, make sure that they are also an experienced commercial real estate lawyer or property attorney. Because your property is often your largest asset in a typical California small business, any lawyer without this experience will not be able to serve you well. If your general legal needs have nothing to do with California property law, it may be best to have a team of attorneys representing your legal interests– one of whom you can call on only for commercial property matters when they crop up.
5. You have to know all the risks of your property upfront– and mitigate them with the right legal instruments and strategies. Every commercial property comes with significant risks. That’s just something you must take on as a small business owner. Luckily, knowledge is power. Work with a California property lawyer upfront to pinpoint the risks and then prepare for and minimize them, so you take on as little risk as possible– and none is unintended or unknown.
As a California business owner, you must make your property a key concern. Ignoring the risks associated with it will put your company at risk. If you have not properly addressed all the legal issues discussed here or you do not know if there are other legal issues you may be facing related to your unique property holdings, call us at Larsen Law today to find out how we can help you better prepare.