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A Reciprocal Easement Agreement (REA) is typically used when a commercial shopping center property is owned by more than one person or entity, and these persons or entities want to develop the property as an integrated shopping center.

Santa Barbara California Shopping Center Parking Lot

The most common scenario is that one of the owners acts as the developer and the other owner is a major retailer (such as Target or Wal-Mart). If the major retailer desires to purchase a portion of the commercial property, it will be necessary for the developer and the major retailer to enter into an REA. If not, there will be no contractual agreement between the developer and the major retailer governing such things as the construction of the shopping center, the architectural compatibility of the buildings, and the use of the common area. Without an REA, the developer or the major retailer could build whatever and whenever it wishes and could conceivably prevent the other party from using its parcel for parking, access or utility lines.

If the developer and the major retailer enter into an REA, it is recorded by the parties in the county in which the commercial property is located and will create certain contractual obligations between the developer and the major retailer that will enable a shopping center to be constructed. Once constructed, the shopping center is operated as one integrated retail project. These contractual obligations follow the property. If any part of the property is sold, any subsequent owner will be subject to the obligations contained in the REA and will benefit from those rights.

Items Typically Associated with a Reciprocal Easement Agreement (REA)

1. Easements for Parking, Access, Encroachments and Utilities.

Each party should have the right to access the other party's property for vehicular parking and access and for pedestrian access. Each party may also need to access the other parties' utility systems. Also, the parties may need certain encroachment rights if their canopies or foundations encroach upon the other party's property. All of these rights would take the form of "easements" and would have to be set forth in detail in the REA. These "easements" would effectively allow one party non-exclusive use of the property of the other party.

2. Construction and Architectural Compatibility.

The REA will typically provide for the developer to construct all of the on- and off-site improvements for the shopping center, as well as those relevant to buildings to be located on the developer’s property. The major retailer will be responsible for the construction of the major retailer's building. The REA typically provides for each party to review and approve the plans and specifications for each party's work, thereby creating architectural compatibility for all of the construction work at the shopping center.

3. Operation of Common Areas.

The REA should provide for one party to operate, insure, and maintain the common areas of the shopping center. That party would usually be the developer or a third party manager appointed by the developer. Typically, if the developer does a poor job operating and maintaining the common area, the major retailer will have the right to "take over" the operation and maintenance of the common areas located on its property, and sometimes this take over right may be extended to the entire common area in the shopping center.

4. Taxes, Building Maintenance, and Building Insurance.

The REA typically requires each property owner to pay the property taxes that relate to its property. In addition, each party is also required to maintain the appearance of the buildings on its property in an attractive manner.

5. Use, Recapture Rights, and Rights of First Offer.

Some REAs may require the major retailer to use its property for a particular use or may restrict certain uses on the developer property to the benefit of the major retailer. In the event that the major retailer is required to use its property for a particular use and then ceases to do so for a specified period of time, the developer may be given the right to purchase the major retailer's property for its fair market value.

Contact David Collins at 562.694.4920 or dcnassoc@verizon.net if you have any questions about Reciprocal Easement Agreements (REA) for a Shopping Center.

Netflix rapid expansion in Hollywood, California, continues with another new commercial office space lease. The online video streaming company has signed a long-term agreement to occupy about 355,000 square feet at a mixed-use site that Kilroy Realty Corp is building on a lot on Vine Street and De Longpre Avenue, just south of Sunset Blvd.

Kilroy Realty Corp purchased the 3.5-acre lot in 2013 for $46 million from the Academy of Motion Pictures Arts and Sciences (AMPAS). The property complex, dubbed Academy on Vine, will include three office buildings that are currently under construction, with Netflix expected to be able to start moving in by mid-2020. The site will also include a 20-story, 193-unit residential building and large public gathering areas that will feature public art.

The new site is located about a mile from Netflix’s Los Angeles headquarters at Sunset Bronson Studios on Sunset Boulevard near the 101 Freeway, where it uses more than 400,000 square feet in the Icon and Cue buildings built by Hudson Pacific Properties Inc. Netflix also signed an additional lease with Hudson Pacific to fully occupy another 325,000 square feet of office space nearby.

City zoning classifications allow a city, county, or other municipality to regulate development, land use, traffic, municipal resources, and more. A zoning map is often generated to visually describe these zones, and a set of laws, ordinances, and regulations provide a legal framework for how to manage each property.

What Is City Zoning?

City zoning is the way city governments control land development and land use for each individual property within their jurisdiction. City zoning is controlled by zoning laws, ordinances, and regulations passed by city government. City zoning typically separates the region into four major types: residential (R), commercial (C), industrial (I), and agricultural (A).

What are Municipal Zoning Regulations?

The basic purpose and function of municipal zoning is to divide a municipality into residential, commercial, industrial, and agricultural districts (or zones). Typically, a uniform set of laws and regulations are in effect for each specific type of zone. Zoning regulations may include:

- Specific requirements as to the type of buildings allowed
- Location of utility lines
- Restrictions on accessory buildings, building setbacks from the streets and other boundaries
- Size and height of buildings
- Number of rooms
- Minimum lot area
- Parking restrictions
- Types of animals allowed
- Extraction of natural resources

Who Controls City Zoning?

Zoning is a purely a county, city, or municipal responsibility. Though such laws are somewhat universal, the classifications used to describe zoning are not uniform from place to place. Zoning laws and regulations are typically established through that municipality's leadership, including elected officials, managers, and lawyers.

Residential, Commercial, Industrial, Agricultural Zoning Laws and Municipal Planning Subdivisions

Within each general category (Residential, Commercial, Industrial, Agricultural), more narrowly defined divisions are designed. A residential zone might be separated into single-family homes on one acre, single family homes on a half acre, hotels, boardinghouses, mobile homes, low-rise apartment complexes, high-rise apartment complexes, or institutional housing.

A commercial zone might be separated into neighborhood shopping centers, office buildings, or large shopping centers.

An industrial zone might be zoned as light or heavy.

An agricultural zone might be separated into the types of plants or animals that can be farmed.

If you have any questions about zoning issues, please contact David Collins and Associates.

Owning commercial real estate is very different from having your own residential property. Single family homes are where you live. Shopping centers and restaurants are where you work. Laws that govern each type of property are different. There are many laws protecting owners of private residential property. Private land ownership is one of the core principles and values of the county.

The following are some features that are permitted in commercial landlord tenant lease agreements that are not permitted in residential landlord tenant lease agreements:

- There is no single "standard" commercial lease.
- There is no implied right of habitability.
- There is no statutory right to "repair and deduct" for property defects.
- Protections for residential foreclosures (extended time to vacate) do not apply.
- The 10% 60 day rent raise rule does not apply.
- The 60 day notice to quit rules (required for month to month tenancies over one year) do not apply.
- Statutory penalties for turning off utilities or changing locks (CC 789.3) do not apply.
- There is no specific limit to the amount of security deposit charged.
- The privacy protections of entry by landlord laws (CC 1954) do not apply.
- Landlords can accept a partial rent payment and still successfully evict with proper notice.
- Late charges which are excessive or illegal in residential tenancies may be acceptable for commercial ones.
- Rent control generally does not affect commercial rents.
- You may have to pay rent even if the space becomes damaged by such events as flood or fire.

1. Ask a lot of questions up front.

The first step in purchasing commercial real estate is knowing yourself, your situation, and what you're looking for. Here are some questions to consider:

- What kind of property are you looking for?
- Are you looking to use the building for your own business, rent it out, build equity, and/or something else?
- What kind of location do you need?
- Do you need to buy or lease the property?
- What is your situation regarding cash, financing, and/or ability to make a down payment?
- What is your risk tolerance?
- How much time can you commit to the property?
- How much work are you willing to put into the property?
- What skills/knowledge do you have regarding real estate construction and maintenance?
- Do you need a property manager?
- Are you willing to perform the duties of a landlord?

2. Learn some commercial real estate vocabulary.

There is a lot of vocabulary and acronyms in commercial real estate that you may not be familiar with. It's helpful to be savvy on some of the terms. This will make this process and working with people in the industry easier.

Here are some common terms:

- Loan-To-Value (LTV): A ratio of how much money you're asking from a lender vs. the total value of what you want to purchase.
- Debt Service Coverage Ratio (DSC): How much debt service charge can you manage with expected income.
- Capitalization Rate (Cap Rate): Income of the property divided by the total value of the property.
- Vacancy Rate: Percentage of properties that are vacant in a time period in a given area.
- Ad Valorem: A tax based on the assessed value of a piece of property.

3. Visit and consider many properties. Do you homework on each.

Consider and tour many different properties. Figure out what works and what doesn't about each of them for you. Consider the most important things for each including price, location, condition, and allowed uses. Your situation and needs are unique. The property should be a good fit in terms of price, location, uses, and investment required.

Here are other questions to consider for each property you are interested in:

- What is the property currently used for?
- What can/can't it be used for?
- What kind of rent/income does the property currently generate per year?
- What kinds of taxes and liens are there on the property?
- What things will need to be replaced or repaired soon?
- Why is the owner selling?
- How is the area around the property doing? Any major upcoming changes?

4. Find the experts you will need.

Buying commercial real estate is often a complex process. Many experts are available to help with some of the steps. Which and how many experts depends largely on the type of property you are purchasing, and what you will be using it for.

You may need to hire:

- Accountant
- Architects
- Commercial real estate appraiser
- Commercial real estate lawyer
- Commercial realtor
- Engineers
- Environmental specialists
- General contractor
- Mortgage broker

5. Calculate your financing.

You will most likely need to get finance the purchase of the property. What type of bank, credit union, or mortgage company could you use? What kind of credit do you have, and what kind of interest rate do you expect to pay? Obtain a prequalification letter from a financing company before you put a bid on any property.

6. Make an offer.

Make an offer within the terms described in your prequalification letter. Have your real estate lawyer review the contract or agreement. Have your lawyer explain all details of the written agreements so you know exactly what your rights and obligations are.

7. Do your due diligence.

This is where the details matter. Money and property are about to change hands. You'll need to dot all the i's and cross all the t's. You can never know too much about the property you'll buy.

You'll generally need to do a title search, property appraisal, and property inspection. Title search provides valuable information such as boundary lines, location of the main building, property improvements, location of secondary buildings, identification of liens and easements (which are access rights by different service companies such as water, gas, telephone, railways and other utilities), etc.

You and the seller will need to find an escrow officer who will be the neutral 3rd party overseeing the transaction. They will help with the transfer of deeds and funds. They make sure both parties are protected in the transaction.

Finally, you (the buyer) are given a due diligence time period with which to make sure all the documentation about the property is correct. This is where you triple check that everything the seller told you about the property is true. This includes things like service/utility contracts, surveys, environments reports, rent rolls, covenants, restrictions, and many other aspects of the property. If something strange or wrong comes up in your inspection of the property, you have the right to tell escrow to cancel the transfer of funds.

Ontario Median Home Price Chart 05-18

The median home appraisal value in Ontario California is $411,471 as of May 5, 2018. In recent years, Ontario home values dropped to a low of $220k in September 2009.

Foreclosure rates dropped from a high of 42.99% in August 2008 to a rate of 0.84% in August 2017. Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The mortgage delinquency rate in Ontario is 1.3%.

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Victorville CA Commercial Real Estate & Home Property Appraiser

Dave Collins Property Appraiser Logo

Commercial, Business, Residential (Home) Real Estate & Property Appraisals and Appraisal Services in Victorville, Orange County, California

Collins and Associates provides dependable and accurate appraisals in Victorville, Orange County, Southern California and beyond. Principal David R. Collins is a licensed Certified General Appraiser (G.A.A., S.C.R.E.A.) with over 40 years of experience. We are an appraiser of commercial, industrial, land, income residential, and residential properties, providing the type of reliable values that banks and major lending institutions require for loans.

562.694.4920 – Call for more information and FREE CONSULTATION

In addition to lending appraisals, our services include:
HUD/FHA appraisals
Mortage refinance appraisals
Conventional lending appraisals
Determining market value for a sale
Land – raw to finished sites, including tracts
Proposed construction
Single family residence – tract to custom homes
Small income units
Apartments buildings
Commercial property – specialty car wash, motel, fast food
Industrial properties
Tax assessment appeals (reducing property taxes)
REO / Foreclosure appraisals
Business valuations and appraisals
Consulting and feasibility studies
Appraisal reviews
Real estate consulting
Attorney appraisals / Legal matters: expert witness, divorce
Accountant appraisals – date of death, family trust valuation
IRS appraisals
Feasibility studies
Rental surveys

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Collins and Associates LogoCollins and Associates
Victorville, CA
Phone: 562.694.4920

Contact Person:
Victorville Real Estate Property Appraiser

Victorville CA Commercial Real Estate & Home Property Appraiser

Temecula CA Commercial Real Estate & Home Property Appraiser

Dave Collins Property Appraiser Logo

Commercial, Business, Residential (Home) Real Estate & Property Appraisals and Appraisal Services in Temecula, Orange County, California

Collins and Associates provides dependable and accurate appraisals in Temecula, Orange County, Southern California and beyond. Principal David R. Collins is a licensed Certified General Appraiser (G.A.A., S.C.R.E.A.) with over 40 years of experience. We are an appraiser of commercial, industrial, land, income residential, and residential properties, providing the type of reliable values that banks and major lending institutions require for loans.

562.694.4920 – Call for more information and FREE CONSULTATION

In addition to lending appraisals, our services include:
HUD/FHA appraisals
Mortage refinance appraisals
Conventional lending appraisals
Determining market value for a sale
Land – raw to finished sites, including tracts
Proposed construction
Single family residence – tract to custom homes
Small income units
Apartments buildings
Commercial property – specialty car wash, motel, fast food
Industrial properties
Tax assessment appeals (reducing property taxes)
REO / Foreclosure appraisals
Business valuations and appraisals
Consulting and feasibility studies
Appraisal reviews
Real estate consulting
Attorney appraisals / Legal matters: expert witness, divorce
Accountant appraisals – date of death, family trust valuation
IRS appraisals
Feasibility studies
Rental surveys

Temecula CA Commercial Real Estate & Home Property Appraiser

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Collins and Associates LogoCollins and Associates
Temecula, CA
Phone: 562.694.4920

Contact Person:
Temecula Real Estate Property Appraiser

Temecula CA Commercial Real Estate & Home Property Appraiser

San Bernardino CA Commercial Real Estate & Home Property Appraiser

Dave Collins Property Appraiser Logo

Commercial, Business, Residential (Home) Real Estate & Property Appraisals and Appraisal Services in San Bernardino, Orange County, California

Collins and Associates provides dependable and accurate appraisals in San Bernardino, Orange County, Southern California and beyond. Principal David R. Collins is a licensed Certified General Appraiser (G.A.A., S.C.R.E.A.) with over 40 years of experience. We are an appraiser of commercial, industrial, land, income residential, and residential properties, providing the type of reliable values that banks and major lending institutions require for loans.

562.694.4920 – Call for more information and FREE CONSULTATION

In addition to lending appraisals, our services include:
HUD/FHA appraisals
Mortage refinance appraisals
Conventional lending appraisals
Determining market value for a sale
Land – raw to finished sites, including tracts
Proposed construction
Single family residence – tract to custom homes
Small income units
Apartments buildings
Commercial property – specialty car wash, motel, fast food
Industrial properties
Tax assessment appeals (reducing property taxes)
REO / Foreclosure appraisals
Business valuations and appraisals
Consulting and feasibility studies
Appraisal reviews
Real estate consulting
Attorney appraisals / Legal matters: expert witness, divorce
Accountant appraisals – date of death, family trust valuation
IRS appraisals
Feasibility studies
Rental surveys

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Collins and Associates LogoCollins and Associates
San Bernardino, CA
Phone: 562.694.4920

Contact Person:
San Bernardino Real Estate Property Appraiser

San Bernardino CA Commercial Real Estate & Home Property Appraiser

Riverside CA Commercial Real Estate & Home Property Appraiser

Dave Collins Property Appraiser Logo

Commercial, Business, Residential (Home) Real Estate & Property Appraisals and Appraisal Services in Riverside, Orange County, California

Collins and Associates provides dependable and accurate appraisals in Riverside, Orange County, Southern California and beyond. Principal David R. Collins is a licensed Certified General Appraiser (G.A.A., S.C.R.E.A.) with over 40 years of experience. We are an appraiser of commercial, industrial, land, income residential, and residential properties, providing the type of reliable values that banks and major lending institutions require for loans.

562.694.4920 – Call for more information and FREE CONSULTATION

In addition to lending appraisals, our services include:
HUD/FHA appraisals
Mortage refinance appraisals
Conventional lending appraisals
Determining market value for a sale
Land – raw to finished sites, including tracts
Proposed construction
Single family residence – tract to custom homes
Small income units
Apartments buildings
Commercial property – specialty car wash, motel, fast food
Industrial properties
Tax assessment appeals (reducing property taxes)
REO / Foreclosure appraisals
Business valuations and appraisals
Consulting and feasibility studies
Appraisal reviews
Real estate consulting
Attorney appraisals / Legal matters: expert witness, divorce
Accountant appraisals – date of death, family trust valuation
IRS appraisals
Feasibility studies
Rental surveys

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Collins and Associates LogoCollins and Associates
Riverside, CA
Phone: 562.694.4920

Contact Person:
Riverside Real Estate Property Appraiser

Riverside CA Commercial Real Estate & Home Property Appraiser

Rancho Cucamonga CA Commercial Real Estate & Home Property Appraiser

Dave Collins Property Appraiser Logo

Commercial, Business, Residential (Home) Real Estate & Property Appraisals and Appraisal Services in Rancho Cucamonga, Orange County, California

Collins and Associates provides dependable and accurate appraisals in Rancho Cucamonga, Orange County, Southern California and beyond. Principal David R. Collins is a licensed Certified General Appraiser (G.A.A., S.C.R.E.A.) with over 40 years of experience. We are an appraiser of commercial, industrial, land, income residential, and residential properties, providing the type of reliable values that banks and major lending institutions require for loans.

562.694.4920 – Call for more information and FREE CONSULTATION

In addition to lending appraisals, our services include:
HUD/FHA appraisals
Mortage refinance appraisals
Conventional lending appraisals
Determining market value for a sale
Land – raw to finished sites, including tracts
Proposed construction
Single family residence – tract to custom homes
Small income units
Apartments buildings
Commercial property – specialty car wash, motel, fast food
Industrial properties
Tax assessment appeals (reducing property taxes)
REO / Foreclosure appraisals
Business valuations and appraisals
Consulting and feasibility studies
Appraisal reviews
Real estate consulting
Attorney appraisals / Legal matters: expert witness, divorce
Accountant appraisals – date of death, family trust valuation
IRS appraisals
Feasibility studies
Rental surveys

Rancho Cucamonga CA Commercial Real Estate & Home Property Appraiser

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Rancho Cucamonga California Eminent Domain Just Compensation Appraisal
Rancho Cucamonga Hospital & Medical Office Building Appraisal for Healthcare Property

Collins and Associates LogoCollins and Associates
Rancho Cucamonga, CA
Phone: 562.694.4920

Contact Person:
Rancho Cucamonga Real Estate Property Appraiser

Rancho Cucamonga CA Commercial Real Estate & Home Property Appraiser