Presenting a live 90-minute webinar with interactive Q&A CC&Rs and Easements for Commercial and Mixed-Use Projects Drafting and Amending CC&R Declarations and Easements: Best Practices for Commercial Developers THURSDAY, OCTOBER 16, 2014 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Robert M. Diamond, Partner, Reed Smith, Falls Church, Va. David A. Herrigel, Principal, Hyatt & Stubblefield, Atlanta The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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CCR s and Easements for Commercial and Mixed-Use Projects October 16, 2014 Prepared and Presented by: David A. Herrigel Hyatt & Stubblefield, P.C. Peachtree Center Harris Tower 233 Peachtree Street, N.E., Suite 1200 Atlanta, Georgia 30303 (404) 659-6600 dherrigel@hspclegal.com
A. Goals of Governance Structure 1. Long-term ownership, operation and maintenance of common areas and amenities 2. Smooth and efficient operation and administration before and after development period 3. Foster an environment for all uses to succeed 5
A. Goals of Governance Structure (cont.) 4. Creation and enforcement of community-wide standards of architecture, maintenance, and use 5. Maximize marketability, developmental control, flexibility 6. Create a community 6
B. Things to Avoid and 7 Why 1. Creating a nonresidential association unless a reason exists to do so (e.g., ownership of common property) a. Nonresidential or commercial owners may not have time, resources, or interest to be involved in the day-to-day planning and affairs of the community b. Creates unnecessary administrative and other costs
B. Things to Avoid and Why (cont.) 2. Too much governance Service Areas v. Sub- Associations a. Administrative and other costs of Sub-Associations b. Finding something for Sub- Association to do 8
B. Things to Avoid and Why (cont.) 3. Direct interaction between nonresidential and residential owners a. Competing interests and expectations for the community and for residential and nonresidential owners 9 b. Different levels of commitment and participation
C. Drafting Tips/Techniques 1. Know your audience Be user friendly Use plain language; Avoid legalese 2. Organization TOC Consistent use of defined terms 3. Be wary of forms 4. Flexibility v. certainty 10
D. Significant Document Provisions 1. Membership and Voting Parcel owners and parcel associations Composition of board of directors Assigning votes to different uses 11
D. Significant Document Provisions (cont.) 2. Allocation of assessment liability Allocation methods Who pays what? How to calculate? Different assessments for different services Lien rights 12
D. Significant Document Provisions (cont.) 3. Easements Granting and reserving in CCR s Development and construction period Operational easements Public use of facilities 13
D. Significant Document 14 Provisions (cont.) 4. Development Rights What declarant rights are appropriate? What is an appropriate period of control? Transition/turnover to owner control 5. The 1000 Pound Gorilla Dealing with anchors and other big players
Documenting Mixed-use Developments Robert M. Diamond rdiamond@reedsmith.com
Essential Principles 1. Anticipate the unexpected 2. Define shared components 3. Understand the relationship of the parts or uses 4. Opt for simplicity 5. Avoid complex, multi-level structures with varying membership 6. Documents must be flexible 7. Maintain control by the developer 16
Essential Provisions of the Documents A. Definitions 1. Shared use areas; common areas; limited common areas; reserved common areas 2. Mortgagee 3. Maintenance (operating expense) vs. capital replacements (reserve expense) 17
Essential Provisions of the Documents B. Easement rights C. Maintenance Responsibilities D. Expense allocation and assessment provisions E. Voting rights and governance/decisionmaking process F. Insurance G. Reconstruction and repair 18
Essential Provisions of the Documents H. Enforcement provisions I. Architectural control and use restrictions J. Mortgagee rights K. Amendment L. Termination M. Alternative dispute resolution vs. litigation 19
Special Situations A. Leasehold and fee B. Seniors communities C. Timesharing parking D. Using airspace and land condominiums before construction to finance the project 20
Ballston Metro Center Half leasehold over Metro station; Half fee simple Hotel, retail mall, parking garage and residential condominium Components The box who owns who uses who fixes who pays O = office C = residential condo H = hotel R = retail P = parking 21
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Leisure World of Virginia holes in the donut limited liability company Governance structure Each subassociation and each owner NOT in a subassociation is a member. Individual homeowners are NOT members. Five condominiums plus the developer. Developer has voting control until the project is completed. 29
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