The Laurex Process: Investment Management
Leases often spur feuds
By Luci Scott

Phoenix lawyer Jones Osborn II has helped solve plenty of commercial real estate disputes, and he says the issue that creates the most questions is landlord/tenant relations.

"Leases tend to generate lots of disagreements," he said, especially subleases and whether the landlord has to approve them, whether the tenant and the use are acceptable.

Osborn had a client who wanted to sublease a large portion of an office building in Phoenix to a labor-intensive company similar to a call center.

"The company packed its employees in pretty tightly, and the owner of the building refused to consent to the sublease because it put too much burden on parking, elevators, the cooling system."

The lawsuit was settled out of court, and the tenant did not move into the building.

Osborn has written a self-published book, Arizona Real Estate Law, which he is giving away to clients and brokers.

"I wrote memos about real problems and real people and saved them, updated them and put them into one book," he said. "It's indexed so I could use it, and my clients or anybody could find it useful."

Another issue that he often sees involves disputes about zoning.

"You have cases where people can't get zoning and believe there's no other economically feasible use for the property, and other cases where municipalities downzone property. Both of those cases can sometimes end up with lawsuits. . . . You have to have a very good case if you sue the city and win."

A case in litigation now - Osborn handled the zoning part - is a dispute between an investment group, Cave Creek/Carefree Partners, and the town of Carefree. The town has insisted that the northeastern corner of Cave Creek Road and Carefree Highway needs be built at one house per acre, although the other three corners are zoned commercial.

"This is the busiest street in that part of the Valley," Osborn said. "My clients feel it's just not realistic to develop single-family homes."

The investment partnership, Cave Creek/Carefree Partners, has as principals Sol Diskin and Fred Rosenbaum, who have applied for zoning for low-density garden offices.

The case is in Superior Court.

One frustrating thing Osborn says he sees too often is that a client will sign a contract to buy real property, then will come in and ask Osborn to review it.

"You're supposed to do it in the other order," Osborn said.

"Sometimes it works out, and sometimes it doesn't. Sometimes we reopen negotiations if there is a problem."

Often a buyer will feel he will lose a deal if he waits for a lawyer to review the contract.

"All the time people are coming in, saying, 'This is a really good deal, I didn't want to let it get away. People were lined up, and I had to sign this before the next guy grabbed it.'

"Sometimes that's true, but usually a deal will hang around for a day or two, long enough to get something reviewed."

Sometimes people don't pay enough attention to the title.

"I once had a client who bought several pieces of property he wanted to assemble and build a large house on. . . . When we got the patent and looked at it, a public roadway was planned around the border of each piece, so he couldn't put them together and build one big house in the middle."

Too many brokers hate to get lawyers involved, he said, because they fear a lawyer will kill a deal.

"I really don't think that happens very often unless there is a real problem," Osborn said, in which case the client kills the deal after receiving a lawyerly explanation.

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Luci Scott
Arizona Business Gazette
Nov 27, 2003