For commercial real estate professionals, remaining updated on ever-changing compliance laws and regulations is an integral part of the job. At the same time, having an in-depth understanding of common legal challenges in commercial real estate (and how to overcome them) can help professionals in the field facilitate successful transactions.
If you are looking to develop your understanding of commercial real estate law topics such as lease agreements, real estate finance, and zoning laws, then pursuing your Master of Legal Studies (M.L.S.) degree could be a wise career move.
Understanding the Role of an M.L.S. Degree in Commercial Real Estate
A Master of Legal Studies is a graduate-level degree designed for professionals working in law-adjacent roles who want to deepen their understanding of their industry's complex legal and compliance frameworks. In the real estate field specifically, an M.L.S. degree can help commercial real estate professionals improve their own operations in a range of ways.
The Basics of an M.L.S. Degree and Its Relevance to Real Estate
One of the main components of an M.L.S. degree program in real estate is a focus on industry-related compliance laws and regulations. Thus, an M.L.S. degree can help real estate professionals better comprehend and apply regulations related to sustainable development, construction, and housing to their own work to avoid legal issues down the road.
How M.L.S. Graduates Enhance Commercial Real Estate Operations
In addition to the compliance side of commercial real estate, professionals working in this field need to be able to navigate other complex legal issues. Some real estate professionals, for example, may need a legal background to make ethical investment decisions — whereas others may need to be equipped to handle complicated real estate transactions or planning and zoning requirements.
The right M.L.S. program will focus on the private and public regulations of commercial real estate that are most relevant to professionals in the field. More specifically, professionals in these types of programs will have the opportunity to study issues such as housing law, how land use is controlled by law, and how these laws are applied in the real world.
Key Legal Challenges in Commercial Real Estate
From a legal perspective, commercial real estate professionals must most often deal with complex zoning laws along with environmental regulations that can hinder development.
Navigating Zoning Laws and Regulations
Land use planning is a complicated area of commercial real estate. Therefore, professionals in this field could benefit from an M.L.S. degree program specifically focused on the private and public regulation of land use and development. With a better understanding of how land use is controlled by law, the roles of regulatory authorities involved in the process, and how different zoning laws are applied, real estate professionals can keep their development projects moving forward with confidence.
Overcoming Environmental Regulation Hurdles
These days, commercial real estate developers are under more pressure than ever to ensure that all development is done with responsible use of natural resources and environmental protection in mind. Professionals working in the development side of commercial real estate, then, can benefit from an in-depth look at the legal, policy, and ethical aspects of environmental protection — as well as the responsible use of natural resources in new commercial construction. In some cases, having this level of legal knowledge and understanding could be the difference between a development deal that is completed and one that falls through.
The Impact of Leasing and Tenancy Laws on Commercial Properties
Commercial real estate professionals may also be involved in complex issues surrounding tenancy laws, lease agreement laws, and tenant rights — all of which require careful consideration and specialized legal knowledge.
Critical Considerations in Lease Agreements
In certain scenarios, real estate professionals (like leasing agents) run into issues with tenants breaking the terms of their leases. This may include dealing with tenants who fail to pay their rent on time or keep the property maintained.
On the other hand, commercial property managers and leasing agents are also under a responsibility to provide ample notice before making any changes to a lease agreement and to follow their end of the agreement. When either party fails to hold up to their side of the lease agreement, legal issues can ensue; this is why real estate professionals must understand how to mitigate problems and handle potential disputes as they arise.
Dispute Resolution and Tenant Rights
Sometimes, disputes are inevitable. When this occurs, real estate professionals should know how to handle disputes with tenants in a way that is productive and respectful. In an M.L.S. program, students can learn about a tenant's legal rights in a dispute in addition to practical strategies and best practices for dispute resolution as they relate to:
- Direct communication
- Referring to the original lease agreement
- Arbitration (when necessary)
- Alternate dispute resolution
- Handling cases in small claims court
Additionally, with a solid understanding of the legal rights tenants have, real estate professionals can ensure they are holding up their end of the bargain to avoid disputes in the first place.
Financial Regulations and Their Influence on Real Estate Decisions
Financial regulations are another important topic in commercial real estate, particularly when it comes to real estate investment and the legal responsibilities of those involved in such transactions.
Understanding Tax Implications for Commercial Properties
Completing an M.L.S. degree program can help commercial real estate professionals better understand how different tax laws may affect their (or their clients') properties. For example, a firm grasp of capital gains taxes on commercial real estate investments and how they work can help professionals in the field make smarter investment decisions. Meanwhile, property managers may need to know how income generated from rent payments is taxed, as well as any special credits or deductions that may be available to take advantage of.
Compliance With Finance and Lending Regulations
Seeking financing for commercial real estate acquisition and/or development is a common part of a real estate professional's role, so having a strong understanding of common real estate investment and finance law topics is critical. Knowing the ins and outs of the various laws governing real estate investment and financing (including the legal responsibilities of those involved) is a must for closing deals with confidence.
This entails specific knowledge of related real estate finance laws and regulations like the:
- Equal Credit Opportunity Act (ECOA)
- Fair Housing Act (FHA)
- Truth in Lending Act (TILA)
- Home Mortgage Disclosure Act (HMDA)
Understanding these finance and lending regulations as they relate to real estate can help professionals maintain compliance while also doing their part to keep lending and housing practices fair.
Pursue an Online Master of Legal Studies Degree
Commercial real estate professionals may encounter a number of legal and compliance challenges in their everyday work — but being able to navigate these issues with confidence can lead to more successful real estate transactions and professional growth.
At the University of Miami School of Law, we offer an online Master of Legal Studies degree with a curriculum specifically designed for non-lawyers in law-adjacent careers. Our specialized real estate track offers in-depth coursework on relevant topics such as title insurance laws, land use planning and zoning regulation, investment and finance law, lease agreement law, and more.
Plus, because this 30-credit degree program is offered 100% online, you will not need to put your professional life on hold to pursue your degree. Contact us today to request more information about this degree program or begin your online application for admission.
Sources
https://admissions.law.miami.edu/academics/MLS/
https://www.ftc.gov/legal-library/browse/statutes/equal-credit-opportunity-act
https://www.huduser.gov/periodicals/cityscpe/vol8num1/ch5.pdf
http://www.hud.gov/program_offices/fair_housing_equal_opp/fair_housing_rights_and_obligations
https://www.consumerfinance.gov/data-research/hmda/
https://www.irs.gov/taxtopics/tc409
