No one is able to predict how the coronavirus situation will play out or precisely how each of us might be impacted or for how long. It is possible your ability to perform various contractual obligations will be delayed. Many contracts protect parties against an inability to perform due to uncontrollable circumstances, at least in some situations, by inclusion of a so-called force majeure provision. This provision excuses certain behavior in certain situations determined to be beyond the control of the party failing to perform. Obviously, the text of the particular provision is critical to understanding what it says. We are writing to alert you that many force majeure provisions include a mandatory notice provision. If you don’t provide the required notice, you are estopped from raising force majeure as a defense against a claim arising out of your failure to perform. So if the coronavirus pandemic is interfering with your ability to perform contractual obligations, we urge you to review your contracts and deliver any required notices so as to protect yourself to the extent possible, and if your contract mandates that any other steps be taken to preserve the defense, take those steps as well. Gibbons stands ready...
Author: Shepard A. Federgreen
NY High Court Voids Commercial Tenant’s Traditional Safety Net – Here’s How Landlords Can Take Advantage of This Ruling
Commercial tenants in New York have traditionally been able to secure a stay of summary dispossess proceedings brought against them and remain in occupancy pending the outcome of tenant-commenced litigation challenging the existence of a landlord-alleged default. Thanks to a recent landmark decision by New York’s highest court, this may no longer be the case if the lease contains the waiver language set forth below. When a landlord provides notice of an alleged default, tenants often seek a declaratory judgment as to the interpretation of the lease and whether a default exists, and also move for a Yellowstone injunction to toll any summary proceeding until the declaratory judgment action is completed. This effectively stays the summary dispossess proceedings. In 159 MP Corp., et al. v. Redbridge Bedford, LLC, the State of New York Court of Appeals addressed the enforceability of a commercial lease provision that prohibited the tenant from commencing a declaratory judgment action against the landlord with respect to any dispute regarding the lease. The Court rejected the tenant’s argument that the clause was void against public policy, finding the clause enforceable, based in large part on the sophistication of the parties and the “strong public policy favoring freedom...
It is a common belief that appraisal provisions in leases governing future renewal rents don’t really mean anything. The logic behind this conclusion is that regardless of what the lease says, if the tenant doesn’t receive a new rent number that justifies staying, it will leave. There is a lot of truth to this. However, a recent New Jersey Appellate Division decision, Cablevision of Oakland, LLC vs CK Bergen Holdings, LLC, App Div 27-2-3149 demonstrates neither a landlord nor a tenant can rely on conventional wisdom as a reason to forego doing the right job in the documents. If you are concerned about the methodology to be used in the appraisal process you had better make that clear in the lease. And if you want the Court to have the power to review an appraisal to determine whether there was compliance with the methodology mandated by the lease, you better make that clear in the lease, too.
The Third Circuit has just issued a non-precedential ruling under New Jersey law reminding us how naked a naked lease guarantor can be, and how careful we have to be when reviewing “form” lease guaranties. In G&S Livingston Realty, Inc. vs. CVS Pharmacy, Inc., CVS was the guarantor of a lease in which the retail tenant had gone into bankruptcy and rejected the lease. Of course, absent other information, CVS would stand behind the obligations of the bankrupt retail tenant. In this instance, the retail tenant had options and rights under the lease which CVS as an ordinary guarantor was not able to take advantage of.
In United Parcel Service v. Secaucus, UPS failed to properly respond to a request for information as to income and expenses made by the tax assessor pursuant to N.J.S.A. 54:4-34, universally known as a “Chapter 91 request.” Later, when UPS brought an action in the Tax Court to challenge its 2011 assessment, the assessor moved to have the action dismissed due to UPS’s failure to properly respond to the Chapter 91 request. This is what a tax assessor typically does in these circumstances because the statute is clear that the failure of the owner to respond to a Chapter 91 request within 45 days is an absolute bar to the right to bring an appeal of the assessment.
New York’s Appellate Division, First Department, in 135 East 57th Street LLC v. Daffy’s Inc. was faced with the following facts. A retail chain had occupied high profile space for about 15 years. The tenant had the right to renew by notice to the Landlord to be delivered by January 31, 2010, a year prior to lease expiration. For no reason other than a mistake by the tenant’s controller, notice was not timely given. However an email and fax was sent (dated January 30, 2010) on February 4, 2010, purporting to exercise the option. The landlord on February 5, 2010, rejected the notice as being late, and accused the Tenant of back-dating the notice for its own purposes.
The New York Supreme Court, Appellate Term has just reaffirmed that a landlord, under certain circumstances, may evict a tenant utilizing classic “self help” and without court action. In Sol De Ibiza, LLC v Panjo Realty, Inc. the landlord, after the tenant failed to comply with various rent demands, padlocked the door – which padlock the tenant then cut off – and which the landlord then replaced.
Changes to Form RTF-1! NJ Realty Transfer Fee Applicable to Inter-Company and Affiliate Transfers for Nominal Consideration?
Inter-company transfers of real estate have always been subject to the NJ Realty Transfer Fee. However, in an October 2009 decision of the Tax Court, such transfers between commonly-owned entities were held to be exempt when the transfer is a sale of unencumbered property for less than $100 (as compared to a capital contribution of property by the grantor to the grantee with a simultaneous delivery to the grantor of equity in the grantee).
Lenders, as we all know, continue to be saddled with under-performing and non-performing commercial real estate mortgage loans. A quick internet search will reveal that many are predicting future defaults on billions and billions of dollars of loans. Amongst many other implications for both the lending institutions and the economy at large, carrying these loans impacts reserve requirements and, in turn, available capital. Potentially, we have the makings of a classic “vicious cycle.”