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A Lease Is a Lease Is a ' Loan? Avoiding Recharacterization
The topic of recharacterizing leases as secured loans is not a new one, and is a staple of programs on yearly developments in commercial law. The drafters of the revisions to the 1978 Official Text of the UCC recognized that the focus on whether a lease was “intended as security” in the definition of security interest in ' 1-201(37) had the “unfortunate result” of courts looking to inconsistent factors to discover the intent of the parties. (See the Official Comment to UCC ' 1-203.) The drafters put forward the current definition of security interest in ' 1-201(35) with no reference to the parties' intent, and moved the rules distinguishing leases from security interests to ' 1-203, hoping to achieve “greater certainty” for commercial transactions. Yet, practitioners and courts alike continue to ignore the statutory bright-line tests and persist in applying a variety of other tests and interpretations that have resulted in conflicting decisions as to what is a lease and what is a disguised security interest. The applicability of UCC Article 9 to transactions styled as leases is a question that is debated in courts repeatedly year after year, with recent years being no exception. This article explores the impact of recharacterization, and discusses the tests developed by courts to determine whether a lease will be considered to be a secured loan. Then, a review of the most recent cases shows the characterization tests in practice.
A lease is a financing vehicle much like a loan is. A lease involves a lessor acquiring an asset which is then provided to a lessee for a specified term in exchange for rental payments. A loan involves a lender giving a borrower the funds to purchase the desired asset in exchange for a promise to repay the loan. In both situations, the user of the asset obtains that use through financing provided by another. However, while leases and loans are each financing tools, the classification of the individual transaction as one or the other matters greatly.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Transfer Tax Implications on Real Property Leases
The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.