In the Marketplace
Highlights of the latest equipment leasing news from around the country.
Exemptions and Prohibitions in the New Franchise Rule
The New Franchise Rule deletes the four exclusions in the existing Rule for employer-employees and general partnerships, cooperative organizations, testing or certification services, and single trademark licenses, since a revised definition of 'franchise' in the Rule obviates the need for these exclusions. The New Rule retains the exemption for franchise sales under $500, fractional franchises, and leased departments, while adding an exemption for petroleum marketers governed by the Petroleum Marketing Practices Act, as well as for three categories of 'sophisticated investor.'
No Proration of Lessors' Payments in Bankruptcy
On March 15, 2007, the U.S. Court of Appeals for the Third Circuit (the 'Third Circuit') issued an important decision regarding the rights of equipment lessors who find themselves ensnarled in court proceedings as a result of a lessee's filing for bankruptcy protection. <i>In Re: Federal-Mogul Global Inc v. Computer Sales International</i> considered whether two lower courts properly modified an equipment lease under 11 U.S.C. '365(d)(5) of the Bankruptcy Code ' formerly codified at 11 U.S.C. '365(d)(10) ' by permitting proration of payment obligations as of the date of rejection of the leases. The Third Circuit reversed, holding that modification of the lease terms was improper.
Movers & Shakers
News about lawyers and law firms in the commercial leasing industry.
Limiting the Impact of Co-Tenancy Requirements
A co-tenancy requirement may have substantial negative effects, including a domino effect if more than one tenant ceases to operate. Part One of this series discussed defining co-tenancy requirements, limiting their duration, and defining violations. The conclusion addresses notice and cure rights and limiting the tenant's remedies.
In the Spotlight: Drafting Better Leases for the Commercial Tenant
Too many tenants' businesses have suffered severe financial consequences or lost leases as a result of poorly drafted provisions. Therefore, it is imperative that tenants negotiate better leases in order to protect their interests. The suggestions in this article provide proposed remedies for a few of the harshest lease provisions. Although market conditions always play a factor in providing negotiating leverage to a landlord or tenant, some of these proposals should survive scrutiny in any real estate market.
Protecting and Attacking Exclusive Use Provisions in Retail Leases
Exclusive use provisions form the foundation of the economic relationships between tenants and landlords in shopping centers across the United States. Landlords make use of these provisions to obtain the right tenant mix in their shopping centers as well as to demand premium rents from the tenants that desire these economic protections. Tenants desire exclusive use provisions to gain the competitive advantages and protections that such provisions afford to their products and services. With the proliferation of so-called 'big box' retailers in shopping centers and the phenomena of over-retailing in communities throughout the United States, exclusive use provisions are increasingly coming under attack. In <i>Tippecanoe Assocs. II, LLC v. Kimco Lafayette 671, Inc.</i>, 829 N.E.2d 512 (Ind. 2005), the Supreme Court of Indiana entered the fray on this issue with a decision that affects the way these provisions should be drafted. This article, through a discussion of the court's decision in <i>Tippecanoe Assocs. II, LLC</i>, describes how exclusive use provisions are coming under attack and practical ways to draft around these issues and to protect landlords and tenants with exclusive use provisions in retail leases.
