Revisiting Boilerplate or 'Miscellaneous' Lease Provisions
January 04, 2006
The May 2005 issue of <i>Commercial Leasing Law & Strategy</i> published an article presenting an overview of certain boilerplate provisions often found in the "Miscellaneous" section at the end of a commercial lease. ("Don't Forget the Boilerplate: Not All Standard Miscellaneous Provi-sions Are Standard," co-authored by Christopher A. Jones and Scott A. Weinberg.) The authors noted that after spending significant time drafting and redrafting the more "substantive" provisions of a lease, several seemingly less important provisions are frequently unexamined. The authors also noted, however, that the boilerplate provisions in leases are often not uniform, but instead, can vary dramatically, depending on whether the lease is drafted on behalf of a landlord or a tenant, and therefore, such provisions must also be carefully reviewed to ensure that they capture each party's understanding of the lease terms.
The Leasing Hotline
January 04, 2006
Highlights of the latest commercial leasing cases from around the country.
Kelo v. City of New London: Takings, 'Public Use,' Urban Waterfront Redevelopment, and the Likely Survival of the Republic
January 04, 2006
In June, the Supreme Court affirmed the power of municipal redevelopment agencies to take property by eminent domain in order to assemble large parcels for economic development. <i>Kelo v. City of New London</i>, No. 04-108 (U.S. June 23, 2005) held that a municipality may take private homes in good condition to transfer them to a private developer as a part of an integrated plan to redevelop an area of New London. This use of eminent domain did not violate the "public use" requirement of the Takings Clause of the Fifth Amendment that, at its core, prohibits the government from taking private property solely to transfer it to another private person to serve a private interest. Kelo follows the Court's decision in <i>Lingle v. Chevron U.S.A. Inc.</i>, 125 S. Ct. 2074 (2005), where the Court ruled that a state statute that was not reasonably calculated to achieve its stated goal was not, by virtue of that irrationality, an unconstitutional taking. (In that case, the statute imposed a cap on the rent that oil companies could charge service station owners in Hawaii in order to achieve the stated goal of lower gasoline prices.)
In the Spotlight: Final Rule for 'All Appropriate Inquiry' in Environmental Assessments
January 04, 2006
The U.S. Environmental Protection Agency ("EPA") has issued its final rule defining "all appropriate inquiry" for environmental due diligence necessary to qualify for the defenses to liability contained in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA" or "Super-fund"). This new rule, published in the Federal Register on Nov. 1, 2005, will apply to all property acquisitions that close on or after Nov. 1, 2006. Although the final rule dropped some of the harsher provisions of EPA's proposed standard, the new rule differs from the industry standard ASTM Standard E 1527-00 in several significant respects, which may have a significant effect upon the cost and scope of environmental site assessments conducted as part of property acquisitions. Prospective purchasers failing to follow the requirements of the final rule will not qualify for the "innocent purchaser," "adjacent landowner" or "bona fide prospective purchaser" defenses to liability under CERCLA in any post-closing litigation.
When Is a Lease a 'True Lease'?
January 03, 2006
Financing deals have become increasingly complicated as parties attempt to raise capital and take advantage of accounting and tax incentives. These transactions often face scrutiny when one party files for bankruptcy. During a Chapter 11 reorganization, a debtor must use all tools at its disposal to best restructure its obligations. In contrast, a creditor must work to ensure it receives the best possible return. The term "lease" is not defined in the Bankruptcy Code. Due to this lack of a clear definition, creditors and debtors will often attempt to recharacterize agreements between the parties. In this context, a secured creditor or debtor may argue that a "lease" is actually a disguised secured financing. In the converse, a party could also argue a secured financing is actually a "true lease." This is due to the Bankruptcy Code's different treatment of secured debt and leases. Depending on the factual scenario, this differing treatment could significantly change the parties' obligations. This article reviews the Seventh Circuit Court of Appeals' recent decision in <i>United Airlines, Inc. v. HSBC Bank USA, N.A.</i>, 416 F.3d 609 (7th Cir. 2005). In this decision, authored by Judge Easterbrook, the court held that it must look to the substance of a transaction and beyond the label given by the parties to determine whether it is a "true lease."
Form vs. Function: When Is a Lease a 'True Lease'? The Seventh Circuit Applies Substance over Form in United Airlines v. HSBC Bank
December 02, 2005
Financing deals have become increasingly complicated as parties attempt to raise capital and take advantage of accounting and tax incentives. These transactions often face scrutiny when one party files for bankruptcy. During a Chapter 11 reorganization, a debtor must use all tools at its disposal to best restructure its obligations. In contrast, a creditor must work to ensure it receives the best possible return. The term "lease" is not defined in the Bankruptcy Code. Due to this lack of a clear definition, creditors and debtors will often attempt to recharacterize agreements between the parties. In this context, a secured creditor or debtor may argue that a "lease" is actually a disguised secured financing. In the converse, a party could also argue a secured financing is actually a "true lease." This is due to the Bankruptcy Code's different treatment of secured debt and leases. Depending on the factual scenario, this differing treatment could significantly change the parties' obligations.
In the Marketplace
December 02, 2005
Highlights of the latest equipment leasing news from around the country.
The Leasing Hotline
December 02, 2005
Highlights of the latest commercial cases from around the country.
Is Your Company in Compliance with the Anti-Terrorism Laws?
December 02, 2005
The fourth anniversary of the tragedy in New York has come and gone, and our country remains on alert in an effort to prevent another terrorist attack. While we see frequent warnings published in the news and through industry groups, the heightened awareness those warnings generate does not put our companies in compliance with the laws requiring our participation in the fight against terrorism. This article examines the anti-terrorism laws that affect our industry and outlines best practices for compliance with those laws. It also provides information on enforcement activities that have occurred. It provides a basis for evaluating whether or not your company is in compliance with the anti-terrorism laws.
