Restrictive Covenants in Commercial Developments
July 28, 2005
Recorded restrictive covenants in commercial developments present many issues. Two important factors to consider when granting such covenants include: 1) the reoccurring impact that they may have over the life span of a shopping center, and 2) the potential impact of such covenants on the current and future objectives of landlords and tenants who are parties to them.
In the Spotlight: What Every Tenant Should Know About Negotiating Parking Privileges in Commercial Leases
July 28, 2005
Designated, reserved parking spaces appurtenant to office leases are highly valued by certain types of tenants, especially in the downtown, metropolitan markets. Thus, a tenant's counsel must carefully consider the parking provision when negotiating an office lease. Landlord-oriented form leases often give the landlord the right: 1) to expand or change any parking area, 2) to temporarily close off portions of the parking areas for purposes of expanding, repairing, restoring, constructing or reconstructing the parking decks, and 3) to change, from time-to-time, the rules and regulations with regard to the parking area. The tenant's counsel should always make sure that the lease properly limits these rights so that they cannot be used in a manner that will potentially, adversely affect the tenant's use of its parking rights. All new rules should be limited by a "reasonableness" qualifier, and the landlord should be required to enforce the rules and regulations in a "nondiscriminatory manner as against tenant."
Exclusive Use Clauses in Shopping Center Leases
July 28, 2005
There are few shopping center lease clauses that are more important to a retail tenant than the exclusive use clause. For many retail tenants, the scope of the exclusive use clause represents the essence of the tenant's bargain with the landlord. A tenant's ability to "corner the market" in a retail center for its particular use adds tremendous value to the leasehold estate and can significantly expand the tenant's gross sales at the center.
The Pitfalls for Landlords to Avoid in Leases Involving New Construction
July 28, 2005
New construction always involves myriad unknowns — cost and timing are two of the biggest. However, if you add the complication of negotiating a lease at the same time, the problems quickly multiply. This article addresses some of these issues and provides advice for the landlord's use to avoid ending up in a situation where the lease becomes unprofitable.
In the Spotlight: Being Gun-Shy ' Difficulties Surrounding the Trigger of Rights of First Refusal and First Offer
June 30, 2005
The right of first refusal ('ROFR') and its close cousin, the right of first offer ('ROFO'), collectively sometimes called pre-emptive rights, are devices used to afford the grantee a degree of flexibility in potentially buying or leasing the subject property at a future time. These rights can be considerably more troublesome, especially to grantors, than may be immediately apparent to many real estate deal makers. Many who have been 'burned' recognize that the problems include: 1) financial loss and delay in completing a transaction that arise from dampened interest in the subject property on the part of third-party potential bidders, and 2) disputes (sometimes resulting in litigation) that arise from issues surrounding the triggering, execution, and preservation of the right. This article focuses on the second problem, with special emphasis on disputes that revolve around the triggering of the pre-emptive rights. It also suggests certain drafting implications that follow from the analysis.
How To Improve Firm Profitability
June 29, 2005
Many lawyers measure their firm's profitability the way a company does ' as a percentage of sales. However, the correct way to measure the profitability of a law firm, whether it is a partnership or a professional corporation, is the net income per equity partner (NI/EP) (or shareholder).
Substance over Form in the Bankruptcy Courts
June 29, 2005
Under the Bankruptcy Code, whether a lease is a true lease or a disguised security agreement also has serious consequences. If a lease is a true lease, and the debtor in possession has need of the equipment or other leased property, the lessor is entitled to receive all the payments due under the contract. If a lease is not a true lease but is a disguised security agreement, the lender is only entitled to the lesser of what is owed and the property's value, which could be significantly less than the totality of the lease payments. The balance will be treated as a general unsecured claim. Further, the creditor will only be entitled to the value of the collateral if it perfected its lien. If it did not perfect, its entire claim will be treated as a general secured claim (which is why informational filings of UCC-1 forms are recommended in lease transactions). Even if it did perfect, payment could be delayed until a plan is confirmed and even then stretched out over the length of the plan as opposed to the terms required by the original contract. For these reasons, usually the debtor will argue that the lease is a disguised security agreement, and the creditor will argue that the lease is a true lease.
In The Marketplace
June 29, 2005
Highlights of the latest equipment leasing news from around the country.
