Commercial and Residential Tenants

[Louis Carbone]

We represent several small to mid size New Jersey and New York Landlords who own various mixed use buildings that are receiving numerous calls from their commercial and residential tenants (inclusive of Restaurants, bars, gyms, salons who were forced to close) asking for either immediate rent concessions or informing the Landlord they cannot (or will not) pay upcoming rent.

In most cases the Leases do not have rent abatement provisions (other than for a casualty) or force majeure provisions. The buildings remain open and are operating.

Preliminary some of the Landlord's have pointed these tenants to new state or SBA programs being offered for economic assistance as a way to assist the tenants..however such Landlords are not being given any concessions from their mortgage lenders or relief from the state as to taxes, or utilities, etc

I would interested to hear what legal or management advice should be given to these Landlord and their management companies who are now dealing with these issues..which will be around for a while....



Louis J. Carbone, Esq.
Law Offices of Louis J. Carbone P.A.
Office 561-272-0282
Lo...@Carbonelegal.com
Member NY, NJ*, CT, FL, & DC Bars
*In House Counsel

[Gregg Larson]

My advice so far has been to keep their powder dry and not make a move.
Things are still in flux and there are many pieces to put in place. The
cost to replace a tenant can be considerable. We are going to know much
more in a month.

In the meantime I have discussed with clients about their financial position
and how the financial position of each entity (most use SPEs). If the
entity is not fluid and a cash injection is necessary we are looking at
establishing lines of credit from related entities and/or banks secured by
future advance deeds of trust. Naturally we plan to review the existing
loan docs to make sure we don't violate those terms and if need be seek a
waiver from the existing lender.


Immediately running off to the courthouse for an eviction right now (on
commercial) on a tenant who was not previously in default strikes me like
those folks who bought out all the toilet paper ...


_____________________________________
C. Gregg Larson
C. Gregg Larson, P.C.
3300 Dale Avenue, Suite 230
St. Joseph, MO 64506
816.279.3344
816.279.3133 fax
gregg....@cglarson.com
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[Sanderson, Douglas]

Great questions. I've had the same ones. Wonder if anyone actually has any constructive answers or examples of any.

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Douglas J. Sanderson
Attorney at Law

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From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> on behalf of Louis Carbone <lo...@carbonelegal.com>
Sent: Monday, March 23, 2020 8:04 PM

To: nyclar...@googlegroups.com
Subject: [nyclarealprop] Commercial and Residential Tenants

We represent several small to mid size New Jersey and New York Landlords who own various mixed use buildings that are receiving numerous calls from their commercial and residential tenants (inclusive of Restaurants, bars, gyms, salons who were forced to close) asking for either immediate rent concessions or informing the Landlord they cannot (or will not) pay upcoming rent.

--

[Gail Marcus]

Louis - Didn’t someone just post that NY lenders have to give forbearances to borrowers.

It’s inevitable that tenants are going to run into trouble. Isn’t it better to deal with it head on. It’s no one’s fault that this is happening. I think it takes extraordinary measures on everyone’s part. How does it go “but for the grace of god go I”.

Do LL insurance policies cover lost rents. There is talk that the government may force insurance carriers to pick up business interruption claims. Possibly the feds will back the claims.

Would love to hear others weigh in.

I think it makes good business sense for LLs to work with the tenants.

Gail

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 23, 2020, at 10:00 PM, Louis Carbone <lo...@carbonelegal.com> wrote:
>
> We represent several small to mid size New Jersey and New York Landlords who own various mixed use buildings that are receiving numerous calls from their commercial and residential tenants (inclusive of Restaurants, bars, gyms, salons who were forced to close) asking for either immediate rent concessions or informing the Landlord they cannot (or will not) pay upcoming rent.

[Bridget Hust]

The webster dictionary definition of "force majeure" includes pandemics. If the tenant can get out of paying rent for "force majeure," I think our landlord clients don't have any recourse.

-----Original Message-----
From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> On Behalf Of Louis Carbone
Sent: Monday, March 23, 2020 7:05 PM
To: nyclar...@googlegroups.com
Subject: [nyclarealprop] Commercial and Residential Tenants

[Scott Bloom]

Speaking to Commercial tenancies, each one is unique. Landlords’ positions vary too. 

As much as I can tell you about the Solomonic view of 50/50 ‘sharing of pain’, why not ask your clients’ brokers to describe the scenarios of having to replace the existing tenants. The $ decisions will likely become much easier. 

Scott M. Bloom

Bloom Real Estate Group LLC

10 Grand Central - 6th Floor

Entrance at 155 East 44th Street

917-327-2109

sbl...@bloomreg.com

On Mar 23, 2020, at 10:00 PM, Louis Carbone <lo...@carbonelegal.com> wrote:

We represent several small to mid size New Jersey and New York Landlords who own various mixed use buildings that are receiving numerous calls from their commercial and residential tenants (inclusive of Restaurants, bars, gyms, salons who were forced to close) asking for either immediate rent concessions  or informing the Landlord they cannot (or will not)  pay upcoming rent.

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[Edward S. Hill, Esq.]

Is their relief in business interruption insurance?


Edward S. Hill, Esq.
Admitted in Connecticut, Massachusetts
and Rhode Island
Mailing Address:
Cappalli & Hill, LLC
c/o Edward S. Hill, Esq.
621 Elk River Drive
Ormond Beach, FL 32174
Direct: 203-272-2607
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[Charlie Arazoza]

I think we'll know more in the coming days. Several of the provisions being negotiated bar evictions and foreclosures. There will also be relief for borrowers from lenders and tenants from landlords, so the ground is shifting under our feet.

There may also be relief coming through government modification of insurance exclusions. What wasn't covered, may become covered...

I've been telling my landlord clients to sit quiet and not respond agressively or give concessions. You gain nothing by getting ugly and if and when you give concessions, you wantthem to be covered by the legislation or insurance so you are made whole.

   


CARLOS F. ARAZOZA
ARAZOZA & FERNANDEZ-FRAGA, P.A.
2100 Salzedo Street, Suite 300, Coral Gables, FL 33134, USA
Phone: 305-444-6226
Fax:305-442-4829
Email: c...@arazoza.com
Skype: charliearazoza



 

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[Arik Katzap]

See link below, it may provide some guidance.

https://www.fhfa.gov/mobile/Pages/public-affairs-detail.aspx?PageName=FHFA-Moves-to-Provide-Eviction-Suspension-Relief-for-Renters-in-Multifamily-Properties.aspx

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[Eliza Hall]

Edward, I had the same thought. It seems like that’s how it should work, but I’m looking forward to getting more thoughts on this from someone more knowledgeable than me.


> On Mar 24, 2020, at 9:58 AM, Edward S. Hill, Esq. <eh...@cappallihill.com> wrote:
>
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[Jeffrey Margolis]

Good to know of that definition, unfortunately most well-drafted NY commercial leases excuse performance of certain obligations, but leave rent obligations intact..no matter what. There's a carve-out.

Best Regards,

Jeff Margolis

Until further notice, I will be working remotely. 

Please direct all calls to my mobile number: 917-882-3073

Websites:  Real Estate | Immigration

 e-mail: jamar...@margolislawfirm.com

On Tue, Mar 24, 2020 at 9:24 AM Bridget Hust <bri...@hustlawfirm.com> wrote:

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[Gail Marcus]

Standard policies have carve out for this situation. Not in our favor. Although i think it’s on the table being discussed.

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 24, 2020, at 12:04 PM, 'Eliza Hall' via nyclarealprop <nyclar...@googlegroups.com> wrote:
>
> Edward, I had the same thought. It seems like that’s how it should work, but I’m looking forward to getting more thoughts on this from someone more knowledgeable than me.

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[Mike Nigro]

See attached. At least the Natl Restaurant Assoc is asking the fed to back-up BI claims. Every insurer I spoke with claims they are excluded.




Michael A. Nigro, Esq. – Phone (816) 994-3500 Cellular (816) 333-2600 Email mi...@manigrolaw.com

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[Charlie Arazoza]

My understanding is that Business Interruption insurance generally excludes pandemics.

That said, some state governments have said that maybe that exclusion should be excluded, and require coverage.

There has also been some discussion at the federal level of using the insurance companies as a processing agent. Tell the companies that they have to cover and then indemnify them with government funds.

   


CARLOS F. ARAZOZA
ARAZOZA & FERNANDEZ-FRAGA, P.A.
2100 Salzedo Street, Suite 300, Coral Gables, FL 33134, USA
Phone: 305-444-6226
Fax:305-442-4829
Email: c...@arazoza.com
Skype: charliearazoza



 

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From: 'Eliza Hall' via nyclarealprop <nyclar...@googlegroups.com>
Sent: Tuesday, March 24, 2020 11:50 AM
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[Jim Henegan]

Do the insurance companies have sufficient reserves to pay claims if all US businesses shut down?

Are there business interruption policy exceptions for pandemics?

Jim Henegan
jhen...@levickroth.com

Levick Roth
350 W. Hubbard Street
Suite 620
Chicago, Illinois 60654

Direct: 312 577-7049
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[Eliza Hall]

I don't think there's any such general rule. If the policy doesn't specifically exclude pandemics, it may well be covered. That said, it may commonly require that the business premises themselves be contaminated -- in other words, that you close because an infected person was there. But there may be wiggle room there in terms of the level of proof needed, especially with respect to a business that accommodated large numbers of people (workers, customers etc.) in a place where testing was not widely done.

https://www.jdsupra.com/legalnews/business-interruption-coverage-and-the-90981/


Typical clause: "We will pay for the actual loss of business income you sustain due to the necessary suspension of your “operations” during the period of “restoration.” The suspension must be caused by the direct physical loss, damage, or destruction to property. The loss or damage must be caused by or result from a covered cause of loss....
In addition to coverage for business income, the business income endorsement of the property policy can provide other coverages, know as “additional coverages.”... policies can include “extensions of coverage,” wherein the insured’s policy will insure against business income losses resulting from a variety of causes, including the following....
* Service interruption....
* Contingent business interruption...
* Interruption by civil or military authority..."
https://www.marsh.com/us/insights/research/business-insurance.html

Eliza Hall | Counsel | Potomac Law Group, PLLC
* Admitted to practice in PA
1300 Pennsylvania Avenue, NW, Suite 700
Washington, D.C. 20004
Tel: (412) 996-1617 | Fax: (202) 318-7707
eh...@potomaclaw.com | www.potomaclaw.com <http://www.potomaclaw.com/>



On 3/24/20, 1:52 PM, "nyclar...@googlegroups.com on behalf of Charlie Arazoza" <nyclar...@googlegroups.com on behalf of c...@arazoza.com> wrote:

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[Gail Marcus]

I think there are, but not typically. I would think restaurants might have. And if you add a Rider, I have heard there is coverage in some instances. But your typical policies, like for tenants/landlords, law firms, I think not.

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[Bernhardt, George P]

We've had a number of discussions of business interruption insurance on DIRT. Most require some kind of physical damage to the premises, so would not be triggered by a pandemic. Of course some may, especially for particular industries that might be hit hard by a pandemic. To know for sure you'll need to read the policy.

George P. Bernhardt
Managing Counsel – Global Real Estate
Baker Hughes Company
17021 Aldine Westfield Road, Houston, Texas 77073-5101
Tel: 713-879-1552 Mobile: 713-826-7426
george.b...@bakerhughes.com

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[Eliza Hall]

Even policies that require physical damage may cover pandemics if the business premises were contaminated. In other words, if a customer/customer/etc. who was infected came into the premises. It's at least an argument that some policyholders, depending on their facts, could make.

Eliza Hall | Counsel | Potomac Law Group, PLLC
* Admitted to practice in PA
1300 Pennsylvania Avenue, NW, Suite 700
Washington, D.C. 20004
Tel: (412) 996-1617 | Fax: (202) 318-7707
eh...@potomaclaw.com | www.potomaclaw.com <http://www.potomaclaw.com/>

On 3/24/20, 4:51 PM, "nyclar...@googlegroups.com on behalf of Bernhardt, George P" <nyclar...@googlegroups.com on behalf of George.B...@bakerhughes.com> wrote:

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[Goldberger, Daniel]

Disease, epidemics, and pandemics are exclusions to business interruption policies unless very expensive endorsements were added to the policy.

Daniel A. Goldberger
Office: 212-479-6538
Mobile: 212-265-7434

Sent from my iPhone

> On Mar 24, 2020, at 4:38 PM, 'Jim Henegan' via nyclarealprop <nyclar...@googlegroups.com> wrote:
>

[External]

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[Allan Cory]

I have prepared a generic Forbearance Agreement with optional treatment(s) for the deferred and accruing non-payment of rent (e.g. payment back over future months--due in full on a later date--forgiven as long as a minimum rent paid for a certain period, etc.) This (along with a confidentiality agreement) is what I have been providing to my requesting tenant clients and my proactive landlord clients, without regard to the existence or interpretation of terms for any force majeure language that may be in the underlying agreement(s)--My thinking is that a voluntary resolution is always best.

A rub that's likely to cause me an imminent re-tool of the base document is the probable need for an addition of the tortured if not expansive treatment for any "government or other relief and/or assistance," so that if such is obtained by business (and/or landlord), should it then be considered to be of a nature that would correspondingly translate to impact the proposed Forbearance? ( e.g. a payroll tax would not likely impact but an insurance recovery or a no cost government stimulus loan or cash infusion would likely impact.)

Allan

Law Office of Allan J. Cory
740 4th Street
Santa Rosa, Ca 95404
Office: 707.527.8810
co...@sonic.net

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[Art Macomber]

Then, there's this: U.S. Constitution, Article 1, Section 10, clause 1: No State shall . . .; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, . . .."

I'm pretty sure the police power of the several States is pretty strong, but I don't think even in a public health emergency these laws can impair the obligation of contracts. Question is, what does that mean?

Regards,

Art Macomber | Managing Attorney | Macomber Law, PLLC
Two locations to serve your real property legal needs:
Idaho: 1900 Northwest Blvd., Suite 110 | Coeur d’Alene, ID 83814
Washington: 505 W. Riverside Ave., Suite 520 | Spokane, WA 99201
866-511-1500| A...@MacomberLaw.com| www.MacomberLaw.com

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From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> On Behalf Of Charlie Arazoza
Sent: Tuesday, March 24, 2020 6:56 AM
To: nyclar...@googlegroups.com
Subject: [nyclarealprop] RE: Commercial and Residential Tenants

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[Bernhardt, George P]

Presumably true, however, the interruption should then be a reasonable period of time to decontaminate.

Get Outlook for iOS

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From: 'Eliza Hall' via nyclarealprop <nyclar...@googlegroups.com>
Sent: Tuesday, March 24, 2020 4:05:51 PM
To: nyclar...@googlegroups.com <nyclar...@googlegroups.com>
Subject: EXT: Re: [nyclarealprop] RE: Commercial and Residential Tenants

 

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[Art Macomber]

However, I think there's a strong argument that it is not the coronavirus that is closing a business, but the government mandating a closure. So, usually force majeure is like when a meteor falls on your office building, or a tsunami wipes out your coastal shoreline apartment building. Here, there is an infectious disease potential, but businesses are being closed without any proof that the disease actually exists proximate to the business. Therefore, the question is, and regardless of your personal opinion, is the government comparable to God, so that when the government acts it can be construed as an act of God? The term force majeure is French for "superior force." I understand the government is a superior force, but it seems there needs to be something else besides a State governor's mandate.

I think we need to look closer. We have whole shopping centers with multimillion dollar tenants across the country worried about next month's rents.

Regards,

Art Macomber | Managing Attorney | Macomber Law, PLLC
Two locations to serve your real property legal needs:
Idaho: 1900 Northwest Blvd., Suite 110 | Coeur d’Alene, ID 83814
Washington: 505 W. Riverside Ave., Suite 520 | Spokane, WA 99201
866-511-1500| A...@MacomberLaw.com| www.MacomberLaw.com

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[Dan Meek]

Allan, can you share your Agreement?

Thanks.

Dan
Danny E. Meek, Esq.
Admitted in Indiana only
832 Mt. Hood Court
Naples, FL 34104
239-269-6959
dann...@comcast.net


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[Art Macomber]

Gregg said, ". . . strikes me like those folks who bought out all the toilet paper ..."

TP shortages bring a whole new meaning to the phrase "three squares a day."

Regards,

Art Macomber | Managing Attorney | Macomber Law, PLLC
Two locations to serve your real property legal needs:
Idaho: 1900 Northwest Blvd., Suite 110 | Coeur d’Alene, ID 83814
Washington: 505 W. Riverside Ave., Suite 520 | Spokane, WA 99201
866-511-1500| A...@MacomberLaw.com| www.MacomberLaw.com

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-----Original Message-----
From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> On Behalf Of Gregg Larson
Sent: Monday, March 23, 2020 7:33 PM
To: nyclar...@googlegroups.com

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[Gail Marcus]

Art if you could complete your thought on this, we’d love to hear it. Which way are you leaning with this line of thinking - the insurance company covers or not? Or it works out bad either way.

Regards,

Gail

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 25, 2020, at 10:29 AM, Art Macomber <a...@macomberlaw.com> wrote:
>
> However, I think there's a strong argument that it is not the coronavirus that is closing a business, but the government mandating a closure. So, usually force majeure is like when a meteor falls on your office building, or a tsunami wipes out your coastal shoreline apartment building. Here, there is an infectious disease potential, but businesses are being closed without any proof that the disease actually exists proximate to the business. Therefore, the question is, and regardless of your personal opinion, is the government comparable to God, so that when the government acts it can be construed as an act of God? The term force majeure is French for "superior force." I understand the government is a superior force, but it seems there needs to be something else besides a State governor's mandate.

> To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/DM6PR15MB2842D43DBB931BDF7548ABBAB0F10%40DM6PR15MB2842.namprd15.prod.outlook.com.

[Alan Wallen]

It really doesn't matter what the dictionary definition of force majeure is.  Most leases that I've seen/drafted specifically include a definition of force majeure for purposes of the lease.

The government closure of businesses as the result of COVID-19 is a government action, not an Act of God. Governmental restrictions are usually included as part of the definition of force majeure in many leases.  However, the exclusion from most force majeure clauses of the inability to pay rent or other charges is still going to be relied upon by many landlords to attempt to collect rent from tenants.

I would be surprised if our insurance companies voluntarily agree to cover the losses incurred by tenants as the result of the virus out of either business interruption or rent loss insurance.

Alan

Alan Wallen-General Counsel

EBL&S Property Management, Inc. 

EBL&S Development 

200 South Broad Street-Suite 415

Philadelphia, Pennsylvania 19102

TEL:  215-790-4728

FAX:  215-790-4733

awa...@ebl-s.com 

Sent from my Verizon, Samsung Galaxy smartphone

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[Edward Finkelstein]

Does anyone know if the insurers have business disruption insurance?

Edward R. Finkelstein
Finkelstein Filler LLP
Sent from my Mobile Phone

> On Mar 25, 2020, at 12:22 PM, Gail Marcus <ga...@gmarcuslaw.com> wrote:
>
> Art if you could complete your thought on this, we’d love to hear it. Which way are you leaning with this line of thinking - the insurance company covers or not? Or it works out bad either way.

> To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/743FD510-8240-48BE-AB1E-DC569FCF163B%40gmarcuslaw.com.

[Gail Marcus]

Do you mean re-insurance. Or they themselves if they have policies that cover their interruption. That’s a good one.

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 25, 2020, at 1:02 PM, Edward Finkelstein <edward.fi...@efmflaw.com> wrote:
>
> Does anyone know if the insurers have business disruption insurance?

> To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/F1F85D27-B3CB-431F-AA65-74F3128DDB8A%40efmflaw.com.

[Kevin Sterling]

I appreciate everyone's input on the subject and offer the following for consideration and input.

 

I represent both Landlords and commercial tenants, including many in the hospitality industry. I have explored three different avenues in addressing the current government ordered shutdown - i) Force majeure, ii) temporary taking, and iii) impossibility or impracticability of performance/frustration of purpose (what I will generally refer to as the Impossibility Defense").  For those of you who litigated bank foreclosures during the 2008-2009 financial meltdown, these defenses were explored and often litigated.

 

In the past two weeks, many people have been looking to the force majeure provisions in commercial leases to obtain rent relief. However, based on my experience and own drafting, force majeure provisions in commercial leases specifically exclude payment of rent and in some cases, excludes a delay in exercising of options. Personally, I do not think that a force majeure provision where there is a specific exclusion of rent will provide much relief. I do think force majeure may provide relief for certain operating covenants under commercial leases, but not rent.

 

Additionally, I have looked a government forced closures in the context of a "taking." While this certainly opens up significant constitutional issues, which is beyond my scope, my research has led me to the conclusion that the current public health crisis and business closures is in fact, a proper exercise of the government's police powers as the current situation is a clearly public safety concern. Thus, courts will likely conclude that the shutdown does not constitute a taking.

 

Lastly, I have done quite a bit of research this week on the impossibility defense under Illinois law.  Illinois recognizes the impossibility or impracticability of performance as an absolute defense to a party's contractual obligations. The Illinois Supreme Court recognized this in Leonard v. Autocar Sales & Service Co., 392 Ill. 182, 64 N.E.2d 477 (1945), cert. denied 327 U.S. 804, 66 S.Ct. 968, 90 L.Ed. 1029 (1946). The Leonard Court also allowed for “frustration” of purpose as an extension of the exception, saying it applied to cases where the cessation or nonexistence of some particular condition or state of things has rendered performance impossible and the object of the contract frustrated. It rests on the view that where from the nature of the contract and the surrounding circumstances the parties when entering into the contract must have known that it could not be performed unless some particular condition or state of things would continue to exist, the parties must be deemed, when entering into the contract, to have made their bargain on the footing that such particular condition or state of things would continue to exist, and the contract therefore must be construed as subject to an implied condition that the parties shall be excused in case performance becomes impossible from such condition or state of things ceasing to exist.

 

Many of the cases I found discussing the Impossibility Defense were during the 2008-2009 financial meltdown. The Courts almost universally determined that adverse economic conditions are almost always contemplated by contracting parties. See e.g. Ner Tamid Congregation of North Town v. Krivoruchko, 638 F.Supp.2d 913 (N.D. Ill. 2009). Nevertheless, given that the current COVID-19 shutdown could have hardly been contemplated by the parties at the time of contract formation, I believe that there is a likelihood that the Illinois courts could determine that performance during the shutdown impossible, thereby relieving a commercial tenants that do not engage in a non-Essential Business of its obligations under a lease.

 

I welcome input on the subject as I try to counsel clients on both sides of this equation.

 

Kevin A. Sterling, Esq.

The Sterling Law Office

411 North LaSalle Street

Suite 200

Chicago, Illinois 60654

Ph: (312) 670-9744

Cell: (312) 617-0083

Fax: (312) 962-8817

E-mail: ke...@thesterlinglaw.com

Web: www.thesterlinglaw.com

 

 

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[Edward Finkelstein]

I meant primary coverage. It would be interesting to see whether and how insurers insure themselves (other than reinsurance) and how those policies are written?

Edward R. Finkelstein
Finkelstein Filler LLP
Sent from my Mobile Phone

> On Mar 25, 2020, at 1:33 PM, Gail Marcus <ga...@gmarcuslaw.com> wrote:
>
> Do you mean re-insurance. Or they themselves if they have policies that cover their interruption. That’s a good one.

> To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/C814CAFB-B1C0-445D-A054-AF9635AEB71F%40gmarcuslaw.com.

[Allan Cory]

I’ve attached my homegrown forbearance but with a now added and hurried “Stimulus” section contemplated —please keep in mind I only have a handful of Mom & Pop commercial clients and that heady commercial transactions are not my forte.

The attached is not likely anywhere near adequate for a big-time leasehold and is not seasoned or fully vetted even by me as I’m using more for triage-- perhaps some of the bigger or more commercial comfortable brains on list may (for the greater good) put out a platinum version.

Law Office of Allan J. Cory
740 4th Street
Santa Rosa, Ca 95404
Office: 707.527.8810

Fax: 707.921.7375

[Gail Marcus]

Allan thanks. It’s the thinking behind it not how complex the form is and I think you are giving us a good basis to start from.

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 25, 2020, at 3:37 PM, Allan Cory <ac...@sonic.net> wrote:
>
> I’ve attached my homegrown forbearance but with a now added and hurried “Stimulus” section contemplated —please keep in mind I only have a handful of Mom & Pop commercial clients and that heady commercial transactions are not my forte.

> --
> You received this message because you are subscribed to the Google Groups "nyclarealprop" group.
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> <GENERIC FORBEARANCE AGREEMENT V3.rtf>

[David Barron]

Kevin—

 

Did your research into the impossibility/frustration line of cases suggest that a party, if successful in raising the defense, can use it to excuse performance just for a period of time? Or does that party have to terminate the contract (i.e. claim that it is void or voidable)? My understanding has always been that it’s the latter, although I can’t say I’ve had much experience with the doctrine.

 

 

David W. Barron, Esq.
Bar...@KBLLawyers.com

1939 Harrison Street, Suite 926
Oakland, CA 94612
510.318.6348 phone | 510.318.6347 fax | www.KBLLawyers.com

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[Allan Cory]

Thanks Gail;

I just posted below to DIRT and have attached my latest iteration.

I had hoped that this might be treated akin to an “Open Source” software development with some of you “developers” (likely much more conversant in code than me) would chime in for the betterment of all in making this a tool that we can use for clients without further distressing their cash flow by charging “development hours” and for the greater good.

I’m really hoping to see other revised or other “Alt” provisions organically inject , but even if not, and you desire to see only my continual tinkering at some later date, feel free to hit me off list and I’ll gladly forward the evolving product as I intermittently toll away out here in Podunk.

Allan

Law Office of Allan J. Cory
740 4th Street
Santa Rosa, Ca 95404
Office: 707.527.8810
Fax: 707.921.7375

corylegal.com

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[Brian Graifman]

Whoops I think I just posted on the wrong thread.  I'll resubmit to the correct discussion.

---

From: Brian Graifman <BGra...@borahgoldstein.com>
Sent: Saturday, March 28, 2020 6:34 PM
To: nyclar...@googlegroups.com <nyclar...@googlegroups.com>

Subject: Re: [nyclarealprop] RE: Commercial and Residential Tenants

 

My research on frustration of purpose and impossibility in the NY commercial L&T context, including in cases involving WW II restrictions & the 9/11 WTC attacks, leads me to conclude that such exceptions are interpreted narrowly and mostly in landlords' favor -- especially in the area of real estate leases -- and,  at best, the relief would be suspension rather than termination.  One could note that widespread influenza and epidemics have solid historical precedent and have long been predicted (see, e.g., Laurie Garrett, The Coming Plague (Penguin Books 1995) (1996 Pulitzer Prize winner & New York Times Bestseller)).

 

BRIAN D. GRAIFMAN, ESQ.

Partner, Supreme Court Division

BORAH, GOLDSTEIN, ALTSCHULER,

NAHINS & GOIDEL, P.C.

377 Broadway, 6th Floor

New York, New York 10013

(212) 431-1300, ext. 322

(212) 965-2566 direct

(845) 729-5863 cell

bgra...@borahgoldstein.com

www.borahgoldstein.com

 

This email is confidential and may be privileged. Use or disclosure by anyone other than the designated addressee(s) is unauthorized and prohibited. If you are not an intended recipient of this e-mail, please notify the sender by email and delete all copies of this email from the device on which you received it immediately.

 

---

From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> on behalf of Allan Cory <ac...@sonic.net>
Sent: Friday, March 27, 2020 6:37 PM
To: nyclar...@googlegroups.com <nyclar...@googlegroups.com>
Subject: RE: [nyclarealprop] RE: Commercial and Residential Tenants

 

To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/0aa701d60488%245ce28220%2416a78660%24%40net.

[Jeffrey Margolis]

In a (really small) nutshell: the new CARES bill includes SBA non-recourse-loan forgiveness (max two months) for qualified expenses --deemed to include rent.

Best Regards,

On Tue, Mar 24, 2020 at 9:24 AM Scott Bloom <Sbl...@bloomreg.com> wrote:

Speaking to Commercial tenancies, each one is unique. Landlords’ positions vary too. 

As much as I can tell you about the Solomonic view of 50/50 ‘sharing of pain’, why not ask your clients’ brokers to describe the scenarios of having to replace the existing tenants. The $ decisions will likely become much easier. 

Scott M. Bloom

Bloom Real Estate Group LLC

10 Grand Central - 6th Floor

Entrance at 155 East 44th Street

917-327-2109

sbl...@bloomreg.com

On Mar 23, 2020, at 10:00 PM, Louis Carbone <lo...@carbonelegal.com> wrote:

We represent several small to mid size New Jersey and New York Landlords who own various mixed use buildings that are receiving numerous calls from their commercial and residential tenants (inclusive of Restaurants, bars, gyms, salons who were forced to close) asking for either immediate rent concessions  or informing the Landlord they cannot (or will not)  pay upcoming rent.

In most cases the Leases do not have rent abatement provisions (other than for a casualty) or force majeure provisions. The buildings remain open and are operating.

Preliminary some of the Landlord's have pointed these tenants to new state or SBA programs being offered for economic assistance as a way to assist the tenants..however such Landlords are not being given any concessions from their mortgage lenders or relief from the state as to taxes, or utilities,  etc

I would interested to hear what legal or management advice should be given to these Landlord  and their management companies  who are now dealing with these issues..which will be around for a while....



Louis J. Carbone, Esq.
Law Offices of Louis J. Carbone P.A.
Office 561-272-0282
Lo...@Carbonelegal.com
Member NY, NJ*, CT, FL, & DC Bars
*In House Counsel

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Best Regards,


JAM
(Jeff Margolis)



The Margolis Law Firm
Suite 1505
11 East 44th Street
New York, NY 10017
212-490-0900 + FAX 212-490-0700

website: www.margolislawfirm.com
e-mail: je...@margolislawfirm.com
Notice: This message, and any attached file, is intended only for the use of the individual or entity to which it is addressed, and may contain information that is privileged, confidential and exempt from disclosure under applicable law.  If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited.  If you have received this communication in error, please notify us immediately by reply e-mail and delete all copies of the original message.  Thank you.

 

[Brian Graifman]

My research on frustration of purpose and impossibility in the NY commercial L&T context, including in cases involving WW II restrictions & the 9/11 WTC attacks, leads me to conclude that such exceptions are interpreted narrowly and mostly in landlords' favor -- especially in the area of real estate leases -- and,  at best, the relief would be suspension rather than termination.  One could note that widespread influenza and epidemics have solid historical precedent and have long been predicted (see, e.g., Laurie Garrett, The Coming Plague (Penguin Books 1995) (1996 Pulitzer Prize winner & New York Times Bestseller)).

 

BRIAN D. GRAIFMAN, ESQ.

Partner, Supreme Court Division

BORAH, GOLDSTEIN, ALTSCHULER,

NAHINS & GOIDEL, P.C.

377 Broadway, 6th Floor

New York, New York 10013

(212) 431-1300, ext. 322

(212) 965-2566 direct

(845) 729-5863 cell

bgra...@borahgoldstein.com

www.borahgoldstein.com

 

This email is confidential and may be privileged. Use or disclosure by anyone other than the designated addressee(s) is unauthorized and prohibited. If you are not an intended recipient of this e-mail, please notify the sender by email and delete all copies of this email from the device on which you received it immediately.

 

---

From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> on behalf of Allan Cory <ac...@sonic.net>
Sent: Friday, March 27, 2020 6:37 PM
To: nyclar...@googlegroups.com <nyclar...@googlegroups.com>

Subject: RE: [nyclarealprop] RE: Commercial and Residential Tenants

 

To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/0aa701d60488%245ce28220%2416a78660%24%40net.

[Gail Marcus]

Thanks Allan. I think I saw it on DIRT. Will add to it if I see something to add. You probably have it all covered.

Gail

Gail Marcus, Esq.
2 Penn Center
Suite 1020
Philadelphia, PA 19102
215-751-0505
ga...@gmarcuslaw.com

Sent from my iPhone

> On Mar 28, 2020, at 4:47 PM, Allan Cory <ac...@sonic.net> wrote:
>
> Thanks Gail;

> To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/0aa701d60488%245ce28220%2416a78660%24%40net.
> <GENERIC FORBEARANCE AGREEMENT V6.rtf>

[Brian Graifman]

My research on frustration of purpose and impossibility in the NY commercial L&T context, including in cases involving WW II restrictions & the 9/11 WTC attacks, leads me to conclude that such exceptions are interpreted narrowly and mostly in landlords' favor -- especially in the area of real estate leases -- and,  at best, the relief would be suspension rather than termination.  One could note that widespread influenza and epidemics have solid historical precedent and have long been predicted (see, e.g., Laurie Garrett, The Coming Plague (Penguin Books 1995) (1996 Pulitzer Prize winner & New York Times Bestseller)).

BRIAN D. GRAIFMAN, ESQ.

Partner, Supreme Court Division

BORAH, GOLDSTEIN, ALTSCHULER,

NAHINS & GOIDEL, P.C.

377 Broadway, 6th Floor

New York, New York 10013

(212) 431-1300, ext. 322

(212) 965-2566 direct

(845) 729-5863 cell

bgra...@borahgoldstein.com

www.borahgoldstein.com

 

This email is confidential and may be privileged. Use or disclosure by anyone other than the designated addressee(s) is unauthorized and prohibited. If you are not an intended recipient of this e-mail, please notify the sender by email and delete all copies of this email from the device on which you received it immediately.

 

---

From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> on behalf of David Barron <bar...@kbllawyers.com>
Sent: Saturday, March 28, 2020 2:56 PM
To: nyclar...@googlegroups.com <nyclar...@googlegroups.com>

To view this discussion on the web visit https://groups.google.com/d/msgid/nyclarealprop/9f62a37cc3124a50b91640cff9802822%40kbllawyers.com.

[Gail Marcus]

Brian, I’d be curious if the research that you came across was for a few situations or was there a country-wide shutdown. I’m not sure we’ve ever had anything like this to this extent. 

Gail
_______________________
Gail Marcus, Attorney
GMarcus Law 
Two Penn Center Plaza – Suite 1020
1500 JFK Blvd.
Philadelphia, PA 19102
Tel: (215) 751-0505
Fax: (215 751-0515
Email: ga...@gmarcuslaw.com
Website: gmarcuslaw.com
 
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[Stephen Ortiz]

Think back to those Ricin attacks; when "white powder" in an envelope could clear a business.

I do not see a Virus as being that distinct as a biologic business interuption.

What happened to claims then?

Stephen R.H. Ortiz, CEO
Wilderness Gate

225 Morgan Road

Taos, NM, 87571
Tel: (575) 613-3669
Please consider the environment before printing this email.

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[Jim Henegan]

I want to thank Allan for putting together the draft of the Forbearance Agreement.

Attached are my suggested changes. Many of them are stylistic. Until you negotiate a couple of these there is way to how it will work'

I have trouble which documents in rich text, so I put mine in Word.

I find it very easy to say Lessor when I mean Lessee, so I try not to use Lessor/Lessee. I switched it to Landlord/Tenant. I also switched “Property” to “Premises”.

I would try to use the terminology that is in the Lease being amended.

I numbered the sections with numbers rather than letters.

I added a consent page for the Lender consent. The Lender will be the one driving these Amendments. I would be surprised if you can amend a Lease to delay rent payments without Lender consent.

Should there be interest added to the delayed payments?

Jim Henegan
jhen...@levickroth.com

Levick Roth
350 W. Hubbard Street
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-----Original Message-----

From: nyclar...@googlegroups.com <nyclar...@googlegroups.com> On Behalf Of Allan Cory
Sent: Friday, March 27, 2020 5:38 PM
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[Allan Cory]

Jim--thanks so much and funny at least on one common nerve--I was editing out the term "Basic Rent" as you seized upon as clumsy.

I REALLY appreciate all the work you've done and although I've only rapidly reviewed it appears to be a grooming that was in need and found a steady hand!


Thanks again for contributing to common cause!!!

Allan


Law Office of Allan J. Cory
740 4th Street
Santa Rosa, Ca 95404
Office: 707.527.8810
Fax: 707.921.7375

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[Mark Mermel]

Most policies have virus exclusions.  The power might be a terrorist claim.  Different.

Mark D. Mermel, Esq.

MERMEL ASSOCIATES PLLC

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Lake Success, New York 11042

Tel. (516) 570-4000

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Fax (516) 570-4333

Email: Ma...@MermelLaw.com

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On Mar 30, 2020, at 7:18 PM, Stephen Ortiz <s...@wildernessgate.com> wrote:



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[Mike Gugerty]

Thanks for all the updates and for the form forbearance agreements.  I agree lenders must be involved, because less rent coming in will eventually affect borrowers' financial covenants in the loan documents.

What has anyone heard about the lenders' position in this disaster?  I know of one borrower who spoke to his banker, who said that lender was willing to have the loan payments be "interest only" for a few months, and then tack on the missed principal payments on at the end of the loan.  Not much of a concession -- the bulk of the loan payment is interest. 

Take care and stay safe,

Mike Gugerty

Michael J. Gugerty, Esq.

Gugerty Law Office

140 S. Adams Street

Rockville, MD 20850

(240) 426-8146

mi...@gugertylawoffice.com

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