Category: Transactional Real Estate and Leasing

Unraveling Environmental Legal Complexities: Lessons from the Clarios Case and RIP Waivers

A recent February 5, 2024, decision by the New Jersey Superior Court Appellate Division delivered a significant blow to Clarios, LLC (Clarios), a car battery manufacturer facing environmental scrutiny at its New Brunswick plant. This recent decision has echoed through the environmental legal landscape, leaving companies contemplating the use of Remediation in Progress Waivers (RIP waivers) with critical questions and a renewed sense of caution. The case, far from offering definitive answers, instead highlights the intricate interplay between property rights, environmental stewardship, and the nuances of due process protections. Moreover, the court’s denial of Clarios’s request to postpone remediation has broader implications for scenarios involving joint liability agreements and property transactions, highlighting the complex challenges associated with RIP waivers. By dissecting the court’s reasoning and its implications, we gain valuable insights into the limitations and prudent utilization of RIP waivers, ensuring responsible environmental practices and mitigating unintended legal consequences. Decoding the Chain of Title of the RIP Waiver The complex history of the RIP waiver granted to Clarios in 2007 finds its roots in the ownership transition of the site. Delphi Automotive Systems, LLC (Delphi), the former owner, had been manufacturing automobile batteries at the location. In 2006, Delphi sold the property to Johnson Controls Battery Group, Inc., a corporate predecessor of Clarios, triggering a sequence of...

Landmark Flood Disclosure Bill Now Law in New Jersey, Applies to Both Commercial and Residential Property

On June 30, 2023, the New Jersey General Assembly unanimously passed Bill S3110/A4783, which will require sellers of real property and landlords to make specific disclosures regarding a commercial or residential property’s flood risk. The bill was amended to concur with the recommendations of Governor Murphy’s May 8, 2023, Conditional Veto Statement and was enacted into law upon passage. New Jersey was previously one of less than half of the states in the country that did not require any flood disclosures for real estate transactions. Landlord & Seller Flood Disclosure Requirements Specifically, Senate Bill No. 3110 requires landlords and sellers of commercial or residential real property to disclose to prospective tenants and buyers if a property is located in an area designated by the Federal Emergency Management Agency (FEMA) as a Special Flood Hazard Area (known as the 100-year flood plain) or Moderate Risk Flood Hazard Area (known as the 500-year flood plain), and if the property has suffered flood damage in the past to the owner’s knowledge. Sellers are also required to disclose additional facts related to the property’s flood insurance and flood damage history. Additionally, landlords are required to notify tenants of the possible availability of flood insurance via the National Flood Insurance Program. The New Jersey Department of Community Affairs (NJDCA) is...

New Jersey Supreme Court Relaxes Moratorium and Allows Some Commercial Landlord-Tenant Cases to Proceed

Much has been written about the need for moratoria on evictions, at both the federal and state levels, in order to avoid widespread displacement of residential tenants. Indeed, one of Governor Murphy’s very first Executive Orders – issued on March 19, 2020, just ten days after he declared a State of Emergency – was to halt all residential evictions until two months after the State of Emergency ends. Of course, the State of Emergency continues today, and thus the residential eviction moratorium also continues with no immediate end in sight. Early on during the COVID-19 crisis, as a companion to the Governor’s Executive Order, the New Jersey Supreme Court authorized the temporary suspension of all landlord-tenant trials (both residential and commercial) as of March 16, 2020. While residential and commercial landlords could continue to file complaints to get “in the queue,” those cases could not advance to trial, and the Landlord-Tenant Court backlog today is in the tens of thousands. Some commentators predict hundreds of thousands of eviction complaints may be filed in New Jersey when the pandemic ends. While much attention has been given to the residential eviction crisis, far less has been written about the impact of lengthy moratoria on both commercial landlords and tenants, whose cases are filed identically to residential matters...

COVID-19 – Impact on Existing and Prospective Real Estate Transactions

Uncharted waters – we are all sailing in unchartered waters as the effects of COVID-19 impact our health, our business dealings, our government, our net worth, and our daily lives. And none of us knows what might happen from day to day or how long this crisis might last. In our transactional real estate practice, we are already dealing with multiple situations impacted by this new reality. We share the information and observations that follow to offer useful insights to our clients. Existing Contracts The overarching word that captures many of the issues spawned by the virus is “deadline.” Whether it is a closing date, the end of a due diligence period, the date by which a contingency such as the receipt of approvals or financing must be obtained, or the date of final delivery of a construction project, deadlines that were negotiated and commercially reasonable when agreed upon may no longer be possible to achieve. Government offices are shut down, and many professionals, consultants, and tradespeople are staying home. Deliveries of supplies are interrupted. In some counties, it is not possible to run title searches or record instruments such as deeds or mortgages due to the closing of recording offices (although e-recording is available in some locales). We believe defaults – and many of...

Force Majeure Provisions in Contracts

No one is able to predict how the coronavirus situation will play out or precisely how each of us might be impacted or for how long. It is possible your ability to perform various contractual obligations will be delayed. Many contracts protect parties against an inability to perform due to uncontrollable circumstances, at least in some situations, by inclusion of a so-called force majeure provision. This provision excuses certain behavior in certain situations determined to be beyond the control of the party failing to perform. Obviously, the text of the particular provision is critical to understanding what it says. We are writing to alert you that many force majeure provisions include a mandatory notice provision. If you don’t provide the required notice, you are estopped from raising force majeure as a defense against a claim arising out of your failure to perform. So if the coronavirus pandemic is interfering with your ability to perform contractual obligations, we urge you to review your contracts and deliver any required notices so as to protect yourself to the extent possible, and if your contract mandates that any other steps be taken to preserve the defense, take those steps as well. Gibbons stands ready to assist with these concerns. If you have any questions regarding force majeure provisions in...

Join Us at the ICSC New York Deal Making Conference – December 11 & 12

The Gibbons Real Property Department will once again exhibit at the upcoming International Council of Shopping Centers (ICSC) New York Deal Making Conference at the Jacob K. Javits Convention Center on December 11-12. Stop by our booth, #2411, to meet some of the Department’s attorneys who will be in attendance (Click here to view our booth location marked as the red circle). Deal Making hours are Wednesday, December 11, from 8:00 am to 5:00 pm, and Thursday, December 12, from 8:00 am to 3:00 pm. We look forward to seeing you there!

Gibbons to Exhibit at Upcoming ICSC PA/NJ/DE Conference & Deal Making

The Gibbons Real Property Department will once again exhibit at the International Council of Shopping Centers (ICSC) PA/NJ/DE Conference & Deal Making at the Pennsylvania Convention Center on September 12. Stop by our booth, #319, and meet with some of the Department’s attorneys who will be attending. Deal Making hours are Thursday, September 12, from 8:30 am to 4:00 pm. The Conference provides an opportunity for real estate professionals (shopping center owners, developers, managers, marketing specialists, investors, lenders, retailers, etc.) to network and focus on getting deals done. We look forward to seeing you there!

NY High Court Voids Commercial Tenant’s Traditional Safety Net – Here’s How Landlords Can Take Advantage of This Ruling

Commercial tenants in New York have traditionally been able to secure a stay of summary dispossess proceedings brought against them and remain in occupancy pending the outcome of tenant-commenced litigation challenging the existence of a landlord-alleged default. Thanks to a recent landmark decision by New York’s highest court, this may no longer be the case if the lease contains the waiver language set forth below. When a landlord provides notice of an alleged default, tenants often seek a declaratory judgment as to the interpretation of the lease and whether a default exists, and also move for a Yellowstone injunction to toll any summary proceeding until the declaratory judgment action is completed. This effectively stays the summary dispossess proceedings. In 159 MP Corp., et al. v. Redbridge Bedford, LLC, the State of New York Court of Appeals addressed the enforceability of a commercial lease provision that prohibited the tenant from commencing a declaratory judgment action against the landlord with respect to any dispute regarding the lease. The Court rejected the tenant’s argument that the clause was void against public policy, finding the clause enforceable, based in large part on the sophistication of the parties and the “strong public policy favoring freedom to contract.” The Court also determined that, based on the enforceable lease waiver prohibiting the...

Gibbons Real Property Department Attorneys Represent Pharmaceutical Company in Cambridge Lease

Gibbons attorneys Russell B. Bershad and Nicole E. Taplin, Directors in the Real Property Department, are representing Bayer Healthcare LLC in a long-term, large scale lease for laboratory and office space in a new building under construction by MIT in Kendall Square, in Cambridge, Massachusetts. The Boston Globe featured a story on the lease, which can be found here.

NJ Appellate Division Case Highlights Importance of Thorough Due Diligence Regarding Properties Containing “Abandoned” Railroad Lines

The conveyance of property containing embankments or former railroad facilities may invoke complicated title issues that could lead to significant costs and delays for real estate purchasers seeking to develop the property if such issues are not adequately addressed prior to the acquisition. On January 23, 2019, the New Jersey Appellate Division issued an unpublished decision in 212 Marin Boulevard, LLC, et al. v. Chicago Title Insurance Company and Consolidated Rail Corporation, concerning a party’s alleged misrepresentation about whether the conveyed embankment property was subject to the Surface Transportation Board’s (“STB”) abandonment authority. The STB is the federal agency established to oversee rate and service disputes for railways, as well as railway restructuring transactions, including abandonment of rail lines. Presumptively, any abandonment of rail lines by an entity regulated by the STB requires STB approval, unless excepted under federal statute. The seller, Consolidated Rail Corporation (“Conrail”), represented to Chicago Title Insurance Company (“Chicago Title”) that STB abandonment was not required, and Chicago Title, in apparent reliance on this statement, issued policies for the conveyed parcels when the purchaser closed on the property. Even so, the Appellate Division rejected Chicago Title’s third party complaint against Conrail for negligent misrepresentation. The decision should remind real estate developers to be wary of properties containing railroad lines, whether in...