Category: Transactional Real Estate and Leasing

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...

Gibbons to Exhibit at ICSC New York Deal Making Conference on Wednesday and Thursday

The Gibbons Real Property Department will once again exhibit at the International Council of Shopping Centers (ICSC) New York Deal Making Conference at the Jacob K. Javits Convention Center on December 5-6. Stop by our booth, #2411, and meet with some of the Department’s attorneys who will be attending (Click here to view the Deal Making floor plan). Show hours are Wednesday, December 5, from 8:00 am to 5:00 pm, and Thursday, December 6, from 8:00 am to 3:00 pm. We look forward to seeing you there!

Real Estate and Pass-Through Provisions of the New Tax Act

The new Tax Act was signed into law on December 22, 2017. Holders and developers of commercial real estate will be impacted by certain provisions of the new Tax Act, such as its treatment of real property depreciation deductions, 1031 like-kind exchanges, and pass-through rates. We direct you to our recent Legislative Tax Alert for a more detailed overview of certain relevant provisions of the new Tax Act. If you have questions or concerns about how the new Tax Act will impact you or your business, please contact Russell B. Bershad, a Director in the Gibbons Real Property Department, or Peter J. Ulrich, a Director in the Gibbons Corporate Department.

Proposed N.J. Assembly Bill Allocates a Share of PILOT Funds to School Districts

As reported in the June 16, 2017 NAIOP WeekEnder, a bill is pending in the Assembly requiring five percent of each annual service charge under a PILOT agreement in connection with a residential redevelopment be remitted to the school district. At present, a municipality retains 95 percent of PILOT payments, the other five percent being remitted to the county. Conventional real estate tax payments are divided among the town, county, school district, and some other stakeholders, such as a fire district, municipal open space, etc. The splits vary, but the school district portion is substantial, often the largest share. To use one example, in Sayreville, the 2016 allocation to the school district is 55.74%; the municipal share is 26.49% and the county share is 14.79%. It is often contended that PILOTs are unfair to school districts because none of the PILOT payment is allocated to the school district. Indeed, school districts have challenged PILOT agreements in court. See, for example, the unreported 110 page, 2005 decision of Mercer County Assignment Judge Feinberg Hamilton Township Board of Education vs. Township of Hamilton and 240 Princeton Urban Renewal, LLC. Whether or not PILOTs truly adversely impact school district budgets is a matter of debate. Regardless of the merits of the debate, it is fair to ask if remitting five percent of PILOTs...