Gibbons Law Alert

Gibbons Law Alert

Category: Transactional Real Estate and Leasing

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

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Posted in Transactional Real Estate and Leasing

On May 16, 2019

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

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Posted in Transactional Real Estate and Leasing

On April 12, 2019

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

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Posted in Transactional Real Estate and Leasing

On March 22, 2019

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

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Posted in Development/Redevelopment / Environmental and Green Issues / Real Estate / Transactional Real Estate and Leasing

On December 3, 2018

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

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Posted in Transactional Real Estate and Leasing

On December 29, 2017

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

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Posted in Transactional Real Estate and Leasing

On June 19, 2017

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...

What Parcel? SCOTUS Hears Arguments in Case Poised to Clarify the Court’s Regulatory Takings Jurisprudence

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Posted in Development/Redevelopment / Transactional Real Estate and Leasing

On March 22, 2017

The Supreme Court of the United States entertained arguments on Monday, March 20, 2017 in a case likely to fortify its Fifth Amendment regulatory takings jurisprudence. The case, Murr v. Wisconsin, is on appeal from Wisconsin’s high court and, when decided, should answer a question left open by the Court’s 1978 ruling in Penn Central Transportation Company v. City of New York. In Penn Central, the Court instructed that in determining whether a regulation has gone far enough to constitute a taking of private property, courts should not limit their analysis to the regulation’s effect on some discrete segment or portion of the subject property, but should instead consider the regulation’s interference with property rights “in the parcel as a whole.” The question of how reviewing courts should define that parcel, however, has gone unanswered for decades. Enter the Murr children, whose parents purchased two adjacent tracts of land along the St. Croix River in the early 1960s. The Murr parents built a cabin on the first lot and maintained title to it in the name of their business. The second lot, purchased afterwards, was kept in their name and remained largely undeveloped. In 1976, a county ordinance was passed establishing new minimum lot size requirements for properties in the area. While this ordinance contained an exception for...

Gibbons Part of Team Nominated by NAIOP for Mixed-Use Deal of the Year

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Posted in Development/Redevelopment / Real Estate / Transactional Real Estate and Leasing

On March 20, 2017

NAIOP New Jersey, the commercial real estate development association, has announced the finalists for its Deal of the Year Awards. Gibbons P.C. was part of the team nominated for Mixed-Use Deal of the Year for the project involving the disposition of the Hoffmann-La Roche US headquarters in Nutley and Clifton, New Jersey. Winners in the categories of Industrial Deal of the Year, Office Deal of the Year, and Mixed-Use Deal of the Year will be announced at the 30th Annual Commercial Real Estate Awards Gala on May 11, 2017. Gibbons was part of the team that led the successful sale of the former 116-acre headquarters and research and development campus of Hoffmann-La Roche, which spans the municipalities of Nutley and Clifton, to Prism Capital Partners and a Boston-based investment manager. As part of the transaction, a joint venture between Hackensack University Medical Center and Seton Hall University will lease two of the campus buildings and 16 acres of the property for the new Seton Hall–Hackensack Meridian School of Medicine, the first new private medical school in New Jersey in over 40 years. The new site will also house Seton Hall’s College of Nursing and its School of Health and Medical Sciences, along with a National Health Institute-designated Clinical Research Center that Hackensack Meridian plans to...

Russell Bershad Named to the NJBIZ Real Estate Power List

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Posted in Transactional Real Estate and Leasing

On November 28, 2016

Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department, has been named to the NJBIZ Real Estate Power 75, a list of the most powerful people in New Jersey real estate. Mr. Bershad appeared for the first time this year, ranking 55th on the list. NJBIZ notes, “Russ Bershad is a newcomer to the list. But, according to one fan, he’s been in the mix for quite some time. ‘He was involved in the Roche deal, he represents David Barry in Jersey City. He’s doing a lot of good things there.’ Said another: ‘You know every detail is going to be pored over when you hire Russ.’ Said another: ‘If you’re going to add more lawyers to the list, and that’s a good idea, Russ is one of the people you need to have.’”

SNDAs: Often Encountered, Rarely Discussed

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Posted in Real Estate / Transactional Real Estate and Leasing

On October 31, 2016

Subordination, non-disturbance and attornment agreements (SNDAs) are often encountered by transactional real estate lawyers, but infrequently discussed. An SNDA is an agreement among a tenant, the landlord’s mortgage lender and, usually, the landlord. An SNDA provides that a tenant’s lease will be subordinated to a mortgage on the landlord’s property, and the mortgage lender will agree that if the mortgage goes into default and the lender forecloses its mortgage, the lease will continue (i.e., it will not be disturbed).

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