This article discusses a recent bankruptcy decision, In re 5877 Poplar, L.P., which ruled that an "absolute" assignment of hotel revenues was in reality an assignment for security purposes as part of the mortgage loan to the debtor, and that therefore the hotel revenues constituted cash collateral that was part of the debtor's bankruptcy estate. The article goes on to discuss the law in other jurisdictions on this issue, and the amendments to the Bankruptcy Code that attempted to resolve these types of disputes.
This article discusses a recent California appellate court ruling, which held that the tenant of a commercial property was estopped from contradicting the termination date of the lease as stated in a tenant estoppel certificate it signed in connection with a sale of the property to the current owner. The court held that the estoppel certificate qualified as an "instrument" under the California Evidence Code, which provides that the facts recited in a written instrument are true as between the parties or their successors.
An analysis of the case and statutory law affecting the rights and obligations of a foreclosing mortgagee with respect to leases in effect on the secured property, including the ability of the mortgagee to elect, through selection of a judicial or non-judicial foreclosure proceeding, to "wipe out" or retain the lease.
This article discusses a recent case, Officemax, Inc. v. Sapp, which held that a letter of intent to lease office space was unenforceable by the intended lessee because the terms of the letter of intent were too vague and indefinite. The court also held that a "non-shop" clause in the letter of intent was unenforceable because it did not specify a duration and was lacking in mutuality because it contained no explicit promise by the proposed tenant not to look at other properties.
This article explores the controversial issue of whether revenues from hotel rooms should be considered "accounts" as defined under the Uniform Commercial Code or real estate "rents." The article also examines the conflicting case law in this area and suggests protective strategies that a lender should employ to protect its security interest.
A discussion of a recent Illinois Appelate Court decision refusing to permit a mortgagee to enforce a contractual assignment-of-rents document that authorized the mortgagee to collect post-default rents without obtaining possession or court approval, and an analysis of how the decision relates to other areas of state and federal bankruptcy law.
A discussion of the availability of title insurance coverage and/or endorsements with respect to the interest of a commercial lender in the rents, income and profits generated by the secured property.
This article examines and analyzes a recent state court decision regarding the issue of whether a clause in a lease provided the tenant with an option to purchase or a right of first refusal. The court held that the right granted was a right of first refusal and not an option, even though a specific purchase price was set forth in the provision. This article also discusses the difference between options, rights of first refusal, and similar rights, and contains drafting tips for these types of clauses.
This article discusses Stone v. Simmons, an Illinois Appellate Court Rule 23 opinion holding that a nonassignability clause in a lease does not prohibit the tenant's collateral assignment of its interest as security for a loan.
Another Trap for the Unwary Lender? This article demonstrates how the terms "rents" or "rents, issues and profits," as defined in a lease, mortgage or an assignment of rents, can affect the rights of lenders, creditors, lessors and owners when given the various constructions placed on those terms by state courts, federal courts and bankruptcy courts. The article concludes by offering some valuable negotiating and drafting strategies for landlords, lenders and tenants.
This article provides an updated analysis of percentage rent provisions in shopping center leases, and advises calculation methods for determining percentage rents according to an acceptable definition of gross sales (including Internet sales). It also discusses pertinent case law to illustrate drafting and enforcement issues regarding percentage rent provisions, concomitant audit rights of the parties, and the consequences of continous operation covenants. Finally, this article provides a discussion of the remedies for default in percentage rent payments and the implication of potential bankruptcy issues.
