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Beating True Lease Challenges: A Lessor's Guide to Structuring and Defending True Leases
Lessees increasingly challenge leases in bankruptcy proceedings or disputes with lessors. They assert and litigate the issue of whether a lease constitutes a disguised security arrangement instead of a true lease. This issue arises with respect to leases of equipment as well as software. The consequence of losing true lease status under state law can dramatically affect a lessor's legal rights and remedies and impair a lessor's economics. Despite this increased uncertainty, lessors can effectively structure and defend their lease transactions as true leases when armed with working knowledge of current judicial trends and applicable rules under the Uniform Commercial Code (UCC).
Courts have exhaustively analyzed the true lease issues over the past 20 years and have created a confusing and complex array of inconsistent decisions. The analysis of true lease challenges often starts with Section 1-201(37) of the UCC. In general, Section 1-201(37) establishes a “per se” or “bright-line” test of whether a transaction should be treated as a true lease or disguised security agreement. Current case law also includes an additional “economic realities” test that evaluates the facts of each transaction to determine objectively whether the transaction is a lease or disguised security interest.
The Golden Thread: Residual Value or Reversionary Interests
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.