Index
October 06, 2005
Everything contained in this issue in an easy-to-follow format.
Using Letters of Credit to Secure Lease Obligations
October 04, 2005
As discussed in Part One last month, a tenant may be able to apply for and have its bank issue to its landlord a letter of credit ("L/C") to secure the tenant's obligations under a long-term lease. From the tenant's perspective, an L/C may be preferable to a large security deposit. An L/C will not necessarily tie up large amounts of the tenant's cash or other liquid collateral, as would a security deposit. Instead, the cash can be deployed as working capital in the tenant's business. Part One discussed six tips for drafting an L/C: 1) <i>Use the ISP (International Standby Practices 1998) instead of the UCP (Uniform Customs and Practice for Documentary Credits)</i>; 2) <i>Keep the Draw Conditions Simple</i>; 3) <i>Avoid Documents Not Within the Landlord's Control</i>; 4) <i>Allow Partial Draws</i>; 5) <i>Avoid Specification of Use of Funds</i>; 6) <i>Provide for Coverage of a Settlement Period After Lease Termination.</i> This conclusion provides six more tips that address issues such as providing coverage of the settlement period after lease termination, shortening the time period to honor the letter and using a transferable L/C. It also discusses matters of concern to the issuing bank.
The Leasing Hotline
October 04, 2005
Highlights of the latest commercial leasing cases from around the country.
In the Spotlight: Beware of Real Estate 'Icebergs'
October 04, 2005
If you own a shopping center, a regional mall or a strip of stores in an office building, you very likely anticipate the more frequent business problems: Tenants don't pay their rent on time or don't pay the rent at all; tenants alter their premises, install signs or assign their leases without your consent; tenants use the wrong parking spaces or the wrong dumpsters. Generally, these common problems are an expected part of owning retail property. Upcoming Spotlight columns will discuss some of these problems. But for now, we address something unanticipated ...
Retail Property Values and Land Use Regulation: Judicial Approaches to Measuring Diminution of Value and Legal Strategies to Redress Loss of Property Value
October 04, 2005
Landlords and tenants who want to understand judicial methods for measuring diminution of property value resulting from land use regulation must first understand the U.S. Supreme Court's takings jurisprudence. Of course, federal takings standards only set the "floor" of constitutional protection. State constitutions may set a higher level of constitutional protection. Although state courts may find a taking in situations where a federal court would not, their approaches to valuation generally mirror the various approaches taken by the federal courts. This two-part article will discuss several Supreme Court takings tests and offer some legal strategies for dealing with them.
The Affect of Post-9/11 Construction and Insurance Practices on Landlords
October 04, 2005
The fourth anniversary of the 9/11 attacks reminded us that the mortal damage to the World Trade Center and adjacent buildings represented a level of destruction never experienced previously in the United States. Among other well-documented effects, the collapse of these structures gave rise to both hindsight and foresight among those who design, build, own and insure buildings. The disaster illustrated that even the tallest and apparently strongest of buildings are vulnerable, and even the deepest insurance reserves can be pumped dry. (The recent destruction caused by a natural disaster — Hurricane Katrina — further underscores this vulnerability.)
Cape Town Convention: Complex Questions and Significant Opportunities
October 03, 2005
The Cape Town Convention on International Interests in Mobile Equipment ("Cape Town" or "CT") and the related Aircraft Protocol ("Protocol") (<i>www.unidroit.org/english/conventions/mobile-equipment/main.htm</i>) continue to advance slowly toward an expected effective date in 2006. When the Protocol enters into force it will affect virtually every commercial and business aviation transaction in the United States and many other nations around the world. Although Cape Town and the Protocol (collectively, the "Treaty") promise to facilitate aircraft financing and provide new financing opportunities, the Treaty also poses numerous questions and requires new approaches to documenting and closing aviation transactions.
Keeping Tabs On Internet Identity
September 01, 2005
No technology issue concerns -- or should concern -- individuals, e-commerce and government regulators more than Internet identity theft. The statistics are staggering. In the last year, LexisNexis reported that unauthorized people apparently took personal information on more than 30,000 Americans from its database -- by stealing logins and passwords of legitimate customers. Another data broker, ChoicePoint Inc., reported a possible theft of similar data from as many as 145,000 people through individuals claiming to have legitimate and legal use for the data they purchased from ChoicePoint. But those numbers look small (except, of course, to the affected individuals) when compared with the identity-theft problem acknowledged by Bank of America -- involving about 1.2 million federal employees.
In the Marketplace
August 31, 2005
Highlights of the latest equipment leasing news from around the country.
Wave Goodbye to Waivers of Jury Trials
August 31, 2005
In a decision that all franchisors need to note, on Aug. 4, 2005 the California Supreme Court ruled that pre-dispute waivers of a jury trial in a civil matter are unconstitutional under the California constitution. Many commercial agreements include a pre-dispute waiver of a jury trial so that businesses that prefer not to submit disputes to arbitration can elect to litigate claims and have their disputes heard by a judge rather than submit to a jury trial. The high court in <i>Grafton Partners v. Superior Court (PricewaterhouseCoopers)</i>, 2005 Cal. LEXIS 8586, 4 (2005), affirmed an appellate court's decision to reject the 1991 appellate court decision upholding pre-dispute waivers of jury trials in <i>Trizec Properties Inc. v. Superior Court</i>, 229 Cal.App.3d 1616 (1991). This case will alter the way commercial contracts — from joint venture agreements, to franchise agreements, real estate leases and other contracts — are written. The <i>Grafton</i> decision is a call to California-based franchisors, and franchisors with franchises in California, to take stock of their decisions and provisions regarding dispute resolution.
