Remember These Things During Recovery

Last Updated on Tuesday, 15 September 2020 03:18 Written by Chris Griswold Tuesday, 15 September 2020 03:18

During this period of “rebuilding” for everyone, there are a couple of things to be mindful of…, things I’ve seen almost cause trouble already.  Prohibited and Exclusive Uses, mostly in leasing situations, but also in some sales (in the form of deed restrictions).  This is good stuff for everybody to know… (don’t forget to click on my links below to also see my short video on this material).

Remember These Things During Recovery

Exclusive & Prohibited Uses.  These are things that, while ordinarily found in other, existing, co-tenancy leasing situations, can come back and haunt either a broker or an owner while desperately trying to back-fill empty space.  These leases are usually old, dusty and forgotten – but still very valid for other surviving co-tenants within a project.

Big Picture:  Look at them, go find them, read them – you’ll be glad you did.

           They’ll usually be written poorly, probably be over-reaching, and you need to carefully navigate around them with your prospective tenant (or purchaser).  Ideally, if there’s trouble, you want to make sure the incoming tenant (or owner) agrees to amend their normal operating routine, their menu, their signage (or whatever) to not infringe upon whatever the existing exclusive and/or prohibited use section contains.  Depending on the circumstances, certain legal language and strategies will need to be employed to further protect the parties (more on that below).

Either way, they all have teeth, whether or not they’re recorded in the relevant county records.  And, they’ll surely be enforced by the party who has the benefit of such protection – especially right now, while things are harder for most…  And if you overlook them, it’s difficult to unscramble the egg, making things worse and damages will begin to grow too quickly.  If in doubt, you can follow this thought process….

First, you can get an opinion on whether the language is an issue (a great starting place) from qualified counsel.

Secondly, with that opinion, you have to make the decision on whether or not to approach the existing co-tenant or co-owner (within the project) about admitting the new tenant/owner or waiving their right to object.  This second component is problematic.  If they say “yes,” then you’re ok.  However, if they say “no,” then you’ve already been told “no,” so proceeding with the prospect is already dead in the water.

So, before doing step 2, first talk long and hard with the prospect, the center’s landlord (or owner) and a qualified attorney who can examine the documents – then get a consensus on what needs to be done before proceeding.  Especially right now, this topic is something too easy to trip and stumble upon.  Have a great month everyone.

What My Clients Are Saying

“I have used and recommended Chris Griswold for years on commercial real estate legal matters but when my mother passed away, I knew I had to call Chris. I’ve heard horror stories in the past of probates lasting well beyond a year, but Chris moved quickly in the probate process and was able to complete the process in less than four months.”
Allan Meadors, Director, Cushman & Wakefield | Commercial Oklahoma.

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Thought Process – Legal Considerations Going Forward After COVID / Disclosures on COVID Impacted Properties?

Last Updated on Thursday, 9 July 2020 12:03 Written by Chris Griswold Thursday, 9 July 2020 12:03

Message From Chris….

What about after we return to normal life/work after this pandemic, what happens when you go to buy, sell, rent or lease real property that may have been impacted by COVID-19?  Will some of the fears we have stick, or will we be a forgetful society?  Hard to tell….  While it’s not my intent (nor possible) to get into the weeds on everything, I do want to help shed some practical light on some things for folks, some things that might possibly develop….  Who knows?  But this is good stuff for everybody to know… (don’t forget to click on my links below to also see my short video on this material).

Thought Process – Legal Considerations Going Forward After COVID / Disclosures on COVID Impacted Properties?

            Question #1 What if I contracted COVID and I later want to sell my home?

Answer:  On the disclosures for the residential sale of property, there is an obligation to disclose certain events, under certain circumstances, that “psychologically impact” a property, if the possibility of the occurrence of such events is important to the prospective buyer/tenant of such property and such buyer/tenant delivers written notice to the licensee/broker assisting the owner in such transaction.  So what?  It may later be decided that COVID warrants becoming an event that causes a property to be psychologically impacted – as things possibly play out in our legal system.

Question #2Same question as above, but it now involves the sale of a commercial property that housed either a seller or a tenant who contracted COVID, what then?

Answer:  Although commercial property differs from residential property, such framework could later be extended to commercial situations by the Courts.  Accordingly, if the buyer or prospective tenant provides written notice to the licensee/broker involved in assisting the owner in such transaction, such issue should be handled the same way as any psychologically impacted property analysis.

Question #3What is the psychologically impacted property analysis?

            AnswerThe licensee/broker involved in assisting the owner in such transaction must receive a written notice from the buyer or prospective tenant, then the licensee/broker assisting the owner will approach the owner to inquire and obtain information about the issue.  With the consent of such owner, the licensee/broker will report back to such buyer or prospective tenant about such findings.  If the owner doesn’t consent or agree to provide such information to such buyer or prospective tenant, then the licensee/broker involved in assisting the owner shall inform such buyer or prospective tenant of the owner’s refusal to provide information on the issue.

What My Clients Are Saying

“Chris Griswold is an attorney that will find reasonable solutions in an economical manner to fit my clients’ best interests. My growth of knowledge of the legal system and use thereof for my clients can be contributed in a large part because of Chris Griswold’s personal willingness to educate and strengthen my knowledge on the laws. Good results from a good law practitioner like Chris are always best and hard to find it seems.”
John W. Meek, RPA / Owner, First Commercial Management, Inc. / Oklahoma City, Oklahoma

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Thought Process

Last Updated on Thursday, 14 May 2020 09:08 Written by Chris Griswold Thursday, 14 May 2020 09:08

During this pandemic, people are asking certain business questions.  While it’s not my intent (nor possible) to get into the weeds on everything, I do want to help shed some practical light on some things for folks.  This is good stuff for everybody to know… (don’t forget to click on my links below to also see my short video on this material).

Thought Process

Question #1 What is the big picture of what’s going on right now?

Answer:  First of all, there’s not a lot of precedence on this sort of situation – it’s never happened.  The legal topics of impossibility, Force Majeure and others are, up until now, rather dusty, largely unused legal doctrines that haven’t seen much daylight in our modern court system.  Secondly, on public policy grounds, courts don’t want business owners held to difficult standards (i.e., normal financial rigors, like making normal/ordinary, full amount rental payments) which can’t easily be made during a shutdown.  However, what isn’t being said yet is that neither (as time goes on, and events play out) will courts want to invalidate/rescind/cancel every contract that was entered into before the pandemic just because business became more difficult to conduct – as that would be anarchy and destabilizing to our economy.

Question #2We’ve lately heard much about certain “defenses” to the enforcement of contracts, like legal “impossibility,” “frustration of purpose,” and “Force Majeure.”  What’s going on with these?

Answer You could spend a lot of time and money right now getting handles on these, but let me try to make it as simple as I can….

Force Majeure:  This is a clause that is sometimes used in contracts.  To be effective and applicable, it must be stated in your contract.  It apportions the risk of economic loss to either one party or the other.  It covers both man-made and naturally occurring events and will have to, through litigation, be declared to apply to this pandemic (assuming it is stated in your contract).  If your contract doesn’t have this provision, it’s understandable, as this sort of thing hasn’t made this sort of provision as popular or necessary as it’s now become.  Also, if it’s not in your contract, don’t dismay – if it had been, such risk may have been apportioned to you….  Either way, if it’s not in your deal, the common law attempts to make up for such omission by giving everyone the benefit of it in the form of “impossibility,” “frustration of purpose” and other common law defenses to the enforcement of contracts.

Common law defenses These do exist (and always have), but they have to be successfully proved by the party claiming them, in litigation.  Furthermore, courts (historically speaking, on public policy grounds), don’t like to undo deals, unless it’s completely necessary.  Without dragging you through lots of legalese and process, what will likely happen is the courts will, if they do anything, entertain “temporary impossibility” claims – where defendants answer petitions with claims that they, for a certain period of time, couldn’t pay their bills (or full bills) during the shutdown – and, in some cases, rightfully so.  Courts are most likely to uphold “objective impossibility” defenses more often than “subjective impossibility” defenses.  Objective means, no one could have performed under the contract, and subjective means I could not perform under the contract.  Bear in mind, courts do expect business owners/operators to be able to make it through a crazy month or two of bad business, while continuing to pay their bills (as “rainy days” do come, for us all).

Question #3Is my business excused from paying rent during this shutdown?

Answer:  That’s going to depend upon a number of things, as I’ve been cracking the lid on above.  For example:

  • If you’re a landlord, the Court will inquire on whether your lender granted you a forbearance as you pursued a non-paying tenant.  Did you try to reasonably accommodate your tenant, entertain any sort of compromise or extension of the lease term?  Did you offer some reduced rent for a month or two or three, during the shutdown?
  • If you’re a business owner, did your business receive payroll relief stimulus?  How was it used?  When did you finally apply for it?  When did you actually receive it?
  • If you’re a debtor or a tenant, were you not current on your bills, even before the pandemic?
  • If you’re a tenant, did your landlord really try to work with you, propose to you temporary forbearances (e.g., that extend the ultimate lease term out the same amount of time as the shut down lasted) and other good faith measures – all while you (as the tenant) refused to even return their emails and phone calls?
  • If you’re a tenant, rent aside, were you at least willing to pay your lease triple net charges during the shutdown (did you even offer to pay these, or, at least try or represent to your landlord that you would try to pay these)?

At the end of the day, if the courts do anything by way of these common law defenses to contracts (hard to tell as of yet, since the courts are not open for normal, “business as usual”), they’ll look at how long the economy was shut down in relation to your business, and possibly how the strange, Corona-economy actually affected your business.  For example, Lowe’s and Home Depot have been seemingly flooded with business during the shutdown – since people are stuck at home and not working as much right now.  In otherwords, some businesses have done even better during this pandemic than before.  So, be ready to produce financials if you’re claiming that you didn’t pay your bills during the shutdown because of the pandemic.  Either way, try to be cooperative, reasonable, responsive, productively creative at problem solving and deal in good faith with your business partners during this difficult time.

What My Clients Are Saying

“Chris Griswold is an attorney that will find reasonable solutions in an economical manner to fit my clients’ best interests. My growth of knowledge of the legal system and use thereof for my clients can be contributed in a large part because of Chris Griswold’s personal willingness to educate and strengthen my knowledge on the laws. Good results from a good law practitioner like Chris are always best and hard to find it seems.”
John W. Meek, RPA / Owner, First Commercial Management, Inc. / Oklahoma City, Oklahoma

The information presented within this article is of a general nature and is not intended to be relied upon as legal advice in any particular matter without first consulting qualified counsel.

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