The Urge To Merge: What Happens To My Bargained-For Protections After The Closing?

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Ruminations has explored the thorny area of integration clauses and the limits of the parol evidence rule in the context of contracts. [If you don’t believe us, click HERE or HERE or HERE to see if we’re fibbing.] We haven’t heretofore look at the same question in the context of the interplay between a purchase agreement and the deed to which such an agreement gives birth. Today, we do. A cautionary warning would be in order. As much as we wanted to stay out of the “weeds,” that didn’t entirely work out, and what follows turned out to be a little “wonky.”

One of the branches of the tree sometimes named “the deed merger doctrine” is often described as follows: “Where a deed is executed in pursuance of a contract for the sale of land, all prior proposals and stipulations are merged and the deed is deemed to express the final and entire contract between the parties.” [There is an entirely different branch, one having to do with the implied combining of multiple tax lots into one lot, but that’s not the kind of “deed merger” being explored today.] It’s too bad that the coverage of today’s real property law school courses have been trimmed from “what they used to be” because too little time is now devoted to understanding the actual extent of such “mergers by deed.” Just like we learned in prior Ruminations postings when it came to the limitations of the parol evidence rule, the common formulation of the deed merger doctrine set forth above is “overstated” because “[t]he rule that prior expressions are merged into the deed is not as broad and absolute as some abbreviated statements of the doctrine might indicate.” [Read more…]

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Structural Damage Revisited And A Global Lesson

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One of Ruminations’ most popular blog postings explored what distinguishes a structural repair from one that is non-structural. In doing so, it pointed out that not every component of a structure is a structural element or a structural component. For those who haven’t seen that posting or want to re-visit it, click HERE to see it. Today, we are going to revisit that subject using an Eleventh Circuit United States Court of Appeal decision as our foundation (ugh – pun!).

The point we’re working toward won’t be irrelevant just because the case in question, Hegel v. First Liberty Insurance Corporation (viewable by clicking HERE), resolves an insurance coverage dispute. Those of us who draft leases and mortgages, and who interpret them when a disagreement arises, need to look wherever the needle might be found. [Read more…]

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Security Deposits – Fugetaboutit (From A Tenant’s Perspective)

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A tenant derives no particular benefit from posting a security deposit other than its use as a means to conclude lease negotiations. A security deposit is merely part of that package of rights and duties we call a lease. Every single term and condition of a lease is economic in nature, and it takes no giant intellectual step to recognize that security deposits are merely a matter of dollars and cents. For a landlord—it is dollars; for a tenant—it makes no sense.

Being a “landlord” issue, security deposit clauses in leases are almost always drafted by the landlord, in its favor. Like most other lease provisions prepared for a landlord’s benefit, the proposed language may be only a starting point for a fair and balanced outcome. Knowledge being power, the following exploration of security deposit issues should serve as useful armament for a tenant willing and able to do battle with a landlord over this often ignored area. [Read more…]

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But, The Lease Guaranty Had All Of The Right Words – What Happened?

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“I guarantee the full performance of the Lease by the Tenant. This Guarantee is absolute and without any conditions. … This guarantee will not be affected by any change in the Lease whatsoever, including, but not limited to any extension of time or renewals.” “The Guarantor further agrees that this guaranty shall remain and continue in full force and effect as to any renewal, change or extension of the Lease.”

Those were two ways in which two different landlord’s forms of guaranty were intended to give the landlord comfort that a guarantor would not weasel out of the guarantee based upon amendments, extensions, etc. to the guaranteed lease. They didn’t work.

What went wrong? Basically, including such language in a guarantee helps make the guarantee bullet-resistant, not bullet-proof. [Read more…]

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Did You Want To Read Something About Radius Restrictions?

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At this moment, when we are about to set pen to paper (so to speak), it is our intention to raise a single topic; get in; and, get out. That hasn’t worked well for Ruminations in the past, but that’s no reason to stop trying.

On its face, today’s posting will deal with “radius restrictions.” Actually, we are going to write about judicial interpretation (again), restraints against alienation, and “blue penciling.” All that will be in the context of a 2014 decision by the Court of Appeals of Georgia in Fab’Rik Boutique, Inc. v. Shops Around Lenox, Inc. Readers can see that decision by clicking: HERE.

The facts are pretty simple and were undisputed. The clothing store had a three-year lease. Either in the lease, or by a later agreement, the tenant had a renewal option. When the tenant tried to exercise the renewal option, the landlord refused to accept the exercise and asserted the tenant had defaulted under the lease, specifically because the following radius restriction had been violated: [Read more…]

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If You Don’t Understand It, Don’t Pretend You Do: Builder’s Risk Insurance (Part 2)

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The take-away from last week’s Ruminations posting was supposed to be that if you really don’t understand “insurance,” align yourself with someone who does. Not doing so is like cutting and pasting text from a foreign language document hoping that is says what you’d like it to mean. If that point didn’t come across last week, perhaps this second part on the topic of “Builder’s Risk” insurance will push readers into finding an insurance mentor.

Last week, we wrote about policy forms for builder’s risk insurance and how there is really no standard form. We also wrote about who could and should be covered. Those who read last week’s posting would have seen some thoughts about what property is covered, what is not, and what can be added to the coverage. If you missed that, click HERE to see what was said. You’ll also see some thoughts about some additional coverages that can be included along with the basic coverages under the builder’s risk typical policy. So, that will be our launching point. [Read more…]

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Is It Enough To Write: “X Must Also Carry Builder’s Risk Insurance”? – A Rhetorical Question

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After re-reading today’s blog posting, Ruminations became more convinced than ever that its only real purpose is to scare all of us out of thinking we agreement writers know about how to write insurance provisions that really work. For people who don’t “do” insurance every day, reading about how to “do” insurance is like reading about how to juggle swords. Unless you really, really, deeply, deeply understand what can and can’t be done with insurance policies, leave it for professionals. That’s not to say that, working with insurance professionals, one can’t get some pretty decent “stock” provisions, but those are rarely the ones one finds in almost anyone’s form lease, mortgage or other agreement. Also, if a person who writes a lease, mortgage or other agreement doesn’t understand the insurance provisions in their own document, why are they putting them in there? [Read more…]

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How One Tenant Can Become Two Different Tenants Without A Landlord Knowing What Happened

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We think today’s subject is quite interesting, though we know that its greatest appeal will be to law “wonks.” [A “wonk” is variously “a person preoccupied with arcane details or procedures in a specialized field” or “a student who spends much time studying and has little or no social life” or “one who studies an issue or topic thoroughly or excessively” (Various sources)].

Even readers with no need to see a definition of “assignment,” might be puzzled as to the words “pro tanto.” Even those who know what those words mean probably don’t realize that you can combine “assignment” with “pro tanto” and do serious harm to one party or the other to a lease.

Simply speaking, an assignment results in one party (the assignor) turning over all of its rights to another party (the assignee). The assignor (say, a tenant), absent some other agreement with the person or entity on the other side of an agreement (say, a landlord and a lease), retains obligations under that agreement (e.g., under the “lease”), but not any rights. [That’s not entirely accurate because there are ways to retain certain rights by way of agreement between the originally contracting parties, but that’s for another day. Today, we’re going to confuse readers enough with the “pro tanto” concept, such that we don’t need to go down a tangent at this point in the posting.] Basically, the effect of a tenant assigning its interest in a lease is that the tenant under the lease changes and the landlord now has to deal with a new tenant, the assignee. [Read more…]

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