To A Hammer Everything Looks Like A Nail

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Knowing what you don’t know is a good thing. A practical application of that statement comes when you are trying to figure out how a particular jurisdiction will treat a particular agreement such as a lease. There are some legal principles that suffuse state law throughout the United States. The law of damages is NOT one of those principles. Yes, the generality of “damages” is pretty much the same all over, but the details are not. Here’s an example from a just-decided Colorado case from its Supreme Court.

The question that court considered was whether a seller could really make the choice of remedies provided-for in the following contract clause: [Read more…]

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Additional Rent Is No Rent At All

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We are aware that in New Jersey, if a lease doesn’t denominate a particular tenant’s financial obligation as some version of “rent,” then the landlord can’t get the tenant evicted for non-payment of that item. The reason we are aware of this is because we’ve seen case law that denies a landlord such relief. While the landlord can sue to collect such charges, for example, common area charges, it can’t evict the tenant if the lease doesn’t say that such charges are “rent” or “additional rent.” It doesn’t matter that Ruminations thinks that’s just plain silly. That’s the way it works even if everyone other than the court knows that such items are part of a tenant’s rent.

Nonetheless, since courts, not Ruminations, get to issue eviction documents, almost all New Jersey leases recite something like: “All monies required by this Lease to be paid by Tenant to Landlord constitute ‘Additional Rent’ and the failure to pay Additional Rent will have the same consequences as failure to pay Basic Rent.” Still, some New Jersey leases don’t say anything like that but, fortunately, almost all tenants actually pay their rent (and additional rent). So, you don’t see a lot of court decisions about the issue. [Read more…]

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How Big A Default Was It?

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It is pretty common for a lease or other agreement to grant a party (usually the tenant) a particular right or option and then make it conditional on the “entitled” party not being in default or never having been in default. We are “talking” about such provisions that look like the following sample, but we aren’t endorsing its particular formulation. That would be a whole ‘nutter discussion.

Provided that on both the day that Tenant gives its Renewal Notice and on what would have been the Expiration Date had the Lease Term not been extended by the giving of the Renewal Notice: (a) this Lease had not been previously terminated; and (b) Tenant shall not be in default beyond applicable notice and grace periods, Tenant shall have the option to …

In Merry Ole England, the King had a court system that heard and resolved all disputes. Well, not really all disputes, only those that fit into a limited number of “off-the-shelf” cognizable claims (lawyers, think: causes of action). These “pre-packaged” claims, called “writs,” were “designed to enable the English law courts to rapidly process lawsuits.” The writs were highly technical, and even though new ones were regularly issued to create new rights, the system just couldn’t keep up. If a claim couldn’t be fit into an existing “writ,” the aggrieved person was out of luck – “no writ, no remedy.” The law was the law and too bad! [Read more…]

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You Can’t Cure Them All – Sometimes It Depends On How You Write The Same Obligation

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If, three months ago, you failed to carry contractually required insurance for one week, can you cure that breach now? Over the past week, we were thinking about the curability of defaults. And, we weren’t distinguishing between those of landlords or tenants or borrowers or lenders. Our starting point was the common formulation used to define an “Event of Default,” the occurrence of which triggers “consequences.” Here’s an example of the genre: [Read more…]

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If The Lease Is Going To Wind Up This Way Anyway, Why Not Start Out This Way?

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Last week, though it might not have been clear (which would be entirely our fault), we were suggesting that the lease negotiating process would be quicker and more effective if the parties started with a form a lot closer to the finish line than has become the custom. We were surprised by how much support we received for our suggestion that the “default” approach in a lease should not call for a landlord’s approval of every detail of a tenant’s fit-up or other alteration work. Certainly, there were detractors, but we thought there would only be detractors. That turned out to be far from the case.

This got us to thinking about some other common clauses that seem to be more suited for inclusion in The Dance of the Seven Sisters (An Iroquois tale adapted by Amy Friedman). Today, our thoughts turn to the default clauses in the typical lease. [Read more…]

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More On The Exercising an Option While In Default Debate – Supplementary Thoughts

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The August 25 Ruminations posting about the right of a tenant to exercise renewal rights or non-disturbance rights even when it is in default engendered a lot of comment, both in on this Rumination site and in a number of Linked-In Group discussions. So, in a departure from past practice, I offer this “supplementary” posting with a generic form of compromise to “Get The Deal Done.” I’m not advocating one position or another with respect to any negotiation. In my role as an attorney, I represent clients, not myself. Attorneys advocate for their client’s desired outcomes. Attorneys are “who their clients are” when engaged as attorneys, though not in their public or private roles.

Ruminate over this: [Read more…]

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