Notwithstanding Anything To The Contrary Contained Herein

Print

When a carpenter or other craftsperson needs to make “that final adjustment,” she or he reaches into the toolbox and out may come a shim. We’ve all seen shims used, but not everyone knows they have a name. Those wedges, washers, and thin strips of material used to align parts or make them fit are called “shims.” We who draft agreements of every type also use shims. Reluctant as Ruminations is to use the word “all” and mean “all,” today’s use seems accurate. Who among us hasn’t slipped in at least one “notwithstanding anything to the contrary” into every agreement longer than several pages? That’s using a shim because it makes the parts of the agreement “fit” together.

Basically, this shim is used in two circumstances. The first is where, after reading what we’ve written, we realize that our crafted provision isn’t exactly right. We realize that there are one or more circumstances that don’t fit what we’ve written. We realize that what we’ve written needs adjustment. We’ve got to carve out some exceptions. So, instead of rewriting the provisions to make them say what they should say, we append a list of those things we realize don’t fit – but not of those things we didn’t realize don’t fit. [Read more…]

Print

Insurance Question: Who Are You And What Is Yours?

Print

When I speak to “you,” you know who you are. That seems simple enough. But, you might not be entirely correct. Try the word in this sentence: “After a while, you get used to it.”

Who’s “you”? In the sense of “After a while, you get used to it,” “you” means any person in general.

Well, in the most commonly used form of commercial liability insurance, the one promulgated by the Insurance Services Office, Inc. (ISO), knowing who “you” is turns out to be pretty important. The policy form defines “the insured” and that includes the policyholder and a specific list of persons and entities related to the policyholder. The coverage, however, applies only to certain acts or omissions “you” might have done or not done and to certain things that are “yours.” Is it possible that “you” and “your” refer to “any person in general”? [Of course not.] [Read more…]

Print

Let’s Learn Our Trade – Warning: A Rant

Print

Imagine you are the computer user of the century. There is nothing about using a computer you don’t know. [So you think.] Your friends call you day and night asking, “How do I do this; how do I do that?” Coding? – No problem. Formatting to produce a publishable book using Microsoft Word? – No problem. Manipulating data to prove or disprove human involvement in climate change, if there is such a thing? – No problem.

Then, one day, boxes from all over the world show up at your door. There are no notes, no letters, and no instructions to tell you what you’ve got. But, one of the boxes has something that looks very much like a computer case. With that clue and looking at the generality of some of the other things that were in the other boxes, your best guess, a good one, is that these are the parts for a computer. You’ve looked inside a lot of computers before. After all, your friends have had you play with some connectors; you’ve replaced a hard drive or two, even a solid state one. But, can you assemble the parts to make a working computer? Do you really, really understand how to assemble a computer? Will your proficiency in using a computer, even playing with its cables and poking around inside the case be enough for you to put all of those parts together? [Read more…]

Print

What’s In A Name: Gross And Net Leases

Print

Gross vs. Net Leases. Rent is the dominant continuing connection between a landlord and a tenant.  Almost always, all expenses arising out of real estate development are paid by tenants – taxes, insurance, maintenance and other operating costs, environmental costs, and the rest.  These costs may already be included in the initial rent.  In such a case, unless the lease is for a very short term, the tenant will thereafter separately pay the amounts by which taxes, insurance premium, and maintenance costs increase over the “base year” cost of those items.  The base year is almost always the first year of the lease term.  So, it doesn’t matter if the initial rent has already taken into account the then current taxes, insurance premiums, and maintenance costs or whether it doesn’t.  When they are included, the rent is higher and the tenant only pays subsequent cost increases – that’s called a “gross” rent lease.  When the rent doesn’t included these initial “pass-through” expenses, the tenant will pay, as “additional rent,” its entire share of the cost for taxes, insurance, and maintenance over and above the seemingly lower rent.  Leases employing this latter approach are frequently referred to as some form of “net” lease – “triple net” (NNN), “absolute net” or “net.”  Unfortunately for the inexperienced practitioner, those terms (and similar ones like them) mean little because, from their “nickname” alone, they cannot tell who is responsible for paying the costs to fix the building’s structure or flooring or items of similar character.  As a result, it is imperative that anyone preparing a lease find out “who pays for what.” [Read more…]

Print

Old And Cold – Audit Rights And Claim Cut-Offs

Print

Is there a time to let old things die? We are qualified to answer that question when it comes to matters emotional, but when it comes to “business,” Ruminations only has some thoughts. Today, we’ll discuss chasing people who owe money but, because money isn’t everything, we’ll start with a little digression intended to make a point.

How long should the government (that’s us, by the way) be permitted to chase a criminal? Many (but not all) states have laws that answer that question. Here’s New York’s answer:

6 years for felonies punishable by 8 or more years in prison

3 years for felonies punishable by less than 8 years in prison

No limit for murder or other capital offenses.

Three years for misdemeanors committed against children 13 and younger.

One year for other misdemeanors.

Though the time limit to file civil claims also varies by state and by the type of claim being made, they also butt up against time limits. Typically, general contract claims must be made within 6 years after the claim can first be made. Claims arising out of the sale of goods have a 4 year limit. Tort claims (and automobile accidents fall in that category) typically have a two or three year limit. Some defamation claims have an even shorter limit – only one year. Unsurprisingly, claims against government entities often have shorter time limits. After all, “Whoever has the gold makes the rules.” [Read more…]

Print

Neither Landlords Nor Tenants Are Elephants

Print

It’s curious that landlords and tenants carefully craft their respective form leases, but often forget to include provisions that are included in almost every executed lease – at least, in almost every lease that the “other side” actually reviews. Yes, there are leases where the “forgotten” provisions are missing. Those are the ones that haven’t been reviewed by the other side or have only gotten a slap dash review. In those cases, you can’t expect that the “other side” will abide by the lease’s provisions. Here’s an unconditional statement: if the other side signs a lease as presented, you don’t want to do the deal.

Ruminations smiles, perhaps grins, as this is being written. Why do landlord-form leases forget to include provisions such as: (a) the landlord will carry property and liability insurance; (b) the landlord will pay the real estate taxes; (c) the landlord will indemnify the tenant for bad, damage-causing things done by the landlord; (d) the landlord will actually take care of the property (common areas) and the building; (e) the landlord will also waive claims for damage to its property and get a waiver of subrogation provision in its property insurance policy; (f) the tenant can audit the pass-through expenses such as common area costs and taxes; (g) the landlord will give the tenant estoppel certificates when requested; (h) the rules and regulations will be uniformly enforced and won’t be changed in a way that harms the tenant; (i) the tenant can use self-help after notice and a reasonable wait; (j) consents won’t be unreasonably withheld, delayed or conditioned; (k) the landlord will comply with laws, environmental, and otherwise; (l) that the property is free of unlawfully present hazardous substances; (m) the tenant is also entitled to get attorneys’ fees; (n) the security deposit will be returned within a given time after the lease term is over and successor landlords will be responsible for the security deposit; (o) if the building is seriously damaged, the tenant also can terminate the lease; and (p) that there are no other leases or agreements that would impair the tenant’s operation of its designated business. [Read more…]

Print

We Reap What We Sow – Let’s Read What We Write

Print

We’re sure that, at one time, there were no written leases. It may have been that no one could conceive that putting the arrangement in writing would be desirable. More likely, it was that writing had not yet been invented. Jump ahead – handwritten, typed, and pre-printed leases came into being. And, then, the greatest invention of all – the word-processed form.

We imagine that when you wrote out a lease by hand, you already had negotiated the “deal” and all you were doing was to write it down. Our imagination isn’t good enough to have any sense as to how that felt, but it seems that some advantages of that process have been lost. Today, we’ll only touch on one of those – the scribe (or the one dictating the text) had to know the whole deal and then, to write it out, had to hear or read the deal in its entirety. The typed lease was probably a step away because, and we are guessing, the draftsperson might mark changes on prior, similar leases so as to reflect the new “deal.” Yet, there was no “search” or “search and replace” function – the editor-negotiator had to read the lease or, at least goodly parts of the lease. [Read more…]

Print

As Set Forth On Exhibit A (Not Actually) Attached Hereto

Print

As we were reading a very recent decision issued by the Supreme Court of Alabama, we once again were preparing to write how wasteful it was for the parties to litigate the issues raised. This urge happens often enough that Ruminations has considered preparing “boilerplate” language to be inserted at the end of many blog postings. Then we got to the concurring opinion. It could apply to many of the “manufactured” disputes created by one party or the other and supported by their advocates. Though the following words by that concurring justice give away part of the story we are going to tell, its content and tone resonate with Ruminations. We suggest that we all step back each time issues like these arise and reconsider our thoughts about litigating them.

[Read more…]

Print