Here at Shenwick & Associates, we are seeing a significant uptick in reviewing and negotiating commercial leases. For those who have never leased commercial office space in Manhattan, you need to be aware that the market and leasing terms are unlike any other commercial real estate market in America. Here are seven provisions that all commercial tenants should request when negotiating an office lease in Manhattan. Failing to consider these points can cost a tenant a significant amount of money and aggravation.1. Request free freight elevator usage for move in and move out of the space.2. Make as few alterations to the space as possible. Let the landlord do as much work as possible and request that the landlord not charge the tenant for plan review of the initial alterations for the space. Remember that the sage advice "construction is never on time or on budget" also applies to leased spaces. Tenants also should have the right to make non–structural alterations to the premises without the consent of the landlord. 3. If the tenant alters the space with the landlord's consent, the tenant shouldn't be obligated to restore the space to its original use when the space is vacated.4. Assignment\Sublet. The standard for landlord approval should be "not unreasonably withheld," and the tenant should request the automatic right to assign or sublet the space if it sells the business, goes public, transfers its assets to a related entity or merges with another entity.5. Electricity. There are three ways that landlords charge for electricity in NYC–direct meter, sub-meter and rent inclusion. The cheapest and best option for the tenant is direct meter. 6. Security deposit. The tenant should ask if a Letter of Credit can be substituted for a cash security deposit. If the tenant is required to provide a cash security deposit, the landlord should represent in the lease how many days after the lease expires the security deposit will be returned to the tenant (e.g. 20 days). If the Landlord is asking for more than two months of security, then the tenant should request that if there are no monetary defaults under the lease, the security deposit is reduced to two months of fixed rent after the first year of the lease (this is known as "burn down.")7. The tenant should request the following representations from the landlord; (a) the electrical capacity for the space; (b) that the premises do not contain asbestos or hazardous materials; and (3) that the HVAC, plumbing, bathrooms, electrical and fire panels and sprinkler be in good working order at the commencement of the lease.The above are just a few points or provisions to consider when leasing commercial space, and tenants should always retain an experienced commercial real estate attorney before entering into a commercial lease. Please contact me with any questions. Jim

Chapter 13 bankruptcy can help you in a ton of ways if you are struggling financially.  The first way that Chapter 13 can help you is to save your house.  If you have fallen behind on your mortgage payments because of the loss of job or illness or just unexpected expenses, you can put what+ Read MoreThe post How Can Chapter 13 Bankruptcy Help? appeared first on David M. Siegel.

A creditors’ meeting is required under section 341 of the Bankruptcy Code.  In simple terms, it is a meeting of the minds between the parties present at the meeting.  The parties that will be present at the meeting will be you, the debtor; the debtor’s attorney, and a representative from the trustee’s office.  If you+ Read MoreThe post Information About Debtor’s 341 Meeting of Creditors appeared first on David M. Siegel.

What’s a credit report?  Where do they came from?  What’s a “credit file disclosure?” After bankruptcy, you want to make sure your credit reports will be right.  You want to make sure your discharged debts are showing discharged in bankruptcy; and it doesn’t look like some are still out there.  Having a bankruptcy on your [...]The post The Credit Report You Need is the “Credit File Disclosure.” appeared first on Robert Weed.

Ask a businessman or attorney outside of Wisconsin about Chapter 128. They will probably shake their head or look confused. But ask Milwaukee bankruptcy attorneys or lenders in Wisconsin, and they can tell how Chapter 128 can be a blessing for debtors and lenders. Chapter 128 Process for Businesses Chapter 128 contains two processes that are only found in Wisconsin. The first creates a receivership, with a party appointed (the receiver) to manage a business, sell its assets, pay the creditors, and ultimately liquidate the business or sell it outright. Like a bankruptcy, the filing creates an estate, the business’s assets and the right to receive funds. The receiver acts like a bankruptcy trustee and distributes payments to creditors based on the law’s order of distribution. Administration costs to run the estate; federal, state and local taxes; and employee wages get a higher rank than general creditors who are unsecured and have no liens. Chapter 128 Works for Individuals Too The second process creates a receivership for individuals with incomes. This “amortization of debts” by “wage earners” works like a Chapter 13 bankruptcy, with payments made to a trustee and paid to creditors. But it is limited to 36 months (3 years) and only applies to some debts. For instance, we routinely file Chapter 128 plans to pay credit card debt, medical bills, payday loans, deficiencies for surrendered cars, and old utility bills. Our Milwaukee bankruptcy attorneys at Lake Law advise that this would not be an appropriate way to pay on a car loan or a mortgage. So why choose a Chapter 128 over a bankruptcy? Our Milwaukee bankruptcy attorneys provide some reasoning: Businesses: Creditors can apply to have a debtor company placed into the receivership involuntarily, meaning against their will. They may prefer this to a bankruptcy and get a receiver they trust to get a business under control before the principals sell assets off. Also, the process can be cheaper than a bankruptcy filing. It may be a win-win for everyone, especially if there are only a few major creditors. It provides an orderly way to wind down and save expensive costs of a lawsuit. Individuals: For individuals, Milwaukee bankruptcy attorneys look for specific people to benefit from a Chapter 128. People who have repaid family members or friends over the last year and don’t wish to see that money returned to a trustee, people who have valuable assets they don’t want to surrender to the bankruptcy trustee for sale to the creditors, and people with little or no secured debt (or secured debts completely current) and willing to pay a monthly payment to only deal with specific creditors. As an example, we recently filed a Chapter 128 for a debtor who had paid a relative back for a loan. That relative would probably have been sued by a bankruptcy trustee to get that money back. Also, she had valuable equity in a home and other possessions. She would not have been a good candidate for a Chapter 7, and would have probably paid too much in a Chapter 13 bankruptcy because of her equity. So our Milwaukee bankruptcy attorneys advised her to file a Chapter 128 and pay plan with the most important and pressing creditors. Contact a Milwaukee Bankruptcy Attorney If You Need Clarification Chapter 128s don’t work for everyone. They don’t protect the debtor from all creditors and not every creditor understands what a Chapter 128 is, since it isn’t a bankruptcy. But it is often cheaper and more orderly than a bankruptcy or any other attempt to smoothly liquidate a business. Talk to the Wisconsin attorneys at Lakelaw to see whether a Chapter 128 petition is right for you or your business.

Pick your words carefully.  Your clients will have to live with the results of your choice. Our challenge as bankruptcy lawyers is to extract, analyze, and present a huge amount of financial information. We have to get it from people who don’t really understand why we need it, nor the consequences of not getting it. We are usually working for less money than the job we do is worth, so the more time it takes, the less we make. But the fact remains, we need to get the right information from the person who has it, the debtor. So, choose your words carefully. The client with no “creditors” An entrepreneur came in to talk with me about a Chapter 7 filing.  The business was toast and he was ready to start over. At some point in the course of the business, there had been big investment and significant operations.  And the man was really anxious to file and get it over with. I asked about his creditors.  He gave me four credit cards with balances small relative to the business enterprise he described. I asked if he owed anyone else money.  No, he replied. Did he have any other bills?  No, he insisted. Was he certain?  Yes, he repeated. I was getting frustrated because the story didn’t add up.  He was getting frustrated, either because he thought I didn’t believe him or I was too dense to understand. Finally, I blurted out, “Is there anyone out there who wants to sue you?” ” Oh, yes,” came the response, “each one of my investors!” Bingo:  in the client’s mind, those investors weren’t “creditors.”  He didn’t “owe” them money.  They didn’t send him “bills”. But they sure as hell wanted a piece of his hide. My word choice had almost failed me. Beyond creditor In so many people’s mind, “creditors” are those who send you bills every month.  They are the entities to whom you acknowledge you owe money. But if you ask your client who their “creditors” are, you risk getting just a subset of those to whom they have legal exposure. If you task your client to fill in Schedule F on line, you almost assure that you get only the folks who send bills. You miss the guarantee of someone else’s debt, perhaps the payroll tax exposure, the assigned business lease, the disputed tort claim. You also risk that the client edits what you say to match his expectations.  ”Creditors”, when the bankruptcy attorney asks, means “people whose claims I expect to discharge”. So, choose your words carefully. Choose words that are expansive.  Or repetitive. Think about the ways that laymen sort and categorize things. Use words that don’t fit into little boxes in your client’s head, that invite him to skip over information outside of that box that you need. The discharge may ride on word choice. Image courtesy of Flickr and Patti Haskins.

The life of an appellate court judge is largely occupied by consideration of criminal appeals and prisoner petitions.    In FY2012, these cases made up 64% of the Fifth Circuit's docket.   (By contrast, bankruptcy appeals made up only 1.7% of cases docketed).    While they are statistically insignificant, the Fifth Circuit is having to devote an increasing amount of its time to cases involving persons unhappy about the foreclosure of their residence.   By my count, the Fifth Circuit has issued two published opinions and eighteen unpublished opinions so far during 2013.   These cases involve an increasing trend of litigants going to district court (usually a filing in state district court which is removed to U.S. District Court) to protest their foreclosures rather than going to bankruptcy court to prevent them.    Many of these cases fall into one of two categories:   either the homeowner argues that the lender lied about the effect of a request for a HAMP modification or that the foreclosing party lacked authority.    This post will examine two published cases dealing with allegations of misbehaving HAM Psters while Part 2 will examine the technical requirements for a Texas foreclosure.   (A HAM Pster is a cross between a hamster and a gangster.    While overworked, underpaid mortgage servicing employees often scurry about like hamsters trying to cope with overwhelming amounts of paperwork that they never manage to fully process, they often appear like gangsters to beleaguered  homeowners who are promised relief only to find that the HAMP process diverted their attention from the inevitably advancing foreclosure).    James and Allene Miller and Ashley Martins were two sets of homeowners who found themselves dealing with BAC Home Loans Servicing, LP.    In an opinion authored by Chief Judge Carl Stewart, the Millers emerged with part of their lawsuit intact.   Miller v. BAC Home Loans Servicing, LP, No. 12-41273 (5th Cir. 8/13/13), which can be found here.   Mr. Martins was not so fortunate.   Martins v. BAC Home Loan Servicing, LP, No. 12-20559 (5th Cir. 6/26/13), which can be found here.   The Martins case will be discussed further in Part 2.What HappenedThe Miller court succinctly summarized a story being heard often by attorneys:The Millers allege that between March 10, 2010 and May 3, 2010, they called BAC at least three times, and that each call resulted in an unfulfilled promise from a BAC call center representative to send them a loan modification application. Further, the Millers allege that at least one of the call center representatives assured them that there would be no need to make a premodification payment to cure the default.On May 3, 2010, the Millers received a letter from BAC’s foreclosure law firm stating that a foreclosure sale of the property would occur on June 1, 2010. The Millers allege that sometime between May 3, 2010, and May 18, 2010, a BAC foreclosure specialist named Victoria Masters informed them that she would make sure a loan modification application arrived, and that the foreclosure sale would be postponed while they attempted to modify their loan. The loan modification application arrived on May 18, 2010. The Millers returned their completed application by mail on May 28, 2010. That same day, they were contacted by an agent of BAC who informed them that the foreclosure auction would proceed on June 1, 2010. On May 31, 2010, the Millers again spoke with Ms. Masters, the BAC foreclosure specialist. She informed them that no postponement had yet been approved, but that she would attempt to obtain such approval from Fannie Mae. Later that day, the Millers allege Ms. Masters represented to them that she had obtained approval from Fannie Mae for foreclosure postponement pending disposition of their loan modification application.Notwithstanding this alleged representation of postponement, the foreclosure sale proceeded as scheduled on June 1, 2010.Miller, pp. 2-3.    The Martins case also involved an allegation that a representative of BAC "orally promised that his house would not be foreclosed if he submitted an application through the Home Affordable Modification Program (known as HAMP), which he did."    Martins, p. 9. In both instances, the home was lost to foreclosure and the homeowner brought suit.   In both cases, the state court suit was removed to U.S. District Court which granted a motion to dismiss for failure to state a cause of action in the former case and a motion for summary judgment in the latter. The Homeowners' Legal Theories   The homeowners attacked the foreclosing parties under a number of state and federal theories, including the Fair Debt Collection Practices Act (FDCPA) , the Texas Debt Collection Act (TDCA), the Texas Deceptive Trade Practices Act (DTPA) and the Texas common law theories of promissory estoppel and wrongful foreclosure.    In these particular cases, the TDCA was the only theory to survive initial scrutiny.The FDCPA vs. the TDCA  This case illustrates an important distinction between the state and federal debt collection statutes.   Both the FDCPA and the TDCA require that a person be a "debt collector" in order to be subject to its requirements.   A creditor is not a debt collector under FDCPA unless it acquired the debt after it was in default.   On the other hand, a creditor is a "debt collector" but is not a "third party debt collector" under the Texas statute.   The U.S. Magistrate recommended that both claims be dismissed on the basis that BAC did not fall within the definition of a debt collector.   While there was a question about whether the loan was in default when BAC took over the servicing, the debtor did not appeal the dismissal of its FDCPA claims.   On the other hand, the Fifth Circuit found that the TDCA did apply and that this claim was wrongly dismissed.   The Court stated:We reject this conclusion, which erroneously affords the lone third-party debt collectors reference talismanic significance despite the fact that the FDCPA is a “distinguishable, federal statute.” (citation omitted). The TDCA’s definition of debt collector is broader than the FDCPA’s definition. (citation omitted). Unlike the TDCA, the FDCPA expressly excludes from its definition of debt collector: “any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . concerns a debt which was not in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii).As noted above, we held in Perry that this FDCPA exclusion encompasses mortgage servicing companies and debt assignees “as long as the [mortgage] was not in default at the time it was assigned” by the originator. (citation omitted). However, we also held in Perry that servicers and assignees are debt collectors, and therefore are covered, under the TDCA. See id. (citation omitted). In light of Perry, we conclude that BAC qualifies as a debt collector under the broader TDCA, irrespective of whether the Millers’ mortgage was already in default at the time of its assignment. Miller, p. 7.   The Miller sued under four provisions of the TDCA:   misrepresenting the character, extent or amount of a consumer debt or its status in a judicial or governmental proceeding; falsely representing the status or nature of the services provided by the debt collector; misrepresenting that the debt was being collected by an independent, bona fide third party; and "using any other false representation or deceptive means to collect a debt."    The Court found that the debtors' allegation that the loan servicer promised to send the Millers a loan modification application and to delay foreclosure stated a cause of action under the TDCA provision relating to misrepresenting the services provided by a debt collector.    However, it found that the debtors' allegations did not state a claim under the other subsections.      The Court found that BAC had not misrepresented the character, extent or amount of the debt because the Millers knew that they owed the debt, knew what they owed and knew that they had defaulted and that BAC said nothing to lead them to think differently.   The Court found that because the debtors had not "alleged any facts stating that BAC was a subterfuge organization for Bank of America" that they had not misrepresented that the debt was being collected by a bona fide third party.    Finally, the Court found that the debtors had not alleged any specific deceptive acts or practices.   From where I sit, BAC engaged in a false and deceptive practice when it told the borrowers that it would not foreclose while it was considering their HAMP application.    However, the Court did not see it this way. DTPA The Court affirmed dismissal of the Millers' DTPA cause of action on the basis that the DTPA applies to a consumer.   A consumer is a person who acquires or seeks to acquire goods or services.   A straight loan of money without more is neither a good nor a service.   A loan to acquire goods or services can make someone a consumer but only if the claim arises from the purchase of the goods or services.   Because the Millers' claim arose from the attempted modification of the loan rather than the purchase of the home, the court found that they did not meet the definition of a consumer and did not state a cause of action under the DTPA. Promissory Estoppel  Both sets of plaintiffs alleged that the doctrine of promissory estoppel precluded BAC from honoring its alleged promise not to foreclose while it was considering the HAMP modification.    However, the specifics of the Texas doctrine prevented them from gaining traction here.   In Moore Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934 (Tex. 1972), the Texas Supreme Court held that a promise to sign a document that would comply with the statute of frauds would preclude the promising party from raising the statute of frauds.    Under Texas law, an agreement to make a loan for more than $50,000 as well as an agreement relating to sale of real estate must be in writing to be enforceable. As a result, the Court found that BAC's promise not to foreclose was unenforceable unless it was contained in a signed writing.  The Plaintiffs alleged that BAC agreed not to foreclose while it was considering the HAMP modification request.   However, the Plaintiffs did not allege that BAC said that it would sign a document in writing confirming this.   As a result, the doctrine of promissory estoppel did not apply. Wrongful Foreclosure Both sets of plaintiffs also unsuccessfully alleged wrongful foreclosure.   Under Texas law, there are three requirements for wrongful foreclosure:   (1) a defect in the foreclosure sale proceedings; (2) a grossly inadequate sales price; and (3) a causal connection between the two.   Mr. Martins alleged that failure to receive notice of the sale was a defect in the sales process.   However, the Court found that the notice need merely be sent, not received.   Additionally, it found that foreclosure for 92% of appraised value was not "grossly inadequate."   While the lower court accepted that the Millers' HAMP misrepresentation claims constituted a defect in the foreclosure sale process, it found that they had not attempted to satisfy the second and third elements of the test.   Instead, the Millers argued that they did not have to meet the second and third requirements where they sought damages but did not seek to set the foreclosure aside.   The Court disagreed.     What Does This Mean For Homeowners Chewed Up by HAM Psters? In a perfect world (or even a pretty good one), lenders would realize that these cases are not an aberration and take steps to make the program work better.   After all, people who default upon their mortgages are not mere deadbeats disconnected from the rest of society.   They have friends and relatives who might be future customers and might be turned off by stories of homes lost due to duplicity concerning the benefits of the HAMP program.   These same people might also have long memories the next time that Wall Street turns to Washington for a bailout.    Nevertheless, until the home mortgage crisis resolves itself, the Miller and Martins cases (and the eighteen unreported cases that I did not discuss) demonstrate that suing a mortgagor/servicer, even one that makes misrepresentations, is a daunting task.    If a loan servicer promises to forebear on a pending foreclosure based on a HAMP request, it is a good idea to have a bankruptcy lawyer waiting in the wings.  However, if that strategy doesn't work or isn't available, the cases discussed here provide a few litigation ideas.   First, if you have the luxury of talking to your client at the time that the loan servicer is promising that HAMP will make everything better, tell your client to ask for the agreement in writing.   They won't put it in writing, but they might say they would.   Offering to put the agreement not to foreclose in a signed letter would be enough to bring the case within promissory estoppel.  Second, be sure to remember the TDCA when pleading causes of action.   While it is not as sexy as the FDCPA, it was the only theory that worked in these cases.   Third, remember that there are three elements to wrongful foreclosure and make sure that you allege each of them (or perhaps omit the claim in favor of a stronger one).   Finally, call your Congressman and tell him that HAMP doesn't work and is being abused.     

The Scenario You’ve been struggling with the mortgage on your commercial real estate or industrial building. Now the bank has started a foreclosure in Illinois. You’re in a state of shock as it is. Now the bank has filed an emergency motion in court to appoint a receiver. What does this mean? What can you do about it? When you signed your mortgage on an apartment building, commercial or industrial real estate in Illinois, you also agreed that if you didn’t pay the bank what you were supposed to when due, the bank could start mortgage foreclosure proceedings. You also agreed that the bank could ask the court to appoint a receiver. In Illinois, the lender’s right to a receiver is just about absolute. The only defense you might have is that you are not in default and the lender doesn’t really have the right to foreclose. But the lender will get the benefit of the doubt. It is a good idea to consult with a Chicago foreclosure attorney to discuss your next move. So who is a receiver? A receiver must be qualified to take possession and to operate the real estate. Typically the receiver is a real estate professional with a track record as a property manager for the type of real estate he is taking over. A receiver of an apartment building is typically a property manager for apartments. A receiver for a shopping center might be a shopping center developer. A receiver for industrial property might be an industrial property expert. What can a receiver do? What does a receivership mean to you? A receiver must post a bond with the court. That’s because the receiver is acting for the benefit of all parties involved in the foreclosure, not just the bank. The receiver acts as an officer of the court. He must be honest. He must account for all rents collected and all expenditures made. So the bond protects all parties against any dishonesty by the receiver. The receiver can’t sell the property – that would be a short-cut to the mortgage foreclosure process, and if any actions to sell the property arise, it is imperative to contact a Chicago foreclosure attorney immediately. However, the receiver can collect rents, enter into leases, contract for the maintenance and repair of the real estate. A typical order appointing a receiver will specify exactly what the receiver can do without court authority. If the receiver wants to do something which is not within the authority granted in the order appointing him as a receiver, he will ask the court’s permission. A receiver will frequently employ an attorney to represent him in matters which come before the court. Who pays the receiver? The lender pays the receiver initially. However, all expenses for the receivership are added to the loan and become the borrower’s responsibility if the loan is “with recourse.” Even if the loan is “without recourse”, the expenses of the receivership are added to the loan and become additional indebtedness against the real estate. Can a Chicago Foreclosure Attorney Help Me? The bank wants a receiver because it does not trust the borrower to take care of the property itself. If you file a bankruptcy case in chapter 11, you can try to get the property back from the receiver. However, our Chicago foreclosure attorneys warn you that the lender and the receiver have the right to keep the property in the hands of the receiver even if you filed a chapter 11. So if you are worried about keeping the property out of the hands of a receiver and think you have a reasonable possibility of success in chapter 11, file your bankruptcy case before the receiver is appointed. For more information about receiverships, foreclosures and chapter 11 bankruptcy, including real estate reorganization, single asset real estate and real estate bankruptcy contact the Chicago foreclosure attorneys David Leibowitz or Jonathan Brand at Lakelaw.

An important part of making your decision to file bankruptcy is deciding which type of bankruptcy is right for you. For the most part you will be making the decision to file chapter 7 or chapter 13. Although it is possible to “convert” or switch from chapter 7 to chapter 13 or vice versa, it [...]

An important part of making your decision to file bankruptcy is deciding which type of bankruptcy is right for you. For the most part you will be making the decision to file chapter 7 or chapter 13. Although it is possible to “convert” or switch from chapter 7 to chapter 13 or vice versa, it […]The post Choosing the Right Type of Bankruptcy appeared first on Tucson Bankruptcy Attorneys Trezza & Associates.