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Constitutional Law: Finney Law Firm joins in filing of Amicus Brief before US Supreme Court in Janus v. AFSCME

Author By Christopher P. FinneyPosted on

Today, the Finney Law Firm and attorney Christopher P. Finney  filed an Amicus Brief with the United States Supreme Court in the case of case of Janus v. AFSCME.  The brief was co-authored with attorney Maurice Thompson of the 1851 Center for Constitutional Law, which was also the named client for whom the brief was filed.

The question presented before the Court in Janus is defined in the briefs as:

Should Abood v. Detroit Board of Education, 431 U.S. 209 (1977) be overruled and public sector agency fee arrangements declared unconstitutional under the First Amendment.

From our perspective, this is one of the most important cases before the Court this term.  Should the Plaintiff Mark Janus be successful the case will outlaw mandatory agency fees paid to public employee unions as unconstitutional “compelled speech” or a compelled subsidy of political speech.  The benefits from a Janus victory will impact hundreds of thousands of public employees nationally.

You may read the 1851 Center brief here.

 

Ohio Personal Injury Law: Things to Consider If You Think You May Have a Personal Injury or Medical Malpractice Claim

Author By Casey A. JonesPosted on
Attorney Casey A. Taylor

Consider this scenario:

You were recently involved in a car accident that was not your fault. You were injured and have, therefore, incurred some medical expenses and had to take some time off of work, resulting in lost wages. Your injuries have hindered you from engaging in your normal day-to-day activities. You’ve started to receive medical/ambulance bills, letters from insurance companies, etc.

Or perhaps you think you may have a claim for medical or dental malpractice…

What do you do next? How do you go about getting compensated for your injuries?

Unfortunately, these situations are all too common. The underlying incident itself is a continuous source of stress, and trying to navigate the process of submitting an insurance claim or filing a lawsuit becomes even more overwhelming. Most people, understandably, don’t know the statute of limitations on a personal injury or medical/dental malpractice claim, nor do they understand how subrogation interests work or what “subrogation” even means (LINK TO SUBROGATION BLOG ENTRY). This is where having an experienced and knowledgeable attorney to represent your interests and help you navigate these processes can truly be invaluable.

Statute of Limitations

First, the law requires you to bring any claims you have within a certain period of time, referred to as a “statute of limitations.” For personal injury and medical/dental malpractice claims, the statutes of limitations are relatively short. If you aren’t aware of this, it is easy to miss out on your opportunity to bring your claims. In Ohio, you have two years for personal injury and only one year for medical/dental malpractice. O.R.C. 2305.10(A); O.R.C. 2305.113(A).

When Time Starts to Accrue and the Discovery Rule

For personal injury claims, such as a car accident, the clock generally starts to run the moment that the incident occurs.  However, for medical/dental malpractice, the law recognizes a “discovery rule.”  The discovery rule operates to toll the statute of limitations so that it does not begin to run until you “discover” the negligence that gives rise to the claim. See Oliver v. Kaiser Cmty. Health Found., 5 Ohio St. 3d 111, 113 (1983). The discovery rule is justified in these types of cases because “[t]hat [the plaintiff] has been injured in fact may be unknown or unknowable until the injury manifests itself; and the facts about causation may be in the control of the putative defendant, unavailable to the plaintiff or at least very difficult to obtain.” Rotella v. Wood, 528 U.S. 549, 556 (2000). In simpler terms, you may not even know something is wrong (for example, that your doctor missed a diagnosis or left a surgical instrument inside of you during an operation) until months or even years later – the law does not hold that time during which you didn’t know anything was wrong against you.  However, the discovery rule does not extend to “a plaintiff’s ignorance of his legal rights,” but only “his ignorance of the fact of his injury or its cause.” Id. at 555-56. Accordingly, courts will not recognize “I didn’t know about the statute of limitations” as an excuse for failing to bring your claim(s) within that allotted time period.

Okay, so you’re still within the statute of limitations… now what?

Creating Value for Our Personal Injury and Medical/Dental Malpractice Clients

Depending on the extent of your injuries, the amount of damages, whether liability is at issue, the current level of evidentiary support, etc., our firm often recommends varying and dynamic approaches to these situations. In some cases, a demand letter sent to the negligent party and/or its insurance provider is often the best first route. In a demand letter, we outline your claims, your evidence, your damages, etc., and offer to release that party from the viable claims you have against it in exchange for a certain amount (which we can help you reasonably determine based on somewhat universal methodology often used by legal professionals and insurance companies alike). However, in some cases, a demand letter is not feasible or would likely be futile. In this instance, or in the event that the at-fault party fails to respond to the demand letter (which sometimes happens), we may suggest moving forward with litigation. We can also help you determine whether your claims will require the testimony of an expert witness (some cases require expert physician testimony, an accident reconstructionist, an economist, etc. to prove your claims and/or damages), as well as discuss other strategic considerations. In any event, we are able to shift the burden and stress off of you (the client) and assume that burden for you.

We take over the preliminary steps, such as contacting insurance companies, requesting and reviewing medical records and billing statements, etc.  If we are able to successfully negotiate a settlement on your behalf, we can also handle drafting or reviewing settlement offers/releases and take care of paying any subrogation liens you may have against you.  Perhaps most significantly, we are often able to do so on a contingency basis (meaning that you pay little to nothing out of pocket – our legal fees come out of the amount we recover on your behalf and only in the event that we are successful in getting you something). If you have been involved in an accident or think you may have a claim similar to those discussed in this entry, please do not hesitate to reach out to us.

Ohio Real Estate Law: Triggering the Duty to Defend on a General Warranty Deed Claim

Author By Casey A. JonesPosted on
Attorney Casey A. Taylor

 

We have previously written on the different types of deeds (Real Estate 101: Different Types of Deeds in Ohio, Kentucky, and Indiana), as well as how costly it can be to breach your covenants under a general warranty deed (Real Estate 101: Breach of General Warranty Covenants Can Be Costly Mistake).  Perhaps the most common breach occurs when you transfer property that is encumbered in some way, such as by an easement or lien, and that easement or lien is not excepted from the deed. However, one of the less discussed components of a general warranty deed is the covenant to defend. Whether you are the grantor or grantee with respect to a general warranty deed, you should be aware of when this duty arises, and what it means, in order to protect yourself, your rights, and your checkbook.

Statutory duty to defend in “short form” general warranty deeds

R.C. 5302.06 states:

In a conveyance of real estate, or any interest therein, the words “general warranty covenants” have the full force, meaning, and effect of the following words: “The grantor covenants with the grantee, his heirs, assigns, and successors, that he is lawfully seized in fee simple of the granted premises; that they are free from all encumbrances; that he has good right to sell and convey the same, and that he does warrant and will defend the same to the grantee and his heirs, assigns, and successors, forever, against the lawful claims and demands of all persons.“

(Emphasis added). This means that a grantor who conveys property under a general warranty deed promises to defend the grantee and the grantee’s title against all “lawful claims and demands” of others.

What are “lawful claims and demands”?

Unfortunately, Ohio law does not provide much guidance as to what “lawful claims and demands” encompasses – this is not a defined term under the statute, nor have the courts ventured to define it in this context. A lawsuit is generally defined to be “the lawful demand of one’s right.” Ludlow’s Heirs v. Culbertson Park, 4 OHIO 5 (1829).

Additionally, in various contexts, Ohio courts have provided the following guidance as to each of the terms separately:

  • State ex rel. Grant v. Brown, 39 Ohio St. 2d 112, 116 (1974) (“To say of an act that it is ‘lawful’ implies that it is authorized, sanctioned, or at any rate not forbidden, by law.”);
  • La Fon v. City Nat’l Bank & Trust Co., 3 Ohio App. 3d 221, 223 (10th Dist. 1981) (adopting the definition of “claim” as “to assert . . . to state; to urge; to insist . . . a right or title.”);
  • Crozier, v. First National Bank of Akron, 9th Dist. Summit No. 10140, 1981 Ohio App. LEXIS 13717, *6-7 (defining “claim” as “a ‘broad comprehensive word’ that includes ‘an assertion’ and ‘a cause of suit or cause of action.’”); and
  • Eighth Floor Promotions v. Cincinnati Ins. Cos., 3d Dist. Mercer No. 10-15-19, 2016-Ohio-7259, ¶ 26 (“‘Demand’ is defined as ‘the assertion of a legal right or procedural right.”).

Thus, read collectively, a “lawful claim or demand” can be defined as “an authorized or unforbidden assertion of a right.”

Do we first have to ascertain is a “claim or demand” is lawful before duty to defend arises?

However, courts have found that the term “lawful” does not require the “claim or demand” to be meritorious before the duty to defend is triggered since this would essentially render the covenant meaningless. See Sediqe v. I Make the Weather Prods., 6th Dist. Lucas No. L-15-1250, 2016-Ohio-4902, ¶ 29 (holding that the claim or demand as it relates to the underlying duty, e.g., that the property is not free from encumbrances as warranted, need not be proven or successful before the duty arises, as “such a rule would render the duty to defend ineffective and eliminate the grantor’s right to control the defense against the claim.”). Thus, for example, a party claiming to have a lien on conveyed property need not prove the validity of their lien before the grantor’s duty to defend the grantee against such claim arises. The idea is that the grantor will step in before it gets to that point in order to defend the grantee’s title against such claims.

Does a suit have to be filed to trigger a duty to defend?

Indeed, the party asserting the claim likely isn’t even required to file suit to trigger the grantor and grantee’s respective rights and obligations under the general warranty deed. As discussed (Here), the Court in Hollon v. Abner, 1st Dist. Hamilton No. C960182, 1997 Ohio App. LEXIS 3814 (Aug. 29, 1997) did not require that the party asserting the adverse, “lawful claim or demand” bring suit before the grantor’s duties under the general warranty deed arose. In fact, the Court awarded the grantee attorney’s fees as damages in a suit initiated by the grantee because the grantee would not have incurred those fees had the grantor lived up to his obligations under the general warranty deed.

Conclusion

If you are a grantee under a general warranty deed and someone asserts a claim against your property (even if they haven’t yet filed suit), the first step to getting your grantor to defend your title as warranted is by informing the grantor that someone is asserting such a claim. As a grantor, if you receive notice that someone is asserting a claim against property that you conveyed by general warranty deed, proven or not, you will want to step up sooner rather than later. A delay in honoring your covenant to defend likely only exacerbates your grantee’s attorney’s fees (especially if your grantee has to file suit to defend his or her own title), for which you will ultimately be responsible.

Finney Law Firm named in 2018 US News – Best Lawyers® “Best Law Firms” rankings

Author By Christopher P. FinneyPosted on

We are pleased to announce that Finney Law Firm has been named in US News & World Report’s – Best Lawyers®“Best Law Firms” rankings for 2018.

The U.S. News – Best Lawyers “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process. Learn more about the methodology used >

Finney Law Firm has worked hard to assemble a team of quality attorneys in diverse practice areas, and it is gratifying to have that team publicly recognized for its quality and depth.

Our practice areas include:

Please let us know how our team of quality attorneys can assist with your legal needs.

A First Amendment double header at the US Supreme Court, Masterpiece Cakeshop and Janus

Author By Christopher P. FinneyPosted on

The United States Supreme Court almost always has a case holding significant drama and legal change on its docket each term.  The two blockbusters for the 2017-2018 term, from our perspective, are Masterpiece CakeShop and Janus.  Both deal with important public policy and First Amendment issues.

Let me explain.

Masterpiece Cakeshop

In the first major decision addressing gay and lesbian rights since Ogerbefell v. Hodges was decided in 2015 legalizing same-sex marriage in America, the United States Supreme Court tomorrow considers at oral argument a Colorado statute that makes it a crime to refuse to provide services on an equal basis to gays and lesbians in Masterpiece Cakeshop v. Colorado Civil Rights Commission.  The issue presented to the Court is:

Whether applying Colorado’s public accommodations law to compel the petitioner to create expression that violates his sincerely held religious beliefs about marriage violates the free speech or free exercise clauses of the First Amendment.

Some key links for your reading pleasure:

Argument preview: Wedding Cakes v. Religious beliefs?

Symposium: Shotgun wedding? Forcing religious vendors to participate in wedding ceremonies

Brief of Petitioners Masterpiece Cakeshop Lts., et al.

Brief of respondent Colorado Civil Rights Commission.

Janus

The second major case before the Court, as our firm sees it, is Janus v. AFSCME, which addresses the question of whether government employees can be forced to pay dues to unions against their volition.  The issue as framed before the Court:

Whether Abood v. Detroit Board of Education should be overruled and public-sector “agency shop” arrangements invalidated under the First Amendment.

The Finney law Firm has been retained to write and file an Amicus Brief in the Janus case, which is due shortly.

Some key links for your reading pleasure:

Brief of petitioner Mark Janus

Will the third time be the charm for challenge to public-sector union fees?

______________________________

Both cases promise to have far-reaching impacts on public life in this country, especially Janus which fundamentally will change public union collective bargaining.

Stay tuned for decisions on these and other cases by early July.

What should an employer do if an employee shows signs of possible mental illness?

Author By Stephen E. ImmPosted on
A previously good employee is starting to behave erratically or strangely. It is starting to disrupt the workplace. The change is such that it appears it may be tied to mental health problems. How should a smart employer handle this?

The Americans with Disabilities Act (“ADA”) bars employers with 15 workers or more from discriminating against workers when an impairment “substantially limits” their ability to engage in “one or more major life activities.” Many state laws include similar prohibitions. A disability or impairment covered by these laws can be either physical or mental. So the employer in this scenario may be dealing with a “disabled” employee. And the law applies whether an employer knows a worker has a mental impairment, or merely perceives one.

Many employers’ first instinct when they think behavior may be tied to a mental impairment — a worker starts being confrontational or is “acting out” in ways he never did before, for example — is to ask what it can do to help. This is not the best approach. The employer should simply document and discipline the inappropriate behavior without speculating as to its causes. Focus on the behavior– not where it might be coming from.

The ADA does allow employers to request that workers submit to a “fitness-for-duty” exam under certain circumstances. If it has a reasonable belief, based on objective evidence, that a worker has a condition that impairs his ability to perform essential job functions, or that causes him to pose a “direct threat” to health or safety, it can require such an exam. This exam cannot be aimed at learning whether the worker is disabled, but a doctor can ask disability-related questions if they are “job-related and consistent with business necessity.”

Documentation is critical. If a company has solid, documented evidence that an employee poses a threat, or can’t perform essential parts of the job, it can require him to submit to an examination as a condition of continued employment.

In addition to the ADA’s bar on discrimination, the law allows protected workers to request a “reasonable accommodation” needed to perform their job, so long as it doesn’t pose an “undue hardship” on the employer. What is “reasonable,” and what constitutes “undue,” will vary from case to case, so employers should approach the situation practically, and should get legal advice. An employer doesn’t have to give whatever accommodation a worker requests, but it does have to try in good faith to find something that works for both it and the employee.

Litigation is a risk employers can’t totally eliminate when the ADA is involved. But by documenting performance and disciplinary issues without assuming that mental or physical illness is the cause, and by offering reasonable accommodations where appropriate, an employer can put itself in a strong position to successfully defend itself.

 

Beware! Kentucky’s Rules on the Unauthorized Practice of Law are Strict

Author By Todd McMurtryPosted on

Written By: Todd V. McMurtry

As a Kentucky lawyer, who lives on the Ohio border, I have seen Ohio lawyers, not licensed to practice law in Kentucky, “cross the river” to handle Kentucky cases. I have always cautioned these lawyers to tread carefully as Kentucky’s rules that govern the practice of law are stricter than one might expect. For example, may an attorney not licensed in Kentucky undertake a preliminary investigation of a case over which the courts of the Commonwealth will have jurisdiction? The short answer, yes.  But, an out-of-state attorney may not offer legal advice on the Kentucky matter until that attorney has affiliated with local counsel. Then, once the case is filed, the out-of-state attorney must seek pro hac vice admission and pay the one-time case fee pursuant to Supreme Court Rule (SCR) 3.030(2). While this is a strict interpretation of Kentucky’s Rules of the Supreme Court, it is based upon their plain language. As well, when compared to the American Bar Association’s Model Rules, the Kentucky rules do not provide a specific safe harbor for an attorney, not licensed in Kentucky, to undertake a preliminary investigation before associating with local counsel.

SCR 3.020 Practice of law defined describes the practice of law as “any service rendered involving legal knowledge or legal advice, whether representation, counsel or advocacy in or out of court, rendered in respect to the rights, duties, obligations, liabilities, or business relations of one requiring the services.”  SCR 3.130 (5.5) Unauthorized practice of law; multijurisdictional practice of law governs when and how a lawyer not licensed to practice law in the Commonwealth may do so. Section (a) of the rule states, “a lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction . . .”  Section (c) states, “A lawyer admitted in another United States jurisdiction . . . may provide legal services on a temporary basis in this jurisdiction if such services: (1) comply with SCR 3.030(2) . . .”  This rule states, “A person admitted to practice in another state, but not in this state, shall be permitted to practice a case in this state only if that attorney subjects himself or herself to the jurisdiction and rules of the Supreme Court of Kentucky, pays a one-time per case fee equal to the annual dues paid by those KBA members who have been admitted to practice law for five years or more to the Kentucky Bar Association and engages a member of the Association as co-counsel, whose presence shall be necessary at all trials and at other times when required by the court.”

Compare Kentucky’s rule with the American Bar Association’s Model Rule 5.5, which permits out-of-state lawyers to provide legal services on a temporary basis when they “are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter.” Rule 5.5 (c)(1).  The ABA rule  does not require the payment of fee. The Kentucky rule requiring payment of a fee creates confusion, because it does not advise a lawyer of what he is to do before suit is filed. Must he pay a fee to contact a witness to determine if the case is worth pursuit?

Another exception provided by the ABA Model Rule provides that an out-of-state lawyer may provide legal services on a temporary basis when the services relate to a pending or potential proceeding and when that lawyer reasonably expects that he will be authorized to appear. Rule 5.5 (c)(2). The ABA’s model rules provide guidance on the proper method for out-of-state attorneys wishing to investigate cases in other states and clearly permits them to do so. The Kentucky rules do not.

Fortunately, the Kentucky Supreme Court commentary acknowledges that “Paragraph (c)(1) recognizes that the interests of clients and the public are protected if a lawyer admitted only in another jurisdiction associates with a lawyer to practice in this jurisdiction.” SCR 3.130, cmt. 8. This comment goes on to state that the Kentucky attorney “must actively participate in, and show responsibility for the representation of the client.” Id.

So, for an Ohio attorney, whose client was injured in a car accident in Kentucky to provide “any service rendered involving legal knowledge or legal advice,” such service can only be provided where a Kentucky attorney actively participates. When a case has already been filed, and the attorney reasonably expects to be admitted pro hac vice, that lawyer may provide services on a temporary basis.

This analysis should give special pause to business lawyers, who have no means to seek pro hac vice admission, which provides the Court’s imprimatur that he may practice law in the state. At a minimum, out-of-state attorneys should affiliate with a Kentucky attorney whenever providing legal services, be that the negotiation of a contract or the investigation or a real estate transaction. Such activities require the active involvement of a Kentucky licensed attorney. The alternative is to take your chances.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Ohio Employment Law: What is “Reverse” Discrimination?

Author By Stephen E. ImmPosted on
When most people will hear the words “employment discrimination,” they immediately think of the alleged victims as being members of minority groups, women, or older workers. Although most discrimination claims are filed by these groups of people, it might surprise you to know that many of the major laws prohibiting discrimination in employment decisions can also apply to men, and to members of a “majority” race or ethnicity.
 
The most important federal law prohibiting employment discrimination is Title VII of the Civil Rights Act of 1964. All or nearly all of the 50 states have comparable laws that are patterned after Title VII.
 
Although the 1964 Civil Rights Act was passed primarily to address discrimination against African-Americans, the prohibitions against employment discrimination contained in Title VII of the Act are much broader than that. The law makes  illegal any employment discrimination that is based on “race, color, sex, religion, or national origin.” By the plain language of the statute, this prohibits employment discrimination against men as well as women, and against Caucasians as well as members of minority groups. And courts have interpreted the statute to permit claims of “reverse” discrimination brought by employees who are not members of historically disadvantaged groups.
 
While courts have said that claims of reverse discrimination ARE subject to somewhat closer scrutiny – and a somewhat higher standard of proof – than the more common forms of discrimination claims, such claims have been permitted to move forward (and have been successful) where the evidence points to a finding that a male employee or job applicant, for instance, was treated less favorably than a female because of his gender.
 
This principle even extends to the area of sexual harassment. Obviously, it has been vastly more common for women to be victimized by harassment in the workplace due to their gender. But under the law, a man sexually harassed by a female manager or supervisor has just as much right to pursue a claim as a woman harassed by a male superior or coworker.
 
There are exceptions to the rule that “reverse discrimination” is just as illegal as the more “traditional” types of discrimination. The age discrimination laws, for instance, cannot be used to protect a younger worker from discrimination practiced in favor of older workers. And the disability discrimination laws, such as the ADA, do not protect non-disabled employees from discrimination in favor of disabled employees.
 
Nevertheless, “reverse” discrimination is a very real and legally recognized occurrence. Both employers and employees should be cognizant of this fact in their businesses and employment relationships. Failure to do so can be a costly mistake!

 

In The News: Chris Finney’s representation of FC Cincinnati is covered in today’s Enquirer

Author By Christopher P. FinneyPosted on

Finney Law Firm and attorney Christopher Finney are proud to list FC Cincinnati soccer club among their prominent clients.

The Cincinnati Enquirer today, for the second time, addressed this representation that reflects the depth of our real estate practice for assistance with their new Major League Soccer stadium planned for Cincinnati or northern Kentucky.

Read more here.

Commercial Leasing: Steps to consider for tenant due diligence

Author By Christopher P. FinneyPosted on

What due diligence steps should a tenant undertake with respect to a commercial property before signing a lease?

Due diligence customary in a commercial real property purchase

Step back and consider for a moment that when we buy a piece of real property — for our home or for our business — it is prudent and customary by both the buyer and the lender to conduct due diligence investigations of the property:

  • title,
  • survey,
  • physical inspections of the structure and mechanical systems,
  • environmental, and
  • checks of governmental records for notices of liens for violations, zoning, traffic engineering, etc.

The list can seem endless.

Isn’t a commercial lease low-risk for the tenant?

But when simply signing a lease for a term of years, why should the tenant be concerned with these things?  After all, his upfront cash may not be significant (relative to a purchase) and if things don’t work out, the tenant can just leave, right?

Well, sometimes that is the case.  The cost and time needed for due diligence would outweigh the risk the tenant is undertaking by simply signing the lease and moving in.  If so, then by all means, proceed.

But, wait, consider this!

But consider these countervailing factors:

  • Tenant is spending significant monies on tenant buildout costs.
  • Tenant is spending significant monies to move, including moving of furniture, fixtures and equipment, the installation of computer and phone systems, and printing of letterhead, envelopes and business cards.
  • The disruption of your business arising from a move (and if things don’t work out a second move).
  • The image you are building at the new location.  What will be lost if a second move is necessary?  Think of a restaurant or bar, retail store,  or bank branch.  The location is intricately tied to a business’s identity in the mind of the consumer.  It may not be easy to just pick up and move.

The reality is that if the tenant does not undertake the kinds of due diligence implemented for a property purchase, he could “lose” the property in many of the same ways as in a purchase — i.e., he could lose the out-of-pocket costs associated with the activities noted above and have the inconvenience and loss to reputation by relocating to a second location.

The types of risk potentially borne by a tenant that due diligence could avoid

Indeed, in certain circumstances the tenant could be obligated to pay rent throughout the lease term, but the property cannot be occupied for its intended purpose.  (Consider a situation where the property cannot be occupied but where the landlord does not appear technically in default of his obligations under the lease.)

  • When signing a significant lease for property, a title examination, possibly a survey, and assuring lender buy-in of the lease can be absolutely critical.
  • If, for example, the landlord has a mortgage against the property, and the mortgage is in default, that lender legally can extinguish a later–signed lease concurrent with the foreclosure.
    • To avoid this risk, one asks a landlord to execute a subordination, non–disturbance and attornment agreement agreeing that so long as tenant makes prompt and full payment of rent (to the landlord or– when in default of the mortgage — to the lender), the lender or a successor buyer will honor the lease.
    • A tenant’s policy of title insurance can be issued, transferring that risk to a title insurer.
  • If the property does not comply with the regulatory requirements, zoning for example, of the jurisdiction in which the property is located, the tenant could be required to make extensive property modifications or to move.
  • If the property has environmental problems, the cost of compliance — in an unlimited manner — could be transferred to the tenant.
  • If the property has structural problems or the HVAC system is old and inoperable, depending on the lease language (shifting repairs and replacement of the HVAC to the tenant), the burden of fixing the problem could fall to the tenant.

Conclusion

Many times tenants will assume these risks in smaller leases.  Negotiating with the landlord’s lender and conducting full-scale inspections and other due diligence may just not be practical.

But a tenant in a commercial setting should carefully consider the risk-benefit to foregoing certain due diligence steps to prudently protect their investment in their new premises.

Call Isaac Heintz (513-943-6654) or Eli Krafte-Jacobs (513-797-2853) to address your commercial leasing questions.

 

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