|
|
|
|
Not since the early 1980s do I remember so many corporate entities without a facilities or real estate related legal department to rely on for advice and strategy when buying out of leases or merging, acquiring or spinning off divisions or companies. I am not sure why, but so frequently these days clients are calling and saying that the business folks have structured a buy out of a lease or an early termination right and would like to paper it , but only to find out that it either conflicts with existing obligations/rights or already exists in some fashion in the existing lease documentation.
I remember one very bad surprise around Thanksgiving when an accounting firm called to announce that they had merged with another midsized firm, only to receive notices from some of their landlords that they were in default under their existing leases because of the change in the corporate structure and share ownership. Upon further analysis and review, in fact, this structured merger put the headquarters lease in default and about 8 leases for other locations. It became a very expensive surprise to remedy.
A similar result occurred for an international retail chain that sold its "tenant" holding company in one country with 60+ store locations, only to find out that it had to renegotiate with 34 landlords to remedy the "anti assignment defaults" under the existing leases. The "anti assignment" clauses for those lucky enough not to have a Real Estate Legal Department and lucky enough not to have triggered the default, is a clause that proclaims that the sale of locations or change in share ownership is the same as assigning the lease for the real estate location with a corresponding default under the "anti assignment" provision. The resulting remedies and liabilities can be extremely large.
There are more stories, but this is enough pain for now. If you don't have a real estate facilities department with corporate institutional memory or a real estate experienced lawyer in your general counsel's office, why not arrange to obtain help on a monthly or retainer basis and get the advice on real estate related strategy before tripping over the problem after making a significant corporate decision without knowing the impact on existing real estate obligations? Similarly regular compliance review and administration of leases or properties saves money. For assistance with or to explore the possibility of having real estate counsel regularly provide advice on corporate related issues impacted by or impacting real estate, please contact Mr. Wood at jbwood@akerman.com or call 212-880-3836.
|
|
|
|
