It is with pleasure that Sherayzen Law Office announces that on May 5, 2010, Eugene Sherayzen became a Legal Advisor to the Bright New Ideas (“BNI”), a Minnesota non-profit corporation devoted to the alleviation of worldwide poverty through the use of solar energy. In his new capacity, Mr. Sherayzen will help overview the BNI’s U.S. and international contracts, and provide legal support for the BNI’s import and export strategy.
Under the Pension Protection Act of 2006, most tax-exempt organizations, with the exception of churches and church-related organizations, must file Form 990 with the IRS effective the beginning of year 2007. Any tax-exempt organization that fails to file the relevant version of the form for three consecutive years automatically loses its federal tax-exempt status.
All Form 990-series returns are due on the 15th day of the fifth month after an organization’s fiscal year ends. Many organizations use the calendar year as their fiscal year, which makes May 15 the deadline for those tax-exempt organizations. This year, however, since May 15 falls on a Saturday, the deadline is actually on May 17, 2010. Absent a request for extension, there is no grace period from filing by the original due date.
Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N. Other tax-exempt organizations with annual receipts above $25,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Private foundations must file Form 990-PF.
It is impossible to know what issues will actually arise during the term of a lease. Hence, it is important for a landlord to hire an attorney to carefully analyze the landlord’s specific situation, spot potential problems and address them in the lease agreement. The process of addressing these issues in the lease, however, can become very contentious since landlords and tenants often disagree about the terms that the other party wishes to include in the lease. This may lead, in turn, to multiplication of disagreements and eventually even ruin the deal altogether.
Therefore, it is very important for the landlord to prioritize the issues in order to know when to concede an issue and when to hold the ground and insist on an agreeable resolution. In this essay, I will identity and discuss six most crucial commercial lease issues for the landlord; these issues are worth fighting for and must be given priority in a commercial lease negotiation.
A. Tenant Payments During the Term of the Lease Agreement
This is the most fundamental part of the lease agreement – the lease agreement (“Agreement”) must require tenant to make the rent payments for the duration of the lease agreement. In order to do so, the landlord should consider adopting four strategies. First, the Agreement should clearly set forth the tenant’s obligation to pay under the lease. Second, the landlord should strive to minimize the number of conditions to the obligation of the tenant to pay rent and operating expenses. Third, minimize the number of events that give the tenant the right to terminate the lease. Finally, eliminate the right of the tenant to set-off payments if the landlord defaults. Similar attitude should be adopted to the rent abatement situations.
B. Control Over the Leased Property
Leasing the property does not automatically mean that the landlord should give up all control over it. Usually, a landlord’s attorney will insist on requiring landlord’s consent to anything that could interfere with the smooth operation or safe condition of the leased property. Another strategy is for the landlord to retain reasonable control over who will occupy the leased property.
C. Unhindered Ability of the Landlord to Finance or Sell the Leased Property
Closely related to the previous topic of control, the landlord should make sure that his ability to finance and/or sell the leased property is left unhindered by the provisions of the Agreement. It is also suggested that the Agreement includes provisions typically expected by lenders, such as subordination and attornment requirements as well as provisions mirroring typical borrower-to-lender covenants.
D. Clear Obligations and Reasonably Enforceable Remedies
This is another priority area for the landlord. The Agreement should set forth clearly both parties’ obligations and responsibilities, conform notice requirements to the landlord’s standard practices, and provide for reasonable remedies such as: adequate security (security deposit, guarantees, letters of credit, etc.), record-keeping of the tenant’s gross sales, realistic late fees and interest, and the landlord’s self-help rights.
E. Insurance and Indemnification Provisions
The Agreement should strive to make sure that there is an insurance against every risk, whether the insurance is provided by the landlord or the tenant. It is suggested, however, to avoid needlessly requiring both landlord and tenant to carry multiple levels of insurance coverage.
F Avoidance of Unexpected Costs
The Agreement should plan for unexpected costs by providing for expenses that vary based on occupancy. The landlord should work toward including in the Agreement provisions reimbursing him for out-of-pocket expenses in connection with attorney’s fees incurred in dealing with tenant requests for lease assignment and sublease. Other professionals’ fees (such as design professionals who review or supervise construction projects) may also be incorporated in the reimbursement provisions.
The purpose of this essay is to familiarize the readers with the very dense and complex landlord issues in a commercial lease negotiation setting. Obviously, in order to achieve better understanding by my non-lawyer audience, I necessarily over-simplified the issues and greatly narrowed the description of the lease provisions. I hope, however, is that I provided sufficient legal background for you to be able to better explain your goals and wishes to the attorney who will be drafting your commercial lease agreement.
In this article, I will discuss three most important reasons for retaining a lawyer to represent you in a Contested Hearing conducted by the Office of Administrative Hearings (OAH).
1. Contested Hearing conducted by the OAH is an Administrative Version of a Trial
Contested Hearing is an administrative trial. In most ways, it is highly similar to a regular civil trial, only with somewhat relaxed procedural and evidentiary rules. There is an administrative law judge and an attorney representing the other side. The rules of procedure and evidence, while more informal and less strict than in a usual trial, must be followed. Moreover, where the OAH does not provide for or omits certain procedures, the administrative judge will refer back directly to the civil court rules for the guidance.
Thus, you need to know the OAH rules. It is very easy to damage your case by making unnecessary procedural mistakes. Even where the mistakes are reversible, the image of your case may suffer.
2. Government Agencies are Represented by Attorneys
Government agencies realize the complexity and importance of the Contested Hearings. Hence, they are always represented by attorneys, often highly experienced and specialized in the relevant areas of law. Government lawyers are also well-versed in the procedural rules of the OAH.
Therefore, it is simply very difficult, if not impossible, for a business owner, who is not trained in law and inexperienced in the OAH procedures, to match the government’s combination of experience, knowledge, and skillful advocacy – even when the judge is lenient when it comes to procedural mistakes committed by the pro se litigators (i.e. business owners who choose to represent themselves).
3. Legal Fees are Often Lower than the Cost of Failure
An adverse ruling by the judge in a Contested Hearing may often put you out of business (for example, in a business license denial case). Even if your business is able to absorb the costs of the final outcome, the expenses associated with the provisions of the ruling may often be significantly higher than in a situation where an attorney’s timely intervention may have mitigated or averted altogether the worse terms of the judge’s decision.
Of course, hiring an attorney does not mean that you will automatically win your case. It does mean, however, that you will have a professional ardent advocate skilled in the art of law and procedure working solely to reach the most favorable outcome in your case. Even in a losing situation, your attorney may be able to find the least-damaging solution to your problem. Often, a lawyer may be able to settle the case even without the need to go to the hearing, avoiding the expenses associated with it.
While a Contest Hearing is not as full-blown civil trial, you should make sure that you are adequately represented during the hearing proceedings. There are procedures to follow, rules to know, and a formidable opponent to defend against. The stakes are usually sufficiently high to justify reasonable expenses on the legal representation.
Sherayzen Law Office can help you every step of the way in the pre-hearing process and it will provide vigorous and creative defense of your interests during the hearing. Call NOW at (612) 790-7024 to schedule the consultation!
On March 18, 2010, the Hiring Incentives to Restore Employment Act (“HIRE”) was enacted into law. The Act offers timely benefits to the employers who hire unemployed workers.
Under the HIRE, qualified employers who hire unemployed workers may qualify for two main tax benefits.
First, under the HIRE, Employers who hire unemployed workers between February 3, 2010 and January 1, 2011 may qualify for a 6.2% payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after the date of enactment. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers will still have to withhold the employee’s share of Social Security taxes, as well as income taxes. Moreover, both employers and employees will still have to pay their share of Medicare taxes.
Second, employers may claim an additional general business tax credit of up to $1,000 per each worker retained.
Notice, new workers filling existing positions may also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.
Types of Employers Qualified to Claim HIRE Benefits
Businesses, agricultural employers, tax-exempt organizations and public colleges/universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.
When to Claim HIRE Benefits
Employers may claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010.
The additional business tax credit should be claimed on the employers’ 2011 income tax returns.
Under the HIRE, in order to benefit from the new law, employers must get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.