Relating to Real Estate
Relating to Real Estate November 2011
- Court of Appeals Lifts Lead Paint Liability Limitation
- EPA Conducting Renovation, Repair and Painting Rule Inspections In Maryland
- Court of Appeals Strikes Penalty for Failure to Register Ground Leases with the SDAT
- Court Holds That Lenders Are Limited In Recovering Attorneys' Fees From Their Borrowers
- Effective Stormwater Management Plans Make Great Neighbors
- Waiver of Statute of Limitations Requires Explicit Language
- TransForm Baltimore May Affect Your Baltimore City Property
- Ipso Facto Clauses: Are They Enforceable?
- Speaking of Real Estate
Court of Appeals Lifts Lead Paint Liability Limitation
By now many landlords have heard of the Maryland Court of Appeals' decision striking down limitations on lead paint liability. The case,Jackson, et al. v. The Dackman Company, et al., No. 131, September Term 2008 (Md. Oct. 24, 2011), exposes all owners of rental properties where lead paint is present to potentially huge liability claims even if the owner has complied with Maryland risk reduction requirements and registered the units with the Department of the Environment. Owners of such units must carefully consider the risks involved if the units continue to be rented – even if the lead paint is properly contained and maintained in accordance with Maryland law. Although there were some complex facts presented in the underlying case, the relevant factual issue, in the opinion of the Court, was fairly simple. Under Maryland law, a landlord who complies with Maryland lead paint risk reduction requirements can escape further liability by making a “qualified offer” to a tenant injured by exposure to lead paint. A “qualified offer” consists of an offer to reimburse up to $17,000 in medical and relocation expenses.
The Court’s analysis of these facts was also simple, yet it has profound implications for the rental market and for business interests in general. The decision is based upon Article 19 of the Maryland Declaration of Rights which guarantees a “remedy” to persons who have suffered “any injury.” The question that the Court decided to address was whether a child injured by exposure to lead paint was effectively denied a remedy if the available remedy was limited to the $17,000 “qualified offer.” The Court used a somewhat subjective test to answer that question. As the Court put it: “[t]he issue, under our Article 19 jurisprudence, generally is whether the abolition of the common law remedy and substitution of a statutory remedy was reasonable.” (Emphasis added.)
The Court concluded that the qualified offer was not a “reasonable” alternative to the potential damages, and therefore the child was denied the remedy guaranteed by the Declaration of Rights.
In concluding that the remedy was not “reasonable,” the Court did not examine the logic of the General Assembly in adopting this legislation which was the product of a two-year study by a Commission appointed by Governor Schaefer. The legislative debate had focused upon the impact on the availability and affordability of rental units, especially in urban areas like Baltimore City. The General Assembly concluded that landlords would remove their units from the market if faced with the Hobson’s choice of spending the large sums that might be required for full lead paint removal or facing potential liability for even larger sums and for which there was no liability insurance. The General Assembly decided that, for Maryland, the reasonable alternative was to provide the limited statutory remedy. The Court, instead, limited the reasonableness review to the perspective of the individual child/plaintiff and largely ignored the impact on the broader population.
The immediate impact of this decision may turn out to be the situation the General Assembly feared – it may be the death knell for affordable housing across the State. Landlords may decide to remove units from the rental market to avoid the expense of remediation or the perils of a jury trial. Unfortunately, the units most likely to be removed are those that are in urban areas with older housing and those units that are typically more affordable. Newer units are less likely to require work, and more expensive units are more likely to justify the expense of a full lead paint removal.
Beyond the implications for the rental market, the case also seems to place severe limits on the ability of the General Assembly to limit liability for personal injury in other areas. For example, the Court would presumably examine any limitation of medical malpractice liability by the same test of reasonableness. A statutory limitation of pain and suffering damages in other tort claims might be subjected to a review to determine if the limits are reasonable. Looking further afield, will the Court apply the same test to limitations on liability that do not involve personal injury? Can the General Assembly impose limitations on damage claims in contractual disputes without being subject to a reasonableness analysis?
Only time – and further opinions from the Court – will answer these questions. What seems clear is that the Court has placed constraints on the power of the General Assembly to limit liability claims. That limitation will favor claimants over defendants, but is now part of the governing laws in Maryland.
If you have questions about this, please contact Michael Powell at (410) 576-4175 or Bob Enten at (410) 576-4114.
EPA Conducting Renovation, Repair and Painting Rule Inspections
In Maryland
After April 22, 2010, rental property owners who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing or space rented by child-care facilities must provide tenants with a copy of the EPA's lead hazard information pamphlet prior to commencing work: "Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools." Property owners and contractors who perform these projects in pre-1978 rental housing or space rented by child-care facilities must be certified and follow the lead-safe work practices required by the EPA's Renovation, Repair and Remodeling rule. The EPA's sample Pre-Renovation Disclosure Form may be used for this purpose.
RRPR applies to all renovation, repair or painting activities, other than for very minor maintenance or repair activities that disturb less than six square feet of lead-based paint in a room, or less then 20 square feet of lead-based paint on the exterior of a building. All records relating to covered disturbances must be retained for three years.
If you receive a notice of inspection from the EPA or would like to find out more about the RRRP, or about other matters affecting lead paint, contact Neil Schechter at (410) 576-4236; or Michael Powell at (410) 576-4175.
Court of Appeals Strikes Penalty for Failure to Register Ground Leases with the SDAT
These extreme cases attracted the attention of the Governor and the Maryland General Assembly. The response was Chapter 290 of the Laws of 2007. This law provided for a registration system for ground rents that would be accessible online at the Maryland State Department of Assessments and Taxation (SDAT). It also provided that if the ground leaseholder failed to register by September 30, 2010, the ground lease was extinguished and rent was no longer payable to the owner of the ground lease.
On October 25, 2011, the Maryland Court of Appeals ruled in Muskin, Trustee v. State Department of Assessments and Taxation, No. 140, September Term 2010 (Md. Oct. 25, 2011) by a vote of five to two, that the part of Chapter 290 that extinguishes ground rents that were not registered, is unconstitutional as a violation of the Maryland Declaration of Rights and Constitution.
The Court emphasized that it was making its decision under Maryland law. It assumed that under applicable federal decisions, this scheme might well have passed muster under the U.S. Constitution. However, the Court noted that sometimes Maryland law may impose greater limitations than the U.S. Constitution.
In reaching its decision, the Court found that Chapter 290 retrospectively abrogates vested rights of ground rent owners. In evaluating whether a statute operates retrospectively, the Court looked to issues of fair notice, reasonable reliance, and settled expectations.
As to the first requirement of fair notice, the Court held that there was no problem because the registration deadline of September 30, 2010 was more than three years following enactment of Chapter 290.
However, the Court went on to say that Chapter 290, to the extent that it provided for forfeiture of unregistered ground rents, violated the reasonable reliance and settled expectations of the owners. The Court said, “Ground rent leases, established through transactions consummated many years ago, create rights and obligations for ground rent owners and leaseholders … . [T]he extinguishment and transfer provisions of the statute are retrospective in application because, upon failure to register timely, the SDAT is required to reach back in time and divest the reversionary interest of the ground rent owner and cancel his/her/its right to receive future ground rent from the leaseholder.”
The Court went on to determine that the owner of a ground rent is possessed of vested rights under the law and that these rights may not be retrospectively impaired. After analyzing various causes of action in which courts approved of restrictions on certain remedies, the Court went on to describe vested real property and contract rights as “almost sacrosanct in our history.” The Court further determined that the forfeiture provisions of Chapter 290 constitute an unconstitutional deprivation of the property of the ground rent owners without just compensation.
Two judges dissented, believing that the Maryland Constitution permits the type of prospective condition on the retention of a vested right so long as the holder of the right had a sufficiently reasonable time and opportunity to protect it by complying with the statute.
Of interest is what is left of the legislature’s attempt to address what it perceived to be a serious problem. The Court of Appeals did not strike down the registration requirements of the new law. It suggested other approaches that would not be impermissibly retrospective. Expressly mentioned was a regulation whereby the failure to register a ground lease triggers an interim consequence such as restrictions on collecting rents prospectively, or denial of access to the courts for the collection of ground rents until the ground rent is registered.
Another case is currently pending in the Circuit Court for Anne Arundel County in which ground rent owners contend that Chapter 290’s requirements for collection of ground rents were so costly and difficult as to constitute an unconstitutional diminution in the value of their property without compensation.
We confidently predict battles on ground rents in the legislative and judicial branches for years to come. For questions, please contact Searle Mitnick at (410) 576-4107.
Court Holds That Lenders Are Limited In Recovering Attorneys' Fees From Their Borrowers
The equity line agreement at issue provided that upon default the Goldmans would pay SunTrust’s “costs of collection, including court costs and fifteen percent (15%) of the principal plus accrued interest as attorneys’ fees or reasonable attorneys’ fees as allowed by law . . . .” The Circuit Court for Baltimore County awarded SunTrust attorneys’ fees in the amount of only $3,094.00.
In a number of opinions the Court of Appeals has required that attorneys’ fees must be reasonable. Judge James Eyler, writing for the Court of Special Appeals in SunTrust Bank v. Goldman, followed the recent cases requiring reasonable fees. As the basis for this, he cited Rule 1.5(a) of the Maryland Lawyers’ Rules of Professional Conduct, which provides that “[a] lawyer shall not make an agreement for, charge, or collect an unreasonable fee . . . .” The Court held that even when the contract itself does not include a requirement of reasonableness, where attorneys’ fees of one party are to be indemnified by the losing party, the fees must be reasonable. Judge Eyler noted that “a contractual provision providing for a fee determined by a percentage is not per se unenforceable, but it must be reasonable and must reflect the actual billing arrangement.”
The bank argued that it should be entitled to the legal fees that it would incur in connection with the collection of the debt after the filing of the complaint and the entry of a judgment against the debtors. The Court of Special Appeals agreed with this in concept. Additionally, the bank contended that it should be entitled to have a judgment entered in its favor for 15% of the outstanding principal balance to cover its future legal fees, and that it would credit the Goldmans for any portion of the judgment for legal fees that it did not pay its counsel. The Court did not go along with that. The Court of Special Appeals acknowledged that SunTrust would not be able to claim attorneys’ fees at a later time because “the entry of a final judgment on a contract case extinguishes any contract–based right to further attorneys’ fees” unless there was an exception to this general rule. The Court found no statutory exemption in Maryland, but it suggested that lenders might avoid having their claims for indemnification of attorneys’ fees merge into judgments if the parties clearly state in their contracts that they intend that there should be no such merger.
The Court found that the language in the equity line agreement in the SunTrust case contained only “general collection language” and was not sufficiently clear to exempt the bank’s judgment from the merger doctrine. The Court held that a trial court should permit a lender to present evidence of fees that will “with certainty be incurred in addition to those actually incurred at that time.” (Emphasis added.) In the case before it, the Court of Special Appeals said there was no evidence of fees that would be incurred in the future or of an agreement to pay attorneys’ fees other than on an hourly basis. Therefore, the appellate court found that the trial court had not abused its discretion in awarding to the bank only fees based on its lawyer’s hourly rate and the time spent as of the date of the judgment.
ANALYSIS
The Court’s finding that clauses requiring one party to pay another’s legal fees are indemnification agreements is based on solid precedent. The Court’s statement that attorneys’ fees must be reasonable is in line with other recent Maryland cases. However, it is the payment of fees to attorneys that must be reasonable, not the amount of a judgment in favor of a lender that needs to be limited. The troubling point from SunTrust v. Goldman is the Court’s requirement that lenders must establish “with certainty” attorneys’ fees that will be incurred in the future. This appears to be too high a burden because at the time a judgment is entered there are numerous unknowns that will factor into the actual costs of debt collection. Instead, the Court could have required that lenders reasonably estimate future legal fees, or it could have permitted a judgment in the amount set forth in the loan documents with a caveat that collection will be limited to actual and reasonable legal fees.
PRACTICE POINTERS
1. In light of SunTrust v. Goldman, lenders should review their loan documents to ensure they contain language that will enable the lenders to be indemnified for legal fees that they incur in collection activities after any judgments they obtain. Language similar to the following may be useful for this purpose:
Borrower shall pay to Lender all costs and expenses (including reasonable attorneys’ fees) of Lender in connection with this Note and the collection of all sums evidenced by it. The parties understand and agree that if Borrower defaults Lender may incur costs of collection, including attorneys’ fees, after the date of any judgment that Lender may obtain. Borrower agrees to pay all of such costs and fees. Borrower further agrees that Borrower’s obligation to pay such costs and fees, and Lender’s claim for such costs and fees which are incurred by Lender after the date of any judgment obtained by Lender, shall survive the entry of, and shall not be merged into, any such judgment.
2. The problem of merger into judgments of contractual rights of a party to be reimbursed for its attorneys’ fees may be applicable to situations other than loans. It may apply in any situation in which one party (the “losing party”) agrees to pay the legal fees of another party (the “prevailing party”) because a significant portion of the legal fees (those relating to the collection of the legal fees for which a judgment is obtained) may be incurred after a judgment is obtained. If a prevailing party desires to be able to recoup its attorneys’ fees incurred in collecting the sums to which it is entitled, it may be advantageous for the agreement that provides for such rights to include anti-merger language, perhaps similar to the following:
If either party to this agreement brings an action to enforce the terms hereof or to declare rights hereunder, the prevailing party in any such action shall be entitled to recover from the losing party its reasonable attorneys’ fees and costs in connection with obtaining a judgment [or favorable settlement], as well as the reasonable attorneys’ fees and costs in connection with the collection thereof. The parties understand and agree that if the losing party does not promptly pay the amount of any such judgment [or settlement], the prevailing party may incur costs of collection, including attorneys’ fees, after the date of any judgment that the prevailing party may obtain against the losing party. The losing party agrees to pay all of such costs and fees. The losing party further agrees that the losing party’s obligation to pay such costs and fees, and the prevailing party’s claim for such costs and fees which are incurred by the prevailing party after the date of any judgment obtained by the prevailing party, shall survive the entry of, and shall not be merged into, any such judgment.
If you have questions about this, please contact Ed Levin at (410) 576-1900.
Effective Stormwater Management Plans Make Great Neighbors:
A Supplement To The Adage "Good Fences Make Good Neighbors."
The Maryland Court of Appeals Reviews the Law on Private Nuisance and Negligence Per Se.
The Court reviewed the standard for a nuisance case in the State of Maryland. Following other decisions in Maryland, the Court of Appeals stated that there are two types of nuisances: (1) a “public nuisance,” which is an injury to the public at large or to all persons who come in contact with it, and (2) a “private nuisance” which is an injury to an individual or a limited number of individuals only. Private nuisance is split into two categories: (1) a nuisance per se, or a nuisance at law, which involves the use of one’s land which is so unreasonable that it is deemed to constitute an actual nuisance “at all times and under any circumstances” (typically motivated by malice), and (2) a nuisance in fact, which arises when considering the surrounding circumstances, a particular land use constitutes a nuisance even though the conduct might not be a nuisance in another locality, or another time, or under some other circumstances.
The Wietzkes’ case was a private nuisance per se matter. The jury ruled in favor of the Church on the issue of nuisance. The Wietzkes appealed and argued that the trial court failed to include certain jury instructions including that (i) strict liability was the appropriate standard that the court should consider in determining liability, and (ii) county approval or the existence of other sources that may have contributed to the damage does not absolve a defendant of nuisance liability. They also argued that the trial court erred in dismissing their negligence claim based on violation of a statute.
The Court of Appeals held that the doctrine of private nuisance is one that balances the conflicting rights of land owners. The court is obligated to balance the benefit versus the harm caused by an offending land owner’s use of its property, leaving to the jury the question of whether the offending land owner has used its property reasonably. Therefore, the jury instruction that required a finding of “unreasonable conduct” was appropriate. The Court of Appeals stated that county approval of improvements to property would not insulate the property owner from liability from a private nuisance, nor would water flowing from multiple sources. However, the Court of Appeals held that county approval and multiple sources were not at issue in this case and did not warrant a jury instruction in that regard.
The Wietzkes also claimed negligence per se on the part of the Church. In this case, there was a Montgomery County statute that stated, inter alia, “a person must not engage in any land-disturbing activity or by any action cause or permit any soil, earth, sand, gravel, rock, stone, or other material to be deposited upon or to roll, flow, or wash upon or over the premises of another in a manner to cause damage to the premises without the express written consent of the owner of the premises affected.” (Section 19-16(a) of the Montgomery County Code). Montgomery County inspectors issued a violation notice to the Church subsequent to the flooding to the Wietzkes’ property. The violation notice referred to Section 19-16(a) and stated that sediment left the Church’s property after a storm and there was flooding of the house. The inspector also noted that the Church’s property was not in compliance with the plans submitted to the County for stormwater management and that various items had not been completed.
Although conflicting evidence was presented at trial regarding the cause of the flooding, the trial court dismissed the negligence claim, reasoning that the Wietzkes introduced no evidence that Section 19-16(a) was designed to prevent the type of harm claimed. The Court of Appeals however, held that a prima facie case of negligence may be established by proof that an individual violated an applicable statue or ordinance. In order to establish negligence based on violation of the statue, claimants must show both that they are “within the class of persons sought to be protected,” and “that the harm suffered is of a kind which the drafters intended the statute to prevent.” The Court of Appeals stated that the purpose of Section 19-16(a) was to prevent the type of harm that the Wietzkes were complaining of, and the Wietzkes were a protected class, being private land owners in Montgomery County. If proven, the evidence could have supported a negligence claim based on violation of the statute. Therefore, there was a prima facie case of negligence. Accordingly, the Court of Appeals reversed the judgment in favor of the Church solely as to the negligence count and remanded the case to the trial court to determine the issue of negligence.
For questions, please contact Lisa Spitulnik at (410) 576-4161.
Waiver of Statute of Limitations Requires Explicit Language
The undersigned, Mehdi Ahmad, Eastpines Terrace Apts., Inc., Stanton Partners and Metamorphosis Limited Partnership, hereby affirm, jointly and severally, their debt in the principal amount of [$171,800.16] that have [sic] been accrued since May [1991] in accordance with the attached schedule to [appellant] and bear an interest rate of nine percent per annum compounded daily until paid. Moreover, the above-enumerated debtors waive any bar imposed by the Statute of Limitations for collection of the principal or the interests [sic] accrued thereon; . . . . (Emphasis added.)
The parties exchanged letters which included a demand for payment in the Fall of 2003, but suit was not brought until November 2007. The trial judge read the second quoted sentence from the 2000 Acknowledgment as being a waiver of the statute of limitations as to that point in time only, and not a perpetual waiver of the statute of limitations (as appellant argued). He, therefore, entered judgment in favor of the appellees. On appeal, the Court of Special Appeals agreed and affirmed.
The Court of Special Appeals found that the 2000 Acknowledgment did not have express language relating to a perpetual duration for the waiver, and “without the inclusion of such express language, an agreement cannot effectuate a waiver of the statute of limitations in perpetuity.” The Court held that the quoted language from the 2000 Acknowledgment had the effect of permitting the appellant to bring a lawsuit as late as June 25, 2003, but not thereafter. This was based on Section 5-101 of the Courts and Judicial Proceedings Article of the Maryland Code (“C&JP”), which provides, “A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.” Effectively, the Court of Special Appeals held that the statute of limitations was reset when the parties signed the 2000 Acknowledgment.
The Court of Special Appeals noted that Maryland courts had not considered whether parties may permanently waive the statute of limitations at the time that a contract is signed. After reviewing Williston on Contracts and cases from Connecticut and Utah, the Court of Special Appeals held that such waivers are unenforceable in Maryland. It stated, “Even if the 2000 Acknowledgment included specific language permanently waiving the statute of limitations, we are of the view that such provision would be void as contrary to public policy.”
PRACTICE POINTER: If a person (called the “debtor”) has an existing debt that may be barred by the statute of limitations but is willing to waive the statute of limitations, not only retrospectively but prospectively as well, the debtor must do so explicitly. If an agreement merely states that the debtor “waives the statute of limitations for collection of the debt” (or similar words), it may be interpreted to mean that even though the statute of limitations may have prevented the creditor from bringing an action at that time, the creditor will have a right to file suit then or before the expiration of the applicable period of the statute of limitations thereafter (usually three years). However, the creditor would be barred from filing suit three years and one day after the agreement. (This is what happened in Ahmad v. Eastpines Terrace.) To waive the statute of limitations prospectively for a period of more than three years, the agreement must say the following (or use similar words): “The debtor waives the statute of limitations for collection of the debt for any action that is filed on or before _______, 20__”.
This begs the question: For how long may the statute of limitations be waived? The Court of Special Appeals in Ahmad v. Eastpines Terrace has indicated that the waiver may not be permanent, and this is the law in Maryland unless and until the Court of Appeals holds otherwise. But the Ahmad panel provided no guidance as to what definite time period would be acceptable. It would be reasonable to think that a twelve year period would be enforceable because this would be consistent with the statute of limitations applicable to a promissory note under seal, a contract under seal, or another specialty pursuant to C&JP § 5-102. Alternatively, the parties could execute their agreement under seal to get the benefit of C&JP § 5-102 and its twelve year statute of limitations.
For questions, please contact Ed Levin at (410) 576-1900. If you need sealing wax, please contact David Fishman at (410) 576-4234.
Transform Baltimore May Affect Your Baltimore City Property
In a project called TransForm Baltimore, the City of Baltimore is currently in the process of re-writing its entire Zoning Code, which was last comprehensively updated in 1971. The City is also preparing new Zoning Maps. The City hopes to create an updated Zoning Code which is easier to understand and to establish a more transparent and predictable process for redevelopment.
As a result of the revisions, the zoning classification of some properties will change. New zoning categories and design guidelines could affect the potential use, development and redevelopment of your property. Therefore, it is very important that you know whether and how your property may be affected by the new Zoning Code.
The public comment period on the second version of the Draft Zoning Code ends on December 5, 2011. You can access copies of the Draft Zoning Code, Draft Maps and Draft Landscape Ordinance, as well as comment on those drafts, at www.transformbaltimore.net. The City intends to issue final versions of the new Zoning Code, Zoning Maps, and Landscape Ordinance after it reviews the comments. If you believe that your property may be affected in a negative manner, you should provide comments to the City now.
Please contact Bill Shaughnessy at (410) 576-4092 or Danielle Zoller at (410) 576-4036 if you have questions about this.
Ipso Facto Clauses: Are They Enforceable?
Contracts and leases typically contain a provision, called an “ipso facto clause,” which states that the filing of a bankruptcy case or the occurrence of another listed event is a default entitling the other party to terminate the agreement and to begin exercising remedies. The term “ipso facto” comes from the Latin phrase meaning “by the fact itself.” Thus, the filing of the bankruptcy or other action itself triggers the default. Some ipso facto clauses require notice first; others are automatic.
A. Triggers for Ipso Facto Clauses
Typical ipso facto clauses are based on the following events:
- Filing of a voluntary bankruptcy petition
- Having an involuntary bankruptcy filed against a party (sometimes, if the petition is not set aside within a set number of days)
- Insolvency or financial condition
- Admitting in writing that a party is insolvent
- The making of an assignment for the benefit of creditors or the appointment of a receiver for all or a substantial portion of a party’s assets.
B. Ipso Facto Clauses Are Generally Not Enforceable in Bankruptcy Cases
Section 541 of the Bankruptcy Code sets forth what interests in property become property of the bankruptcy estate. Section 541(c) provides that property interests of the debtor become property of the bankruptcy estate notwithstanding a provision in an agreement that requires forfeiture of the interest based on the insolvency or financial condition of the debtor, the commencement of the case, or the appointment of a custodian before the commencement of the case.
Provisions in unexpired leases for real property containing ipso facto clauses would be invalided as to a debtor under the Bankruptcy Code. Section 365(f) of the Bankruptcy Code states that notwithstanding language in an executory contract or lease to the contrary, the trustee (or debtor-in-possession) may assume a contract or lease provided the trustee (or debtor-in-possession) furnishes adequate assurances of future performance and cures all defaults as required under §365(b) of the Bankruptcy Code.
C. Why Put Ipso Facto Clauses in Agreements?
Ipso facto clauses typically are only unenforceable in a bankruptcy. If the party never files a bankruptcy, then the clause may be enforceable. However, if a later bankruptcy is filed, an insolvency-based termination made prior to the bankruptcy may not be enforceable in the later bankruptcy case.
Further, an ipso facto clause may trigger a default under a guaranty of a non-bankrupt guarantor or liability of a co-debtor that does not file a bankruptcy petition.
Although an ipso facto clause may not be enforceable in bankruptcy, these clauses are commonplace and will not prejudice the landlord. If a commercial tenant is a debtor in a bankruptcy case, it is required under §365(d)(4) of the Bankruptcy Code to assume the lease (which means the debtor will need to cure defaults and provide adequate assurances of future performance) within the earlier of 120 days from the commencement of the case, or the entry of the order confirming the plan. Without the landlord’s consent, at most the bankruptcy court can extend this period for 90 days for cause. If the lease is either rejected by the trustee (or debtor-in-possession) or not assumed in these time periods, the lease is considered to be rejected and the debtor is required to immediately surrender the property to the landlord. Accordingly, notwithstanding the unenforceability of ipso facto clauses in commercial real property leases, a commercial landlord is not without remedies in the bankruptcy arena.
If you have questions regarding this topic or other bankruptcy issues, please contact Susan Klein at (410) 576-4137.
Speaking of Real Estate
MEDIATOR CERTIFICATION
AWARDS / RECOGNITION
Other lawyers in the Real Estate Practice Group have recently been cited for their accomplishments and status in the legal community, as follows:
Best Lawyers 2012
Timothy D. A. Chriss - Real Estate Law
David H. Fishman - Real Estate Law
Edward J. Levin - Real Estate Law
Searle E. Mitnick - Real Estate Law
Peter B. Rosenwald, II - Banking & Finance Law
William D. Shaughnessy, Jr. - Land Use & Zoning Law, Litigation Land Use & Zoning, Litigation Real
Estate, Real Estate Law
Chambers & Partners Chambers USA: America's Leading Lawyers for Business 2011
David H. Fishman - Real Estate - Senior Statesman
Edward J. Levin - Real Estate - Band 1
Timothy D.A. Chriss - Real Estate - Band 2
PRESENTATIONS
Ed Levin and George Ritchie of Gordon Feinblatt's Litigation Department will speak to the Commercial Real Estate Discussion Group of the Maryland State Bar Association's Section of Real Property, Planning and Zoning on "Howard County, Maryland Changes the Rules Regarding Recordation Taxes on Indemnity Deeds of Trust" on November 15, 2011 at the Sheraton Baltimore City Center Hotel.