Harras Bloom & Archer LLP Blog

Friday, July 29, 2016

The Good Guy Guaranty and Personal Guaranties Under a Commercial Lease

By: Lynn Cosma Wenkert

Is it time to shop for new space for your business?  Your business has grown and has developed good credit on its own, yet landlords are still insisting that you give a personal guaranty on the lease. The purpose of forming a corporation in the first place was to avoid personal liability, so why give a personal guaranty on the lease?

A term you may have heard bantered about by your broker is a “good guy” clause.

A commercial lease typically provides that the Tenant is responsible to pay rent through the end of the term. If the Tenant vacates prior to expiration of the term, the Landlord can continue to sue the Tenant to collect the rent due throughout the remainder of the term.  Unlike a residential lease, the Landlord has no duty to attempt to re-rent the space to reduce Tenant’s damages.
Read more . . .

Tuesday, July 5, 2016

What you Need to Get Out of Your Commercial Lease

By: Lynn Cosma Wenkert

Starting a new business, or is it just time to move the operation out of your garage? 

Renting your first office or retail space is an exciting and frightening venture.  You may have worked with a broker who has helped you negotiate the basic terms such as annual rent, security and a build out allowance, but there are many other terms yet to be considered.

Rent abatement. In today’s market it is common for the Landlord to allow the Tenant several month’s rent concession at the beginning of the lease term.  This gives Tenant the opportunity to complete the build out, or time to settle in if the Landlord is responsible for the build out.

Read more . . .

Friday, March 25, 2016

Selecting A Real Estate Agent

By: Lynn Cosma Wenkert

Selecting the right real estate agent can make the difference between having a smooth transition into your new nest, or suffering anxiety until the ink on the deed has dried.

In New York, we basically have three types of Real Estate Brokerage Agreements, each creating different responsibilities of the Agent to the Seller and the Buyer.

Read more . . .

Friday, March 25, 2016

Dealing With IRS Debt: Installment Agreements

By: Lynn Cosma Wenkert

Being in debt to the IRS can feel like you are being swallowed whole by a whale.  Leaving you  helpless in escaping the clutches of your gigantic opponent, and embarrassed about finding your self in this position to begin with. 

Read more . . .

Tuesday, June 17, 2014

Common Pitfalls of Commercial Real Estate Transactions

Entering into a commercial real estate transaction can be risky business.  Considerations necessary prior to getting involved with a commercial real estate transaction are different in many respects from those in a residential real estate transaction and often times more complex.  There are many pitfalls to avoid when considering buying or selling commercial real estate due to the high stakes often involved.

Property valuation can become a problem in a commercial real estate transaction.  Determining the value of commercial real estate is difficult because the property might be completely unique without any comparable sales.  Often, there is also an income component to consider.  If the property has an income stream that has to be factored into the deal.

Commercial real estate can also be subject to fierce negotiations.  Buyers are responsible for doing their due diligence in these transactions because they cannot rely on consumer protection laws.  Buyers have to be mindful at the outset that outside of fraud, there are no robust legal mechanisms to protect them or provide recourse if the deal goes bad.  For example, the mandatory disclosures afforded to residential purchasers are often not available to purchasers of commercial real estate.

Over-reaching can also be a major problem for buyers and sellers.  Parties involved should be wary of deals that are likely to require more capital or expertise then they currently possess.  But, the key is to realize when you are in too deep before the deal if affected.

It is crucial to memorialize every detail possible in the commercial real estate contract.  Since courts usually only consider the four corners of a contract in order to settle disputes, all critical details of the deal should be covered in the contract.  Too many individuals involved in commercial real estate use standard contracts that do not cover the unique contingencies that only exist in these types of transactions.

Lastly, it is important to consider environmental risks relating to commercial real estate transactions.  Properties with environmental issues, such as those previously contaminated by hazardous material can cost their owners substantial sums in cleanup and even expose them to litigation. These environmental issues are not always readily apparent when the transaction is taking place.  It could take years to discover that there is an environmental issue with the property caused by a previous owner.  At that point, the current owner may be primarily responsible for the cleanup, which can be a substantial unexpected cost.  Hence it’s important to hire experts to perform thorough legal and business due diligence prior to entering a commercial real estate transaction.

For information regarding commercial real estate transactions contact Harras Bloom & Archer LLP at our Melville, Long Island office at 631-393-6220 or our New York City office at 212-922-9545. 

Monday, May 5, 2014

Steps 6-10 of Incorporation

We went over the first five steps for incorporating your Long Island business in our last blog, we'll finish up here with the remaining five parts of the incorporation process that apply if you want to incorporate an existing firm or would like to do business in New York and are headquartered outside the state. The attorneys of Harras Bloom & Archer LLP handle all business matters on Long Island, and will help guide you to success by using their profound knowledge of the legal system to represent your best interests, whether you simply need guidance or require aggressive court representation.

Here are the basic steps for forming a corporation in Nassau or Suffolk county. For steps 1 - 5, click here.

6. Appoint Initial Corporate Directors

Initial corporate directors must be appointed by the incorporator, the person who signed the articles. These directors must serve on the board until  the first annual meeting of shareholders, when the shareholders elect the board members who will serve for the next term. An "Incorporator's Statement" signed by the incorporator must include the names and addresses of the initial directors. A copy of the statement should be filed in the corporate records book.

7. Schedule and the first meeting of the corporation's board of directors

During this meeting, the directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize issuance of shares of stock, set the corporation's fiscal year, and adopt an official stock certificate form and corporate seal. The incorporator or any of the directors must record the meeting minutes and edit them over the course of a week or two before sending them to all directors to sign.

8. Issue Stock to Each Shareholder

Small corporations typically issue paper stock certificates, though they are not legally required anymore. Include each shareholder's name and contact information in the corporation’s stock transfer ledger.

9. File Biennial Statement

All New York corporations must file a Biennial Statement with the Department of State, due every other year in during the calendar month in which the corporation's original certificate of incorporation was filed.

10. Comply with Tax and Regulatory Requirements

There are additional tax and regulatory requirements your corporation must adhere to, including:

  • EIN: Your corporation must obtain a federal employer identification number (EIN). You can obtain an EIN by completing an online application on the IRS website for no filing fee.
  • S Corporation Filing: In order for a corporation to elect S corporation status for tax purposes, it must submit a 'Election by a Small Business Corporation' form (signed by all the shareholders within two months and 15 days after the beginning of the corporation's first tax year. Then, file Form CT-6, Election by a Federal S Corporation to be Treated as a New York S Corporation.
  • New York State Taxes: Under New York State Tax Law, a corporation must file franchise tax reports and pay franchise taxes annually even if the corporation loses money or doesn't conduct business. Franchise tax requirements begin on the date of incorporation and continue until the corporation is legally dissolved by the Secretary of State.
  • Business Licenses: The State of New York may require that you either obtain a license or permit depending on the nature of your business.
For legal guidance on any business litigation matter, contact the Long Island law office of Harras Bloom & Archer LLP at 631-498-5505.

Wednesday, April 30, 2014

5 Tips of Incorporation

If you're establishing a new firm on Long Island, wish to incorporate an existing firm or seek to do business in New York as an existing corporation headquartered outside the state, there is a certain process you must follow in order to ensure the legal validity of the entity. The attorneys of Harras Bloom & Archer LLP guide their clients on a path for success in business matters through their extensive legal knowledge and experience, and their determination in the courtroom.

Here are the basic steps for forming a corporation in Nassau or Suffolk County.

1. Name Your Corporation

Although those seeking to establish a corporation in New York have a fair amount of freedom in choosing their business name, there are some requirements entrepreneurs must adhere to when naming their corporation. One such requirement being that you have to include "Incorporation," "Incorporated," "Limited," or an abbreviation in the business name.

In addition, the corporation's name must be unique, or at least noticeably different from all other business entities registered with the New York Secretary of State. Make sure the name you decide on is available by checking the New York Department of State Division of Corporations business name database [http://www.dos.ny.gov/corps/bus_entity_search.html]. For a filing fee of $20, you can reserve a name for 60 days with the New York Department of State Division of Corporations- file the Application for Reservation of Name [http://www.dos.ny.gov/corps/dom_busfile.html] by mail.

2. File a Certificate of Incorporation

In order for your business to become incorporated, you must file with the New York Secretary of State.  Along with the corporate name, the certificate must include its street address; number of shares the corporation is authorized to issue, and the name and address of the incorporator.

3. Appoint a Registered Agent

Corporations must appoint a registered agent to accept and forward legal papers on the corporation's behalf if it is sued, among other things. In New York, corporations must appoint the New York Department of State for service of process.

4. Create a Corporate Records Book

Be sure to store all information pertinent to the process of incorporating your business. Important items include minutes of director and shareholder meetings, stock certificates and stock certificate stubs. Use your own method of organizing these documents or order a special corporate records kit through a corporate kit supplier.

5. Prepare Corporate Bylaws

Although corporate bylaws- basically the ground rules for your corporation's operations- are not a legal requirement in New York, it is recommended that you prepare them for the purpose of establishing rules of operation and to help establish the legitimacy of your corporation to banks, creditors, the IRS, and others. A business law attorney can assist you in developing these bylaws.

For legal guidance on any business litigation matter on Long Island, contact the Law Office of Harras Bloom & Archer LLP at 631-498-5505.

Monday, April 21, 2014

Real Estate Tips for Small Businesses on Long Island

Many small businesses enter into a lease for commercial space on Long Island at some point. It’s important for business owners in Nassau and Suffolk counties to pay attention to some very important business issues when they enter into a real estate lease, whether you are considering leasing space for office, manufacturing or retail use. 

Set forth below we have some tips that may assist you in the commercial leasing process, and hopefully help you avoid unexpected financial and legal issues. 

1. Don’t assume the landlord’s routine “form lease” is non-negotiable.

Prospective tenants are often presented with a pre-printed lease including their name and various terms and conditions. A commercial property owner or manager will say that the document in front of the possible lessee is the landlord’s typical form lease, but don’t think that means there is no “wiggle room,” so to speak, to amend that lease to better fit your needs or more explicitly state the terms of the agreement. Be sure to read through the provisions of the lease, and then address the specific needs you have that the “form lease” doesn’t satisfy with the appropriate person. 

2. Put all notice requirements on your calendar.

Going over your lease with the proverbial fine tooth comb bearing in mind that some conditions are negotiable will help you pay attention to aspects of the agreement you wouldn’t have normally noticed or questioned. For example, your lease agreement may contain several provisions that require you to send notices to the landlord under certain circumstances, such as the amount of notice you have to give the landlord if you wish to renew or terminate your lease at the end of the term. You may have to give a year’s notice or more in some cases, so make a note of these dates in your calendar to ensure you comply with all notice requirements and do not forfeit any rights under your lease agreement.

The  experienced real estate litigation attorneys at Harras Bloom & Archer LLP provide counsel and assistance to small businesses throughout Long Island in the commercial lease process. For more information regarding the firm's legal services, contact our Long Island office at 631-498-5505.

Friday, March 28, 2014

Commercial Lease Activity in New York City Soars

A Commercial Real Estate Attorney Can Ensure Your Interests Are Protected

Even a 40-year history at the same address can lose its appeal when increasing commercial real estate prices lead to a higher-than-expected purchase offer, United Cerebral Palsy of New York City (UCPNYC ) recently learned. The New York Times reported on December 3 that Toll Brothers offered the UCPNYC $135 million for its four-story headquarter property located in the Gramercy Park neighborhood of Manhattan.

What’s notable about this transaction is that the purchase price is more than twice as much as an offer the UCPNYC received just six years ago. “The sum was beyond our wildest imagination,” said the chief executive of the UCPNYC, which has owned the building since 1973. “It couldn’t come at a better time.” Flat government support has tempted numerous New York non-profits to sell high-value properties, lease new headquarters and use sale proceeds to bolster foundation coffers: St. John’s University recently sold its property at 101 Murray Street, and the City University of New York recently sold its property at 20 East End Avenue. Both will lease newly renovated space instead.

While non-profits face eroding government income, a strong residential condominium market has lifted the value of commercial property. The result is high-value, profitable transactions for both commercial property owners, such as established non-profits, and residential real estate developers.

If your non-profit or other organization is considering leasing commercial property in New York City, Long Island or the surrounding area, it’s important that your full rights and interests are represented and protected in your lease contract. Issues to consider include:

  • What will the monthly lease cost be and how will its exact amount be determined?
  • Who will pay for utilities?
  • Who will pay for renovations and improvements?
  • Who will pay for maintenance?
  • How will disputes be resolved?
  • What are potential points of conflict and how can they be addressed and resolved before a dispute arises?
  • How will conflicts be resolved: through mediation, arbitration or litigation?

The attorneys of New York City and Long Island law firm Harras Bloom & Archer LLP have represented countless clients in commercial lease negotiations and commercial lease disputes. Our services include:

  • Fully assessing property conditions, code, zoning and municipal approval issues, market lease rates, and other issues, then aggressively representing client interests throughout lease negotiations.
  • Zealously assisting clients in avoiding lengthy litigation proceedings; aggressively representing clients in mediation, arbitration and litigation proceedings when lease disputes arise.

Lease disputes and challenges may involve property conditions, unpaid lease payments and other issues between the tenant and landlord, or may involve challenges involving the city or another government entity. As a full-service real estate law firm, we can handle all issues faced by your organization relating to land use, commercial leases and property, as well as land lease and purchase transactions.

For more information regarding our real estate and lease legal services, contact Harras Bloom & Archer LLP at our Melville, Long Island office at 631-393-6220 or our New York City office at 212-922-9545.

Monday, March 3, 2014

A Construction Dispute Leads to Severe Legal Sanctions

Developer Barred from Construction Work in New York State

New York has numerous laws devised to protect homebuyers from unscrupulous conduct on the part of real estate developers. When misconduct occurs, victims of fraud or poor workmanship can use the legal process to obtain the compensation they deserve, as illustrated in a case reported by loansafe.org, a consumer assistance organization.

In late 2013, state Attorney General Eric T. Schneiderman announced that condominium developers Joseph Scarpinito and Shiraz Sanjana were barred from “doing condo and securities-related work in New York," including offering condominiums and co-ops for sale. An earlier investigation found that the developers, who built an 8-story condominium building called The Mirada at 161 East 110th Street, had:

  • Failed to remedy construction defects which resulted in pervasive water leaks
  • Failed to obtain a permanent certificate of occupancy from the City’s Department of Buildings
  • Illegally retained $3.2 million of purchasers’ deposit monies
  • Illegally concealed their identities (with the assistance of their attorney)

In addition to being barred from construction and securities activities in New York, Scarpinito and Sanjana are required to pay $3.2 million to the 67 homebuyers at the Mirada.

As the results of this investigation demonstrate, parties in construction disputes can turn to civil court proceedings to obtain a fair outcome and compensation. If your firm is involved in construction dispute, either as a plaintiff or defendant, contact the New York and Long Island law firm of Harras Bloom & Archer LLP for experienced and knowledgeable legal help.

Our firm focuses on the areas of commercial real estate, business and commercial litigation and land use and zoning law. We represent key stakeholders, including owners, contractors, real estate developers, engineers, investors, lenders and trade associations, in disputes involving the construction of:

  • Condominium and coop developments and single-unit housing
  • Highways and roads
  • Hotel and resort facilities
  • Manufacturing, distribution and utility facilities
  • Office, retail and other commercial developments and real estate

Our objective is to protect each client’s bottom line. We accomplish this goal by combining a comprehensive understanding of real estate law, contract law and local municipal regulations with an attentive understanding of clients’ real estate project objectives and financial considerations. We are also highly experienced in weighing engineering and construction management factors and how they apply to individual cases.

Most often, clients’ interests are best served by skillful and well-prepared negotiations, or through structured mediation or arbitration. Our team, however, has litigated numerous cases involving businesses, the New York City Department of Buildings, local adjudicatory boards and other governmental entities. As our success stories webpage illustrates, we have achieved high-value resolutions for our clients in numerous construction disputes resolved through litigation. We handle cases involving property located throughout the Long Island and New York Metropolitan areas.

If you have questions regarding construction defect and other construction-related disputes in New York, contact Harras Bloom & Archer LLP. Call our Long Island office or New York City office at 631-498-5505 or 888-981-8659.

Tuesday, February 25, 2014

Real Estate Brokerage Dispute Solutions

Real estate brokers’ roles in property purchase and sale transactions are most often clearly defined. Yet disputes can arise that call into question the competency and fair dealing of both real estate brokers and the parties with whom they work. Contract disputes can also arise regarding the interpretation of key clauses. For example:

  • A broker may have difficulty collecting on a brokerage agreement
  • A client can allege that a broker made an error and sue the broker
  • Brokers and clients can disagree regarding whether a commission should be paid
  • Disputes can arise between a brokerage firm and an agent
  • Issues can arise regarding an agent's license, breach of fiduciary duty, earnest money and deposits and broker negligence

The Nassau and Suffolk County real estate attorneys of Harras Bloom & Archer LLP have decades of experience resolving a range of real estate-related disputes, including disputes involving brokerages, brokers and agents. We also provide legal counsel regarding the avoidance of disputes. Our services include but are not limited to the following:

  • Legal counsel to brokers and agents on how to anticipate potential problems and to avoid liability in order to avoid expensive and time-consuming disputes. Our counsel generally includes the negotiation, preparation and drafting of real estate brokerage contracts, including listing agreements. 
  • The resolution of disputes between brokerages and other parties. We are highly experienced real estate litigators who can assist at any point of a real estate dispute.

A common issue that leads to brokerage disputes is disagreements in the interpretation of real estate brokerage contracts. These contracts outline the rights and duties of both the broker and the buyer or seller whom he or she represents. The contract should describe when the broker is entitled to a commission and for what amount/in which percentage. However, disagreements can arise regarding:

  • Whether a fee will be paid only if there is a closing of a sale
  • The specifics of the broker's duties, such as showing the property, creating marketing materials and promoting the property
  • The owner's obligation to provide the financial information necessary to close a deal
  • Tail provisions covering the rights of all parties following the signing of a contract, including the broker's right to a commission regarding leads he or she has generated
  • The broker’s right to a commission if the owner took action that prevented a sale

We represent all parties facing legal challenges involving brokers and brokerages. As skilled real estate transaction and litigation attorneys, we can quickly and efficiently investigate the facts of the dispute that will likely have a bearing on the outcome. We have argued for real estate clients’ rights before judges, juries, arbiters and mediators in hundreds of cases, and our team’s skills and experience range from decades of client advocacy in the courtroom to service as a New York State Supreme Court referee in numerous real estate dispute matters. We can provide effective, results-driven representation both to keep you out of the courtroom and to get you out of the courtroom with your interests protected.

The  experienced real estate litigation attorneys at Harras Bloom & Archer LLP provide counsel and assistance to all stakeholders in transaction and contract disputes. For more information regarding the firm's real estate brokerage legal services, contact our Long Island office at 631-498-5505.

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