If you are the landlord of commercial space, be extremely cautious when drafting your lease provisions with respect to repair and replacement of portions of the leased premises. Commercial tenants should also review their leases carefully to determine what they are responsible for. In order to avoid any potential disputes later, it is better to be clear upfront and delineate responsibilities in detail in a manner that is consistent with what both parties have bargained for.
Case in point: In Quincy Mall, Inc. v. Kerasotes Showplace Theatres, LLC, 903 N.E.2d 887 (Ill. App. Ct. 4th Dist., February 27, 2009), the commercial lease between the mall and the tenant, a theater, included a "general repair" clause with respect to the roof. Under the terms of that clause, the tenant was responsible for repairs to the roof. Eventually, the roof required replacement. When the mall failed to replace it in a timely manner, the theater informed the mall it would replace the roof and deduct the cost of the roof from its rent.
The court supported the tenant's position, because the lease did not contain a clear provision about roof replacement, only about roof repair. The lease stated only that the tenant was responsible for repairing the roof, not replacing it. Therefore the burden of replacing the roof remained with the landlord.
Bottom line -- When reviewing your commercial lease, make sure you understand exactly what your responsibilities are! When something breaks, you should know who needs to fix it.
Thursday, January 28, 2010
Thursday, January 21, 2010
Can a Tenant be Required to Obtain Insurance Against the Landlord's Negligence?
Sure, why not? A recent case, Clarendon American Insurance Company v. Prime Group Realty Services, Inc., Nos. 1 08 0791 and 1 08 1985 (Ill. App. Ct., 1st Dist.,March 26, 2009), specifically statest that if the landlord and tenant enter into a lease requiring the tenant to name the landlord as an additional insured, covering all losses, whether or not they occur as a result of the landlord's negligence, then the tenant must comply with the insurance provisions of the lease, or be in violation of the lease.
In the Clarendon case, the tenant argued that it was not fair for the tenant to have to procure and maintain insurance for the landlord's negligent acts. The court disagreed -- the terms of the lease were explicitly agreed to. Moreover, the court distinguished between insurance and indemnification. It is against public policy for a party to be indemnified for its own negligence. It is not, however, against public policy to have another party insure the negligent party against its own negligence.
When entering into any commercial lease, the insurance and indemnification provisions should be reviewed carefully and agreed to by all parties to prevent any misunderstandings, and hopefully, any litigation down the line!
In the Clarendon case, the tenant argued that it was not fair for the tenant to have to procure and maintain insurance for the landlord's negligent acts. The court disagreed -- the terms of the lease were explicitly agreed to. Moreover, the court distinguished between insurance and indemnification. It is against public policy for a party to be indemnified for its own negligence. It is not, however, against public policy to have another party insure the negligent party against its own negligence.
When entering into any commercial lease, the insurance and indemnification provisions should be reviewed carefully and agreed to by all parties to prevent any misunderstandings, and hopefully, any litigation down the line!
Wednesday, January 6, 2010
Landlords and Recent Amendments to the Illinois Human Rights Act
As most landlords know, they cannot and should not discriminate against tenants or prospective tenants based on age, race, religion, gender, color, or family status. Pursuant to a recent amendment to the Illinois Human Rights Act, a new protected class is being added to that list -- people protected by orders of protection. Note this new law specifically applies to people who are actually protected by the order of protection, not to people the order of protection has been obtained against.
A landlord, or, for that matter, a seller of real estate, cannot discriminate against a potential tenant or buyer solely because they have an outstanding order of protection, whether that order of protection was issued by an Illinois court or an out-of-state court. As a landlord, if you enter into any leases, make sure that there is nothing in the lease that could violate the Illinois Human Rights Act. Lease provisions need not be directly in violation of the Illinois Human Rights Act -- any lease provision that could lead to eviction due to the actions of others (i.e. the person who the order of protection has been obtained against), should be reviewed carefully to prevent alleged violation of the Illinois Human Rights Act.
While many landlords may never find out if their tenant is the beneficiary of an order of protection, landlords that do find out must not discriminate against a tenant or proposed tenant as a result.
A landlord, or, for that matter, a seller of real estate, cannot discriminate against a potential tenant or buyer solely because they have an outstanding order of protection, whether that order of protection was issued by an Illinois court or an out-of-state court. As a landlord, if you enter into any leases, make sure that there is nothing in the lease that could violate the Illinois Human Rights Act. Lease provisions need not be directly in violation of the Illinois Human Rights Act -- any lease provision that could lead to eviction due to the actions of others (i.e. the person who the order of protection has been obtained against), should be reviewed carefully to prevent alleged violation of the Illinois Human Rights Act.
While many landlords may never find out if their tenant is the beneficiary of an order of protection, landlords that do find out must not discriminate against a tenant or proposed tenant as a result.
Thursday, December 24, 2009
Can the Illinois Homeowner Protection Act help you?
The Homeowners Protection Act (HPA) is meant to help Illinois homeowners who are at least 30 days behind on their mortgage payments. Regardless of the homeowner's income or the size of the loan, the law places certain requirements on lenders:
1) Lenders must notify homeowners in writing when the loan is more than thirty days past due.
2) Lenders must provide an opportunity for the homeowner to obtain housing counseling within 30 days. If a homeowner chooses to get counseling, he can contact any U.S. Housing and Urban Development (HUD) certified counseling agency.
3) In their written notice, lenders must clearly state that if the homeowner seeks housing counseling, the homeowner will receive an additional 30 day grace period.
4) Lenders cannot start foreclosure proceedings until they have provided this notice and allowed the counseling and grace periods, if applicable, to pass.
If you are in a situation where foreclosure on your home was initiated prior to April 9, 2009 (when the HPA was signed), it is too late for the protections of the HPA. Additionally, the law only applies to each loan once; if you default on a loan the first time, the HPA will apply. If you are able to work out a payment plan with the lender and default again, the HPA will not apply, and you will receive not further grace periods under the HPA. If the loan is not on your principal place of residence, it does not qualify under the HPA. Moreover, if you have applied for bankruptcy, the HPA will not apply.
Assuming you otherwise qualify for the protections of the HPA, keep in mind that this law will expire on April 8, 2011.
1) Lenders must notify homeowners in writing when the loan is more than thirty days past due.
2) Lenders must provide an opportunity for the homeowner to obtain housing counseling within 30 days. If a homeowner chooses to get counseling, he can contact any U.S. Housing and Urban Development (HUD) certified counseling agency.
3) In their written notice, lenders must clearly state that if the homeowner seeks housing counseling, the homeowner will receive an additional 30 day grace period.
4) Lenders cannot start foreclosure proceedings until they have provided this notice and allowed the counseling and grace periods, if applicable, to pass.
If you are in a situation where foreclosure on your home was initiated prior to April 9, 2009 (when the HPA was signed), it is too late for the protections of the HPA. Additionally, the law only applies to each loan once; if you default on a loan the first time, the HPA will apply. If you are able to work out a payment plan with the lender and default again, the HPA will not apply, and you will receive not further grace periods under the HPA. If the loan is not on your principal place of residence, it does not qualify under the HPA. Moreover, if you have applied for bankruptcy, the HPA will not apply.
Assuming you otherwise qualify for the protections of the HPA, keep in mind that this law will expire on April 8, 2011.
Thursday, December 17, 2009
Illinois Down Payment Assistance Program!
For homeowners who are taking advantage of the Illinois Housing Development Authority's (IHDA's) Home Start program, down payment assistance may be available. The IHDA will loan you 3% of your purchase price, up to $6,000, if you meet certain criteria:
1) You must be a first-time homebuyer (unless you are a veteran).
2) You must qualify for and secure an IHDA 30-year fixed rate loan.
3) You must meet purchase price guidelines.
4) You must meet certain income requirements.
5) You must be willing to participate in homeownership counseling.
The IHDA's down payment assistance loan has zero percent interest, payable in 10 years. Moreover, the loan may be forgivable. For more information directly from the IHDA, click here.
Whether or not you qualify for this program does not affect your ability to receive the current $8000 tax credit for first-time homebuyers. For more information on that credit, click here.
1) You must be a first-time homebuyer (unless you are a veteran).
2) You must qualify for and secure an IHDA 30-year fixed rate loan.
3) You must meet purchase price guidelines.
4) You must meet certain income requirements.
5) You must be willing to participate in homeownership counseling.
The IHDA's down payment assistance loan has zero percent interest, payable in 10 years. Moreover, the loan may be forgivable. For more information directly from the IHDA, click here.
Whether or not you qualify for this program does not affect your ability to receive the current $8000 tax credit for first-time homebuyers. For more information on that credit, click here.
Thursday, December 10, 2009
Contractors and Lien Notices
Effective January 1, 2010, the Mechanics Lien Act shall be amended to require contractors to provide written notice to a homeowner within ten days after recording any lien against the home. This amendment applies specifically to contractors and owner-occupied single-family homes. Subcontractors and other types of homes are not covered by the amendment. Furthermore, the amendment only applies to contracts entered into after January 1, 2010.
The legislature intends the ten-day rule to be quite strict. If a contractor files a lien and fails to notify the owner of a single-family owner-occupied residence that a lien has been filed, the lien is extinguished to the extent of any actual damages the owner incurs as a result of the lien, so long as the damages were incurred before the contractor provides notice of the lien.
Residential contractors should take care to comply with this new law in order to preserve their liens!
The legislature intends the ten-day rule to be quite strict. If a contractor files a lien and fails to notify the owner of a single-family owner-occupied residence that a lien has been filed, the lien is extinguished to the extent of any actual damages the owner incurs as a result of the lien, so long as the damages were incurred before the contractor provides notice of the lien.
Residential contractors should take care to comply with this new law in order to preserve their liens!
Friday, December 4, 2009
New Tax Incentive Program for Vacant Buildings
Vacant buildings are taking a toll on county tax rolls. In order to encourage occupancy of vacant buildings, the Illinois legislature has approved Public Act 96-755 (HB 4120). Effective January 1, 2010, the legislature will grant local governmental authorities an incentive for abating any portion of property tax on a building that was vacant for at least 24 consecutive months prior to being occupied by a business.
In order for a local government to abate any portion of the property tax, a majority of its governing body must vote in the abatement's favor. The abatement cannot be for longer than two years, and the total tax abatement for all taxing districts involved cannot exceed $4 million dollars.
The legislature hopes that this new tax incentive program will encourage business-owners to buy and take over vacant buildings!
In order for a local government to abate any portion of the property tax, a majority of its governing body must vote in the abatement's favor. The abatement cannot be for longer than two years, and the total tax abatement for all taxing districts involved cannot exceed $4 million dollars.
The legislature hopes that this new tax incentive program will encourage business-owners to buy and take over vacant buildings!
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