Monthly Archives: March 2013

Renewal Options in Commercial Real Estate Leases

By Louis Pashman, Esq.

Let’s assume you own a building.  You have a tenant with a written lease.  That lease contains an unambiguous clause that gives the tenant an option to renew the lease on terms set forth.  In order to exercise the option, the tenant must notify you in writing during a specified time period that he intends to exercise the option.  The tenant does notify you in writing but a bit outside the specified time period.

The general rule is that the exercise of an option is a “time of the essence” provision.  There are two cases, however, which have held that, when it comes to renewal options in a landlord-tenant relationship, that general rule is modified.

In the first case, thirty-nine days after the deadline for exercise, the tenant had not notified the landlord.  Landlord wrote to tenant informing him that he had to vacate because he, the landlord, was planning to expand into the tenant’s space.  Within a day or two of receiving that notice, the tenant wrote to landlord notifying him that he intended to exercise the option.  Tenant had been there for ten years and argues it would be unjust and inequitable to forfeit his lease.

The court agreed.  Finding that the tenant would suffer substantial harm if forced to relocate and that the landlord had not changed his position based on the non-exercise of the option, the court held that this “special circumstance” justified renewal of the option.

A decade later, another court reached the same conclusion in a case where the tenant had exercised the option prematurely.

From these two cases we know that a technically non-compliant exercise of the option will not work forfeiture when:

  1. Substantial harm would result to the tenant if forced to relocate;
  2. The landlord did not change his position in reliance on the delay;
  3. The failure by the tenant to give notice was based on an “honest mistake of fact;”
  4. The delay was “slight;”
  5. The loss to the landlord, if any, was “insignificant;”

Clearly, courts will not allow landlords to use “tactics” to avoid the option.  A landlord can, however, diminish the equitable argument a tenant might otherwise have if he reminds the tenant in advance of the approaching deadline or, if no notice is received, he takes significant action in reliance on his belief that he has no tenant.  From a tenant’s point of view, don’t rely on this exception to the general rule.  Be sure to comply completely with all requirements of the option clause.

Three Legal Developments Are Designed to Ease and Speed Sandy-Related Disaster Relief Process for New Jersey Residents and Businesses

By Samantha Sherman, Esq.

New Jersey Establishes New Insurance Mediation Program to Speed Sandy-Related Claims

A new mediation program will allow New Jersey residents whose property was damaged or destroyed by Sandy to settle disputed insurance cases without having to engage in costly and time consuming litigation.  Under the program, property owners will be able to submit homeowner’s, automobile and commercial property insurance claims to a mediator who will review the case and assist in settlement discussions.  Insurance carriers will pay for the cost of the mediator.

The program will be available for non-flood Sandy-related claims greater than $1,000 that do not include a reasonable suspicion of fraud and are based on policies in force at the time Sandy made landfall.  The program initially will not include flood insurance claims because the National Flood Insurance Program (NFIP) handles those claims pursuant to federal regulations.   However, the New Jersey Department of Banking and Insurance will monitor and assess the viability of securing NFIP participation in certain cases at a later date.

State regulated insurers must notify insureds with open or unresolved homeowner’s, automobile and commercial property claims that they can request a mediation conference and detailed instructions regarding how to file such a request.

Insurers authorized or admitted to transact business in New Jersey and the New Jersey Insurance Underwriting Association will be required to participate in the program.  Surplus lines insurers and risk retention groups may elect whether or not to participate on a case-by-case basis.  Participation by policyholders is entirely voluntary.

FEMA Extends Deadline for Sandy Disaster Assistance Registration by 30 Days

New Jersey residents affected by Sandy now have until April 1, 2013 to register for individual disaster assistance through the Federal Emergency Management Agency (FEMA).  The deadline extension applies to homeowner, renter and business registration with the Small Business Administration (SBA) for Disaster Loan Assistance.

New Jersey businesses also have until July 31 to apply for SBA economic injury disaster loans.

Shore Businesses to Enjoy Expanded Seasonal Alcoholic Beverage License Term

Because shore businesses were unable to remain open through November 2012 as a result of mandatory evacuations, power outages and other disruptions caused by Sandy, seasonal alcoholic beverage consumption licensees will be permitted to serve alcoholic beverages beginning on March 1 instead of May 1 for the 2013 tourism season.

Seasonal alcoholic beverage licensees will be able to serve alcoholic beverages through November 14, 2013.

Policy Banning Work from Home May Not Defeat a Disabled Employee’s Request for a Reasonable Accommodation

By Andrew M. Moskowitz, Esq.

As has been widely reported, at the end of February 2013, Yahoo! issued a memorandum in which it “ask[ed] all employees with work-from-home arrangements to work in Yahoo! offices.”  In the memorandum, Yahoo! noted that “being a Yahoo isn’t just about your day-to-day job, it is about the interactions and experiences that are only possible in our offices.”

What will happen if Yahoo! applies this policy across-the-board with no exceptions for individuals with disabilities?

Both New Jersey and New York law provide that unless employers can demonstrate an undue hardship on the operation of their businesses they are required to provide disabled individuals with a reasonable accommodation.  The Americans with Disabilities Act (ADA) imposes a similar obligation.  In defining the term reasonable accommodation, both the Code of Federal Regulations and the New Jersey Administrative Code refer to job restructuring, part-time or modified work schedules.  Similarly, the New York Code of Rules and Regulations lists as examples of a reasonable accommodation job restructuring; modified work schedules; and adjustments to an employee’s work schedule.

Some courts have questioned whether being in the office full-time is an essential function of the job.  For example, in one case in which an employee who experienced pre-term labor and other complications resulting from her pregnancy sought to work from home part-time, the court found that whether the proposed accommodation would have imposed an undue burden on the employer was a question of fact for the jury.

In contrast, where an employer can demonstrate that an employee’s presence at the office is an essential requirement of the position, it will not be required to permit the disabled employee to work from home.  For example, in one case, the plaintiff was a clerk for a trucking company who had sought to work in the office four hours per day and work the remainder of the time from home.   Her duties included meeting with the drivers weekly to review their daily driving logs; training the drivers in the proper completion of these logs; reviewing the logs to detect falsification, entering the logs into a computer and other administrative duties.

The Court found that the Plaintiff’s position required her presence at the office to perform virtually all of the essential functions of her job.  It therefore determined that her request for a modified work schedule in which she worked at home part-time was unreasonable and would impose an undue hardship on her employer.

The lessons employers may draw from the above examples is, first, a policy such as that implemented by Yahoo! must make accommodations for individuals with disabilities.  Clearly, an employer’s desire that its employees have “interactions and experiences that are only possible” at the office would not, standing alone, defeat a disabled employee’s request for a temporary job restructuring.  In addition, if employers believe that an employee’s daily presence at the office is an essential function of the position, they should prepare accurate job descriptions which document this requirement.

Providing Accommodations to Employees with Disabilities
MAY 17, 2013 // 7:30 – 9:00 a.m.

Yahoo! recently mandated that all employees with “work-from-home arrangements” discontinue these practices and work in Yahoo! offices.  Can an employer enforce such a policy across-the-board with no exceptions for individuals with disabilities?    The Americans with Disabilities Act of 1990, the New Jersey Law Against Discrimination and the New York State and New York City Human Rights Laws all require employers to provide a reasonable accommodation to employees with disabilities.  Accordingly, a policy such as that implemented by Yahoo! must make accommodations for individuals with disabilities.

This seminar will examine various hypotheticals with a focus on leaves of absence; requests to work at home; and modified work schedules.  It will also discuss the importance of employers drafting accurate job descriptions which describe the essential functions of each position.

Pashman Stein Offices: Court Plaza South, 21 Main Street, Suite 100, Hackensack, New Jersey 07601

To RSVP, please email by no later than May 10. There is no fee to attend but registration is mandatory.