Question: My Company is currently in escrow to purchase an industrial office building. Although our due diligence period has expired, given recent market conditions, we fear we are over paying for the property. What options do we have? Answer: You’re not alone. Many buyers in this market are asking themselves this same question. Due to the absence of further details in your question, allow me a broad response. First, you as Buyer can always choose not to close. The only issue is what, if anything, will that choice cost you in the end. The first question to ask yourself is “[h]ow badly do I want this particular property?” The more you want it, the fewer options you have. Next, carefully review the purchase and sale agreement to ensure that Seller has satisfied any and all condition precedents (e.g., perhaps Closing is conditional on Seller making certain repairs or securing certain lien releases for recent work performed). If Seller fails to satisfy a condition precedent within the time allotted, then your legal duty as buyer to close is excused, thus enabling you to walk away and demand a refund of your deposit. Alternatively, you might choose to make Seller aware of your walk-away option (assuming you in fact have it) with the hope of negotiating a lower price in exchange for your commitment to close. Otherwise, if Seller has (or eventually will) satisfy all applicable condition precedents, I have real simple advice. Pick up the phone and call Seller. Be honest about the issue. Depending on a number of factors you cannot perhaps anticipate, Seller may be more accommodating than you expect. Lastly, assuming your purchase and sale agreement provides for your deposit to serve as liquidated damages, you may choose to walk away and forfeit your deposit. Depending on your alternatives, sometimes this is your best option (e.g. you might willingly choose to forfeit a $200,000 deposit, if you stood to acquire a property better suited for your needs for $1,000,000 less than your current deal). Q: We’re in the process of selling our company. Some of our business leases are in my individual name. Assuming all of the landlords consent to me assigning the leases to the company buying my company, am I free and clear of any future liability under these leases? A: Absolutely not. Obtaining an assignment is one thing. What you need is a release. An assignment merely makes your buyer a co-obligor on the lease. It doesn’t release you from your obligations. In order to sleep comfortably after your transaction closes, as a condition precedent to closing, you need to ensure that your purchase and sale agreement contains a provision obligating buyer to secure “assignments and releases” from all landlords relative to all leases on which you personally are reflected as either a tenant or guarantor. You should be prepared, however, for your buyer to push back on this request. In reality, although commercial landlords freely approve assignments, they rarely grant releases unless there is something in it for them (e.g., money, a promise to exercise a future upcoming option, etc.). Chances are your buyer will instead propose to agree to indemnify you for any claims arising from leases for which landlords refuse grant releases. However, keep in mind that buyer’s promise to indemnify you is only as strong as buyer’s ability and willingness to back up that promise. Q: Our marketing department has been updating our print collateral and has posed various questions regarding copyright. How is work copyrighted? How long does a copyright last? A: Copyrights are currently automatically conferred by law once the work is “fixed.” The Copyright Act states that a work is “fixed in a tangible medium of expression when its embodiment in a copy sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration ” Although an owner may enjoin an infringer from publishing a copyrighted work, an owner may not sue an infringer for damages and attorney fees unless the owner registered the work and provides prior notice [e.g., by affixing ” & #352;” to the work]. How long copyrights exist is a function of when they were created. Currently, a copyright lasts for the life of the author plus 70 years. In your case (work for hire), it lasts 95 years from the year of first publication or 120 years from the date of creation, whichever expires first. A word of caution you might want to confirm that you have written agreements with your marketing department (who are presumably employees as opposed to independent contractors which is relevant under the statute) clarifying that any and all work that they create within the course and scope of their employment constitutes work for hire and is thus the property of the Company. This column contains general information and under no circumstances constitutes legal advice. This information is not provided in the context of an attorney-client relationship and nothing herein creates an attorney-client relationship. Readers should not act upon this general information without first seeking professional advice.” Ira Rosenblatt is a business and corporate lawyer and a co-founder and Director of Stone, Rosenblatt & Cha, a business law firm in Warner Center. Rosenblatt has earned Martindale-Hubbell’s highest rating (“AV”) for legal ability and ethics and is listed in Martindale-Hubbell’s National Bar Register of Pre-eminent Lawyers. He can be reached at [email protected].
