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  • A real estate development generally progresses through the following stages before construction can begin:

    1. Project planning;
    2. Forming an investment entity;
    3. Negotiating the development agreement;
    4. Negotiating the land acquisition and performing due diligence;
    5. Land use, zoning, and regulatory compliance;
    6. Retaining the contractor;
    7. Securing the financing; and
    8. Closing the acquisition and financing.

    A commercial real estate development project typically begins with a real estate developer who formulates and oversees a project from inception through completion. One consideration that a developer typically analyzes is the geographic area in which the development is located. To do so, the developer typically obtains a commercial real estate broker to assist in selecting the best location for the development. Commercial brokers often have access to large databases containing information about potential properties and development locations, including details on the demographics, price, recent sales, and much more.

    Once a developer identifies a potential development site, the due diligence phase begins. The preliminary due diligence phase determines the project’s feasibility prior to negotiating a letter of intent or term sheet to purchase the land.

    The negotiation aspect of the land acquisition usually coincides with the formation of the investment entity and any joint venture and development agreements, if applicable. If the developer has the financial means, then they may sign a purchase agreement or acquire the land before the investors are committed to development, if the project is to become a joint venture.

    What is a joint venture agreement? A joint venture agreement specifies the terms on which investors agree to provide capital for a development project, how that capital will be repaid, and how the various parties will each have a role in the conduct of the entity’s business and management of the project. When a joint venture agreement is drafted for a development project, it often contains financial arrangements between the developer and the investor. Many times, these arrangements involve a development fee and the promote payment structure. What is a development fee? A development fee represents the compensation paid to the developer throughout the construction period. What is the promote? The promote is the disproportionate share of profits paid to the developer following the repayment of capital plus a negotiated return to the investors.

    Now, what are purchase and sale agreements? Purchase and sale agreements encompass the many various deal points associated with the acquisition of the land underlying the development, which deal points may include:

    1. Seller’s representations regarding the property,
    2. Expiration of the due diligence period, and
    3. The purchaser’s closing contingencies.

    The representations regarding the property include representations that the seller has made about the property and the condition of the buildings on the property (if any) in addition to any known historical information about the property. As for due diligence periods, they are often included as points in purchase and sale agreements, as it is essential that the real estate developer has the opportunity to analyze the property and ensure it is fit for the intended development. Due diligence periods are also used to allow a developer to obtain zoning variances or other land approvals and potentially secure construction financing and engage contractors, architects, and other consultants.

    A development agreement is typically entered into between an affiliate of the developer and the property owning-entity. As the developer is often also a partner in the joint venture that owns the land on which the development is taking place, the developer must wear two different hats in the development process. The roles set forth in the development agreement set out the developer’s specific responsibilities as a contractor and building during the construction process and the development agreement also provides the limits on the developer’s authority during this construction period.

    One development aspect that often presents many unknowns, and that is time consuming and resource-intensive, is the zoning and land use compliance process. Developers must understand the federal, state, and local laws and regulations regarding zoning, environmental compliance, building and fire codes, and construction labor. This aspect of the due diligence process can take weeks, sometimes years, to complete.

    The last stage of the development process before breaking ground is the closing of the land acquisition, which may involve financing transactions. Considering all the fluctuating factors that occur during a real estate development deal, there is no “typical deal,” but rather just what is considered to be standard during a deal.

    As can be seen, it is crucial that you fully understand the various stages of development that take place before construction begins if you are involved, or want to be involved, in a commercial real estate development. KI Legal’s real estate attorneys are well versed in these matters and are prepared to help guide you through the process. For more information on commercial real estate developments, or for help with your particular real estate venture at hand, contact us at (212) 404-8644 or email info@kilegal.com to discuss.

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team.

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.

    Commercial Real Estate Developments 101
    Development and Finance,  Real Estate and Finance
  • Property and liability insurance are important and often required in various real estate transactions. In a lease, for example, a landlord will make sure that there is an insurance provision with coverage adequate to protect its property. In a purchase and sale of real estate, purchasers will often want to make sure that a seller maintains its insurance coverage so that, if there is any damage to the property before closing, the property can be restored to its original state at the time the contract to purchase the property was signed, and the sale can proceed as planned. Alternatively, a seller may require a purchaser to obtain insurance coverage before the purchaser enters onto the seller’s property for the purchaser to perform its due diligence to ensure that, in the event the purchaser damages the property in any way, the damage can be adequately repaired.

    Why are insurance policies important?

    Insurance policies allow the policy holder, the individual or entity being insured, to shift its financial risk onto a third-party insurance company. By paying an insurance company a small premium, the insured can use the money that may have otherwise been tied up as a safety net for certain scenarios for other investments. For example, if a purchaser wants to enter onto a seller’s property to perform due diligence, the purchaser would be doing so at his own risk. If something were to go wrong and the purchaser would damage the property, the purchaser would be required to repair the property or reimburse the seller for whatever damage was caused. To protect itself in such a situation, and if there were no insurance companies, it would be prudent for the purchaser to stash an adequate sum of money just in case something goes wrong. With an insurance policy in place, the purchase can take the sum of money he would’ve kept as a security blanket and use it to enter a new business deal.

    Why do lenders require insurance policies?

    Another real estate transaction that involves insurance policies is mortgage loans. One of the requirements that a borrower needs to satisfy to obtain a mortgage loan is insurance coverage. A lender will require a borrower to obtain property insurance in an amount sufficient to cover the worth of the property that the lender will be placing a mortgage on so that, if the property is destroyed, the insurance company can make the lender whole by paying the lender the worth of the property. For the lender to be entitled to receive an insurance payout, if necessary, the lender must be named as an “additional insured.” What is an additional insured? An additional insured is a third-party beneficiary to an insurance policy. In the case outlined above, the borrower of the loan will pay for the insurance policy and have the insurance company add the lender as an additional insured to ensure the lender would be entitled to receive any paid-out insurance proceeds.

    Insurance clauses in real estate contracts are often heavily negotiated and hard to navigate. It is therefore important to make sure you have proper representation when negotiating your real estate contracts. For more information, or for help on your next real estate deal, reach out to the knowledgeable real estate attorneys at KI Legal by calling (212) 404-8644 or emailing info@kilegal.com.

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.

    Property and Liability Insurance in Real Estate Transactions
    Insurance Defense,  Premises Liability ,  Real Estate and Finance
  • Choice of law refers to the decision a court must make about the substantive law it will apply to the facts of a case when there is a conflict of law. A conflict of law arises when the law of more than one jurisdiction may apply to the dispute and the laws of the jurisdictions differ. As one might expect, different states apply different choice of law tests to determine which law to apply. The tests depend on the nature of the case and the manner in which the case was brought before the court. Generally, there are three tests that courts use in this context: the traditional test, the significant relationship test, and finally, the governmental interest analysis test.

    Choice of Law Test 1: The Traditional Test

    Courts employing the traditional test apply the law of the place where the event that gave rise to the claim occurred and that created the right upon which the party brings the lawsuit. In a tort action, such as an action based in negligence, the law of the place of the wrong—of the tort—is applied. In contract actions, the law applied is the law of the jurisdiction in which the contract was made.

    Choice of Law Test 2: The Significant Relationship Test

    Courts using the significant relationship test apply the law of the jurisdiction that has the most significant relationship to the dispute. In tort actions, courts generally consider factors such as the place of the injury, the place where the conduct causing the injury occurred, the domicile of the parties, and the place where any relationship between the parties is based. In contract actions, courts look to the place of contracting, of negotiations, of performance, the location of the subject matter, and domicile of the parties.

    Choice of Law Test 3: The Governmental Interest Analysis Test

    Finally, courts applying the governmental interest analysis test consider the policies underlying the law of each state and apply the law of the jurisdiction that has the greatest interest in the litigation. Factors considered by courts applying this test include, predictability of results, maintenance of interstate and international order, simplification of the judicial task, advancement of the forum’s governmental interests, and application of the better rule of law. It should be noted that some states apply their own tests to determine choice of law.

    Interestingly, New York applies the third test, the governmental interest analysis. In tort actions, a New York court, after identifying the types of laws in conflict, applies the law of the jurisdiction in which the tort took place, if the conflict involves laws that regulate conduct. In a contract dispute, a New York court, first having determined whether or not the contract contains a choice of law provision, applies the law of the state chosen by the parties if the law has a reasonable relationship to the parties or transaction and does not violate the public policy of the state. If the contract does not contain such a provision, New York applies a center of gravity analysis, which involves analysis of the significant relationship test factors.

    To learn more about the substantive law that may apply to your specific matter, or for services related to your specific situation, contact our knowledgeable corporate governance attorneys at (212) 404-8644 or email info@kilegal.com to get the help you need. 

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team. 

     ____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.  

    Choice of Law in Tort and Contract Actions
    Commercial Disputes,  Commercial Litigation,  Commercial Real Estate
  • This article presents the exit and termination provisions that may assist parties in the event an investor/member in a joint venture is looking to exit or terminate their relations.

    Joint ventures are typically flexible business organizations that respond to market conditions and other circumstances. However, as time passes and situations change, parties to a joint venture may no longer have the same goals and share the same strategic interests. For example, one party may have a difficult time performing their responsibilities due to financial difficulties or operational difficulties. In the case that the parties’ motives, goals, and strategies change it is vital to have a well-crafted termination and exit provision within the joint venture agreement.

    There are numerous ways joint venture parties can provide for an early exit from, or termination of, a joint venture. An overview of the common themes can provide a good foundation for deal specific, creative solutions. Further, there are two main reasons why joint venture parties need exit and termination provision: deadlock and default or change of control of one of the parties.

    Deadlock is usually defined as the inability of the joint venture parties to agree to any one of a particular subset of the supermajority issues. Such supermajority issues are approval of annual budgets and business plans, raising additional equity capital from the existing parties or others; amendments to the joint venture entity’s governing documents; engaging in a public offering; mergers, acquisitions, and dispositions of all or substantially all of the joint venture’s assets; dissolution; and granting liens on material assets. This is not a comprehensive list but an idea of what joint ventures typically have supermajority votes on.

    In addition to deadlock situations, if one party materially breaches the joint venture agreement the other party will usually be entitled to trigger exit provisions. The terms of the exit rights in a default or change of control situation usually vary from deadlock situations because one party is at fault. Usually, in the case of default the non-defaulting party can decide whether to buy out the other party or sell its own interest under a buy sell provision. Change of control is treated similarly to defaults.

    If a party does not provide for an exit, then that will lead to inefficiency and delay in resolving the situation, resulting in lost value. However, if the parties do not provide mechanisms to deal with a deadlock situation, then they can turn to the applicable law that is used to address those situations.

    If a deadlock arises in a joint venture situation. The first step is to try and resolve it with an escalation procedure. An escalation provision applies when the issue has already been discussed by the board of directors. A part that wishes to break the deadlock must provide notice to the one party and then the issue is submitted to specified high level officers of each JV party. Those officers will then be required to attempt to resolve the deadlock for a specified period of time.

    Furthermore, a buy sell provision is used in connection with a deadlock. It is also used with certain modifications if the other party materially breaches a joint venture agreement or experience a change in control. A buy sell provision is invoked when one JV party is buying the other party out. Therefore, once the buy sell provision is triggered, it ends the deadlock by removing a party from ownership.

    It is vital that joint venture agreements are drafted with the appropriate exit and termination provisions. In ensuring that these provisions are protective and appropriate it is fundamental to hire an attorney to conduct such drafting.

    KI Legal’s Transactional attorneys are well versed in these matters and are prepared to help guide you through the process. For more information on joint ventures, or for help with your particular real estate venture at hand, contact us at (212) 404-8644 or email info@kilegal.com to discuss.

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team. 

     ____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.  

    Joint Ventures: Exits and Terminations
    Joint Ventures,  Real Estate and Finance
  • As one of the most populous and economically significant states in the country, New York has a complex web of labor laws aimed at protecting workers’ rights and ensuring fair and accurate compensation. Among these laws are notice and record-keeping requirements that employers must comply with to avoid penalties and/or civil liabilities. This article will delve into some of the specifics of these requirements.

    New York law requires employers to provide written notice of an employee’s rate of pay, regular payday, and other relevant information at the time of hiring. The notice must be provided in both English and the employee’s native language, if different, and if the state has provided a template for the translation of such notice. Employees must also sign a statement acknowledging their receipt of the notice. The employer must keep the signed and dated notice and acknowledgment for at least six years, and it must give the employee a copy. The written notice to the employee must contain the following information:

    • The employee’s rate of pay including overtime rate, if applicable;
    • The basis of the rate of pay (such as, for example, by the hour, day, week or by salary or commission);
    • Any allowances the employer intends on taking as part of the minimum wage, such as a tip or meal credit;
    • The regular payday, which must comply with requirements set forth in New York’s Labor Law;
    • The name of the employer, including any d/b/a;
    • The address of the employer’s main office or place of business and a mailing address, if different;
    • The employer’s phone number; and
    • “Such other information” as New York’s Labor Commissioner “deems material and necessary.”[1]

    An employee or the Commissioner of the Department of Labor may bring legal action against employers who fail to provide the above notice within ten (10) business days of an employee’s first day of work. Either may recover from the employer $50 for each workday that a violation occurs, with a maximum recovery of $5,000 plus attorneys’ fees.

    On each payday, employers must also provide detailed wage statements or paystubs to employees containing the following information:

    • The dates of work covered by that payment;
    • The employee’s name;
    • The employer’s name, address, and phone number;
    • Pay rate and the basis of the pay rate (such as, for example, hourly, daily, or weekly, or salary or commission);
    • Gross wages;
    • Deductions;
    • Allowances, if any, claimed as part of the minimum wage; and
    • Net wages.

    For employees who are paid hourly (i.e., non-exempt employees), the wage statement or paystub must also contain the following information:

    • Regular hourly rate of pay;
    • Overtime rate of pay;
    • Number of regular hours worked;
    • Number of overtime hours worked, if any; and
    • For employees paid on a piece rate, the applicable piece rate of pay and the number of pieces completed at each such piece rate. (Piece work is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed, regardless of time. Some industries where piece rate pay jobs are common are agricultural work, cable installation, call centers, writing, editing, translation, truck driving, data entry, carpet cleaning, craftwork, garment production, and manufacturing.[2])

    Employees who fail to provide wage statements will be subject to civil action by either or both the employee and the Department of Labor. Recovery could be $250 for each workday the violation occurs, up to a maximum of $5,000, plus attorneys’ fees.

    Furthermore, employers must maintain for at least six (6) years accurate payroll records that show, for each employee, the following information:

    • Name, address, and social security number;
    • Actual hours worked for each workday;
    • The number of weekly hours worked;
    • Pay rate and the basis of the pay rate (such as, for example, hourly, daily, or weekly, or salary or commission);
    • Gross wages;
    • Deductions;
    • Student classification;
    • Tip credits, if any, claimed as part of minimum wage; and
    • Net wages paid.

    For non-exempt employees, employers’ payroll records must also contain the following information:

    • Regular hourly payrate;
    • Overtime rate;
    • Number of regular hours worked;
    • Number of overtime hours worked, if any; and
    • For employees paid on a piece rate, the applicable piece rate of pay and the number of pieces completed at each such piece rate.

    There are two other related notice requirements: First, an employer must notify its employees about various employee benefits, including but not limited to sick leave, personal leave, vacation, holidays, and work hours. These notices can be made in writing—typically through an employee handbook—or by conspicuous public posting in the workplace. Second, employees must provide terminated employees with a termination notice within five (5) business or working days of termination. Termination does not only mean firing—it can also mean quitting, resigning, being laid off, etc. The termination notice must include the exact date of termination and the exact date of the cancellation of any employee benefits. If accident or health insurance are part of an employee’s benefits, the failure to give an employee a notice of termination of such benefits can subject the employer to fines of up to $5,000.

    New York Labor Law is complex. Employers must take notice and record-keeping requirements seriously to avoid legal liabilities, penalties, and—importantly—to be prepared in the unfortunate event of a lawsuit. Diligent record-keeping can make the biggest difference in the outcome of employment litigation. Moreover, by providing proper notice and wage statements, maintaining accurate records, and fulfilling notice requirements, employers can help ensure compliance with the Labor Law and protect the rights of their employees. At KI Legal, our labor & employment attorneys have extensive experience navigating the intricacies of New York’s labor laws. If you are a business owner with any questions or concerns regarding what we discussed here today, contact our team to assist you. Call (212) 404-8644 or email info@kilegal.com for a free consultation today.

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team. 

     ____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.  


    [1] N.Y. Lab. Law Sec. 195(1)(a)

    [2] Gittleman, M., & Pierce, B. (2015). Pay for Performance and Compensation Inequality: Evidence from the ECEC. ILR Review, 68(1), 28–52. https://doi.org/10.1177/0019793914556241

    Notice and Record-Keeping Requirements Under New York Labor Law
    Wage & Hour Employment
  • Commercial leases contain numerous provisions that impose various obligations on tenants. The most commonly known obligation is the tenant’s obligation to pay rent. Tenants are also usually required to carry insurance that covers the property and take out the garbage. Although there are the general obligations that are allocated by law or custom, landlords and tenants can negotiate various obligations. One commonly negotiated obligation is the obligation to maintain and/or repair the leased premises.

    The repair and maintenance provisions in a lease control which party is responsible for maintaining and repairing various facilities within the leased premises. In the event a tenant negligently breaks something, the tenant will, more often than not, be required to repair such damage. When it is unclear whether the landlord or tenant damaged the premises, it can raise the question of who is responsible for repair of the damage? Additionally, which party is responsible for the basic maintenance of the space and the systems within?

    The simple answer is that the lease will determine the responsible party. The negotiated terms of the lease dictates whether the landlord or the tenant will need to repair the damage that the premises sustains. The lease will also state who needs to maintain the premises in its original condition (normal wear and tear excepted). Lease negotiations can even extend to the type of lease the parties are executing. For example, the terms of a triple net lease call for the tenants to be responsible for most, if not all, of the overhead expenses incurred in the upkeep of the premises and paying fees associated therewith. In a triple net lease, it is expected that the tenant will be responsible for the maintenance and repair obligations. However, in a standard lease agreement, most often the tenant is responsible to repair any damage that the tenant causes and any damage that happens within the premises, but the landlord will be responsible for the maintenance of building systems (i.e., plumbing and electrical), damage that the landlord causes, in addition to maintaining and repairing the structural elements (e.g. roofs, foundations, etc.) of the building where the leased space is located.

    As you can see, it is important to understand the type of lease that you are entering into before you start negotiations, as it will invariably change the repair and maintenance obligations a tenant has to undertake. When negotiating a lease it is advisable to be represented by an attorney who understands the different types of leases and the negotiating techniques that allow a party to get the best possible terms, including repair and maintenance terms, in any type of lease. Our experienced real estate attorneys here at KI Legal are ready and able to help assist you. For more information, or for help on your next lease agreement, reach out to the knowledgeable real estate attorneys at KI Legal by calling (212) 404-8644 or emailing info@kilegal.com

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team. 

     ____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.  

    Maintenance and Repair Obligations in Commercial Leases
    Commercial Landlord-Tenant Disputes,  Commercial Real Estate,  Real Estate and Finance
  • Being that New York City has been the center of business and commerce for the country for well over a century, it is only logical that the state has a long history of case law regarding business torts. Among the most common of these torts is fraud. During the course of business, fraud may come about through the following means: (1) contract disputes, (2) the purchase and sale of goods, and (3) securities transactions.[1] Claims of fraud may take several forms, but in this article, we will discuss equitable fraud, which is defined as fraud via an innocent mistake of the offending party.[2]

    Because equitable fraud is fraud committed through an innocent mistake of one of the parties, the injured party does not need to show “scienter” in order to prevail. Scienter is the combination of two elements needed to prove common law fraud. The elements making up common law business fraud are: (1) knowledge of the fraud; and (2) an intent to induce reliance.[3] In order for there to be said innocent mistake, it would be impossible for a defendant to have committed scienter. Despite there being an innocent mistake, and no scienter was committed, a plaintiff can still recover on the theory of equitable fraud.

    Because scienter is not required, the elements that must be met in order for a party to recover under the theory of equitable fraud are simply: (1) a material misrepresentation of fact and (2) justifiable reliance by the plaintiff.[4] The plaintiff must show that the material misrepresentation made could reasonably be relied on by the plaintiff, and as a result they suffered.[5] For example, if two parties were negotiating the sale of a parking lot, and if the seller were to unknowingly or perhaps recklessly claim that the lot contained 500 spots but instead contained just over 400 spots, then a Court may find that such a misrepresentation was an honest mistake, but large enough of a discrepancy that action was warranted.[6] Although courts have held that “puffery” during the course of negotiations is allowed, such a large discrepancy as well as a determinable and known value would likely not be considered “puffery” under New York law.[7] If the buyer were to rely on the seller’s representations, and buy the lot, planning for 500 spots, then upon purchase and inspection the buyer may attempt to recover under the theory of equitable fraud.

    Despite the fact that the plaintiff was defrauded in these cases, they may not recover damages, but rather be able to recover via rescission of the contract.[8] Because there was no evidence of scienter, there is no claim for common law fraud that can be made where a plaintiff would be entitled to damages. If found liable for equitable fraud, a defendant may be ordered by the court to return the value of which was exchanged if doing so would return the parties to their original positions before the contract was made.[9]

    For help navigating business torts, contracts, and prospective business dealings, contact our knowledgeable litigation attorneys here at KI Legal so we can help protect your business and their interests. Call (212) 404-8644 or email info@kilegal.com today.

    at (212) 404-8644 or email info@kilegal.com to get the help you need. 

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team. 

     ____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.  

     

    [1] Omid H. Nasab, 2022 in New York Business Litigation 469–489, 469 (2022).

    [2] Id.

    [3] Spector v. Wendy, 63 A.D.3d 820, 821, 881 N.Y.S.2d 465, 467 (2009).

    [4] Id.

    [5] Albany Motor Inn & Rest., Inc. v. Watkins, 445 N.Y.S.2d 616, 617 (N.Y. App. Div. 1981).

    [6] See W. Side Fed. Sav. & Loan Ass'n of New York City v. Hirschfeld, 101 A.D.2d 380, 476 N.Y.S.2d 292 (1984).

    [7] See Ironwoods Troy, LLC v. OptiGolf Troy, LLC, 204 A.D.3d 1130, 1133, 166 N.Y.S.3d 730, 735 (2022) (defining “puffery” as opinions of value or future expectations, rather than false statements of value.)

    [8] D'Angelo v. Bob Hastings Oldsmobile, Inc., 89 A.D.2d 785, 453 N.Y.S.2d 503 (1982), aff'd, 59 N.Y.2d 773, 451 N.E.2d 471 (1983)

    [9] See id.

    Business Fraud in New York: Equitable Fraud
    Business Fraud
  • As we discussed in our two prior articles on H-1B visas – “Do You Qualify for an H-1B Visa?” and “Your Rights as an H-1B Worker”, an H-1B visa - Specialty Occupations, DOD Cooperative Research and Development Project Workers, and Fashion Models – is for persons working in specialty occupations requiring at least a bachelor’s degree or its equivalent in on-the-job experience and distinguished fashion models.

    It is important to be aware of your rights and the protections granted to you by your status as an H-1B worker. Here is a look at these rights and protections -

    1. Your employer is required to start paying you within thirty (30) days of your entry into the United States. If you are already in the U.S., then your employer must start paying you within sixty (60) days of your H-1B status being granted.
    1. Once you have been granted H-1B worker status, your employer is not allowed to put you on involuntary, unpaid leave.

    Even if your employer is lacking in work to give you or you do not have a valid license or permit to work, you cannot be put on unpaid leave at the option of the employer.

    1. Your employer is also required to give you a copy of the Labor Condition Application filed with USCIS.
    1. Your employer is not permitted to attempt to make you pay a penalty if you are leaving your job prior to an agreed upon date.

    H-1B employers may, in certain circumstances, recover reasonable costs that they spent in obtaining approval of your H-1B visa petition.

    If you believe that your employer has violated your rights or treated you unfairly as an H-1B worker, please reach out to one of our knowledgeable immigration attorneys at KI Legal for help. Our immigration team is well experienced in visa matters and can provide insightful and helpful advice as to what your next steps should be. Call us at (212) 404-8644 or email info@kilegal.com to get started.

    --

    *ATTORNEY ADVERTISING*

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    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team.

    _____________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.

    Your Rights as an H-1B Worker
    Immigration
  • The law of a jurisdiction and the forum in which a contract dispute is heard can bear heavily on the outcome of a case. In many instances today, contracts are drafted to include choice of law and forum provisions, which means the contracting parties negotiate and agree to the law governing a dispute, in the event a dispute arises. A choice of law clause sets the substantive law of the appropriate state to be applied in the dispute. A choice of forum clause dictates the court that will adjudicate the case and, indirectly, the procedural rules that will control the trial. In the absence of a contractual provision, the forum court will apply its choice of law rules to determine the appropriate substantive law to decide the law of the case, and its procedural rules to conduct the trial.

    There are many advantages to selecting New York as the law and forum for a particular dispute. As an epicenter of business and commerce, New York courts have a reputation for their ability to handle complex commercial disputes including those involving complicated contractual and financial arrangements and cross-border issues. New York has created a specialized court for the resolution of commercial disputes: the Commercial Division of the New York State Supreme Court.

    Moreover, New York has relatively few limitations on selecting its law or courts. In 1984, the state legislature passed section 5-1401 of the New York General Obligations Law, which allows parties to choose New York law to govern their contracts even if the transaction has no connection to the state, as long as certain conditions are met, such as the agreement must relate to a transaction, covering in the aggregate, not less than $1 million. Moreover, New York courts recognize that predictability and stability are crucial components of large commercial transactions. For this reason, New York courts honor the justified expectations of the parties to a contract.

    While advantageous, New York may present some disadvantages of which practitioners should be aware when contracting choice of law and forum selection clauses in commercial contracts. For example, one consequence of including a New York choice of law clause without qualification is to preclude application of the laws of another jurisdiction even when New York’s choice of law rules mandates the application of the other jurisdiction’s law to the issue. Additionally, there exists uncertain application of New York law between state and federal courts. When parties opt to litigate in New York, they may be exposed to subtle differences in the application of New York law by federal and state courts. Recent decisions reveal that federal courts applying New York law as a result of diversity jurisdiction and New York state court applying New York law, have introduced varying interpretations of the law.

    As this discussion demonstrates, deciding which law and which forum to select in a commercial transaction requires very careful consideration. KI Legal is in a key position to make the most beneficial selections, drawing from the experience of its multidisciplinary team of commercial litigators and transactional attorneys. If you have questions about the preferred law and forum for commercial disputes, or would like to discuss your particular matter, feel free to contact us by calling (212) 404-8644 or emailing info@kilegal.com.

    This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team.

    _____________________________________________________________________________________________

    KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum. KI Legal’s services generally fall under three broad-based practice group areas: Transactions, Litigation and General Counsel. Its extensive client base is primarily made up of real estate developers, managers, owners and operators, lending institutions, restaurant and hospitality groups, construction companies, investment funds, and asset management firms. KI Legal’s unwavering reputation for diligent and thoughtful representation has been established and sustained by its strong team of reputable attorneys and staff. For the latest updates, follow KI Legal on LinkedIn, Facebook, and Instagram. For more information, visit kilegal.com.

    New York as the Preferred Law and Forum for Commercial Disputes
    Business Owner Disputes,  Commercial Litigation,  Corporate Law
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