Minimizing Liability of a Limited Liability Company Manager in a Real Estate Joint Venture

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Liability PhotoDelaware limited liability companies have become a popular vehicle for real estate joint ventures and preferred equity investments in real estate. As a manager, co-manager or managing member of an LLC, you may have certain duties and liabilities to your partners and to the company itself, even beyond those expressly set forth in the limited liability company agreement. In this article, we will look at a couple of recent decisions under Delaware law and how those decisions affect attempts to minimize liability to LLC managers. Continue reading

Triggering the Buy-Sell: Considerations for invoking a buy-sell provision in a partnership dispute (Part 1)

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buy-sellIn a down market, partnership disputes tend to rear their heads with increasing frequency, and many partners begin looking for a way out[1]. One place they often turn is the buy-sell mechanism. But before pulling the trigger on a buy-sell, there are several things to consider in order to prepare for how the circumstances might play out. Continue reading

When Can an Email Modify a Written Agreement?

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EmailFollowing up on the series of articles over the past four weeks regarding oral modification of written agreements, we now turn to a related topic: modification of a written agreement by email.

Generally, the legal doctrines covered in the oral modification series — part performance, waiver, promissory estoppel and equitable estoppel — will apply to statements made in emails as well as to oral statements. So just as an oral statement may modify a contract, even in the face of a “no oral modification” clause, an email may also modify a contract if one of the four doctrines above is invoked.
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Word of Mouth: When are oral modifications of written agreements binding? Part I – Part Performance

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contractMost well-drafted legal documents include language that provides that the agreement cannot be modified except by a written agreement signed by both parties — or some other provision of similar effect. You may think that means that nothing you say can modify the documents. However, this is not necessarily the case. Under New York law, even where an agreement contains an express no oral modifications clause, there are circumstances under which the agreement can be modified by what you say, your conduct, what you write in an email or other forms of communication that don’t amount to a written agreement.
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Piercing the Corporate Veil: A Primer

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structure chartIf you have worked in the areas of structured finance or commercial real estate — even if you are not a lawyer — you may be familiar with the concept of “piercing the corporate veil.” You probably have used special purpose LLCs to limit the liability of individuals and to protect holding companies with substantial assets from the liabilities associated with a specific transaction. These structures are not without risk. You may have been advised that entities and individuals in the upper reaches of the structure chart may be exposed to the liabilities of their special purpose subsidiaries if a claimant is able to pierce the corporate veil. But beyond that the concept may remain a mystery.

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Considerations for Foreclosing Mezzanine Lenders – Part 1

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lender ownedDuring the real estate boom of the 90s and early 2000s mezzanine lending became a commonplace source of capital for developers and other sponsors.  Now, as the economic downturn continues and real estate values continue to fall, more and more mezzanine lenders are finding themselves with defaulted loans.  In this series, we will examine five critical considerations for mezzanine lenders to weigh before commencing enforcement action.
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Five Strategies for Special Servicer Negotiations: How to avoid the most common stumbling blocks

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Notice of ForeclosureWhether you are a borrower, a B-piece holder or a foreclosing mezzanine lender, at some point you have found yourself in the unenviable position of dealing with a special servicer. By gaining insight into what motivates special servicers, you will solidify your negotiation strategy and better understand how to avoid a few common pitfalls.

In the CMBS world, the special servicer is the gatekeeper of all workouts. A loan enters special servicing when it is more than 60 days behind in payments or has matured or when some other default has occurred or is imminent. The special servicer has leeway to modify or extend the loan — or agree to a forbearance or workout — or it can choose to foreclose or commence other enforcement actions.

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Eagle Hospitality Avoids Foreclosure, Reaches Compromise With Blackstone

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The Wall Street Journal reported this week that Eagle Hospitality Trust and Blackstone Group struck a deal to avoid foreclosure on 13 upscale U.S. hotels.  Eagle owns the 13 properties, which include the Cincinnati Landmark Marriott, and Blackstone holds the debt.
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