Infrastructure Bonds
A bond could be a style of security accessible in debt marketplace for investors to take a position their cash in multiple entities like organization, state government, central government etc. Whenever a government or a corporation problems some bond they collect the cash and invest it for his or her more development or enlargement. Whosoever problems a bond can promise the investors to come the cash and can pay the interest on it. From an investor prospective the bonds are like securities having a hard and fast income on it. They are going to get the interest in each outlined time (usually its half-dozen months) and can go back to their principal whenever the bond is matured. Even the issuer of bond will open a get back choices or will list the bonds in stock market as a security when a specific lock-in amount. This selection offers an investor an opportunity to book the profit.
The bond issued for infrastructure purpose is thought as infrastructure bonds. The tenure for such reasonably bonds are sometimes ten to fifteen years. They are majorly issued for developing the infrastructure during a country and today are quite common round the world. Principally infrastructure bonds are issued by government and therefore the cash collected from it's used inside the country itself. The govt can use this cash to develop roads, rural development, Electricity purpose etc. It's the responsibility of the issuer of bond to pay the outlined interest and pay the total quantity at the time of maturity. The govt in numerous countries offers special tax profit to those who invest their cash in infrastructure bond. India is one amongst the samples of that. An honest come and therefore the tax edges makes infrastructure bond an awfully lucrative choices to take position cash.
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Showing posts with label Assignment. Show all posts
Showing posts with label Assignment. Show all posts
Wednesday, August 22, 2012
Friday, June 22, 2012
Commercial Leases: Restrictions on Assignment
Commercial leases typically include restraints on transferability, namely that a tenant may not assign the lease without the consent of the Landlord. After California's Supreme Court implied a requirement of reasonableness into lease assignment consent provisions (where none had existed before), California's Legislature enacted a statutory scheme relating to the assignment and subleasing of commercial space.
Evolution of the Law
A majority of jurisdictions, including California, long held that where a lease contains an approval clause (a clause stating that the lease cannot be assigned without the prior consent of the landlord), the landlord could refuse to approve a proposed assignee, even if that refusal was arbitrary and the proposed tenant was perfectly suitable.
With time, many jurisdictions trended toward a reasonableness standard, namely that there must be some commercially reasonable objection to the assignment. California's Supreme Court, in an opinion entitled Kendall v. Ernest Pestana, Inc. (1985) 40 Cal.3d 488, adopted the reasonableness standard, finding that an unreasonable refusal to assign constituted an unreasonable restraint on alienation.
The court held that the trier of fact may properly consider the following factors in determining reasonableness: financial responsibility of the proposed assignee, suitability of the use for the particular property, legality of the proposed use, need for alteration of the premises, and the nature of the occupancy, i.e., office, factory, clinic, etc. However, the court determined that a denial solely on the basis of personal taste, convenience or sensibility was not commercially reasonable. Nor was it reasonable to deny consent in order that the landlord may charge a higher rent than originally contracted for.
Justice Lucas, in a dissenting opinion, noted that the lease in the Kendall case did not require a reasonableness standard. Nor had the Legislature enacted such a requirement. Justice Lucas found it improper for the court to imply a requirement of reasonableness when the Legislature had in fact specifically refused to do so and the parties had not contracted for it. Absent such legislative direction, the parties should be free to contract as they see fit. 40 Cal.3d at 508.
The Legislature's Statutory Scheme
In response to the Kendall case, the California Legislature weighed in on the debate with a comprehensive statutory scheme governing assignments of commercial leases.
In general, without an express limitation, a tenant's interest in a commercial lease is freely transferable. Civ.C. 1995.210. The common law, later codified by statute, also states that any ambiguity in a restriction on transfer of a tenant's interest in a lease shall be construed in favor of transferability. Civ.C. 1995.220. On the other hand, if the parties contractually agree, a party may absolutely prohibit transfer. Civ.C. 1995.230.
Consent of the Landlord
A commonly used provision in leases requires that the landlord's consent is required in order to transfer the tenant's interest. The Legislature also addressed this issue by finding that a restriction on a lease may require the landlord's consent subject to any express standard or condition for giving or withholding consent, including, but not limited to, either (a) the landlord's consent may not be unreasonably withheld, or (b) the landlord's consent may be withheld subject to express standards or conditions. Whether the consent was unreasonably withheld is a question of fact to be determined based on established case law. For example, as noted in the Kendall case, bases for good faith reasonable objection include inability to fulfill terms of the lease, financial irresponsibility or instability, suitability of premises for intended use, or intended unlawful or undesirable use of premises. 40 Cal.3d at 497.
In the event that the lease does not set forth any standards for giving or withholding consent, the restriction shall be construed to include an implied standard that the landlord's consent may not be unreasonably withheld. In the event that a landlord rejects an assignment, a tenant may make a written request for a statement of reasons for withholding consent. In the event that a landlord fails or refuses to respond, the court may find the assignment reasonable simply based on the landlord's failure to respond. In the event that a landlord provides reasons, it is a question of fact as to whether those reasons were reasonable. Civ.C. 1995.260.
Although the Kendall case stated that as a matter of law (versus a question of fact) a denial of consent solely on the basis of personal taste, convenience, or sensibility, and denial of consent in order that the landlord may charge a higher rent than originally contracted for, are not commercially reasonable (40 Cal.3d at 501), the Legislature rejected this absolute approach and instead made resolution of the issue a question of fact to be determined by the circumstances of the particular case. The comments to the statute specifically state that in some circumstances, it may be commercially reasonable for the landlord to require, as a condition for consenting to an assignment, that the premium received by the tenant for the assignment be paid to the landlord. (Referring to John Hogan Enterprises, Inc. v. Kellogg (1986) 187 Cal.App.3d 589).
Appreciation in Rents
A common reason (often unstated) for a Landlord's refusal to consent to an assignment of a lease is the desire to capture the appreciation in rent that has occurred since the lease was entered into. When the Supreme Court decided Kendall, it held that, in a lease in which the issue was not addressed, denying consent solely in order that the landlord may charge a higher rent than originally contracted for was an arbitrary reason which failed the test of good faith and reasonableness. 40 Cal.3d at 501. The court held open the possibility that the parties could contract for an allocation of increased rents, and the Legislature later codified the principal in Civ.C. 1995.240, stating that a restriction in a lease may include a provision that the landlord is entitled to some or all of any consideration the tenant receives from a transferee, in excess of the rent under the lease. However, if not specifically addressed in the lease, this section does not create a presumption that a demand for the increased rent, absent a contractual right to such an increase, is either reasonable or unreasonable. Whether such a demand is reasonable or not would be a question of fact and subject to the existing case law.
A landlord seeking to deny a tenant's request to assign the lease should consult with an attorney who can apply the law to the specific facts in drafting a statement of reasons for the tenant pursuant to Civ.C. 1995.260. An ounce of prevention is worth a pound of cure.
Evolution of the Law
A majority of jurisdictions, including California, long held that where a lease contains an approval clause (a clause stating that the lease cannot be assigned without the prior consent of the landlord), the landlord could refuse to approve a proposed assignee, even if that refusal was arbitrary and the proposed tenant was perfectly suitable.
With time, many jurisdictions trended toward a reasonableness standard, namely that there must be some commercially reasonable objection to the assignment. California's Supreme Court, in an opinion entitled Kendall v. Ernest Pestana, Inc. (1985) 40 Cal.3d 488, adopted the reasonableness standard, finding that an unreasonable refusal to assign constituted an unreasonable restraint on alienation.
The court held that the trier of fact may properly consider the following factors in determining reasonableness: financial responsibility of the proposed assignee, suitability of the use for the particular property, legality of the proposed use, need for alteration of the premises, and the nature of the occupancy, i.e., office, factory, clinic, etc. However, the court determined that a denial solely on the basis of personal taste, convenience or sensibility was not commercially reasonable. Nor was it reasonable to deny consent in order that the landlord may charge a higher rent than originally contracted for.
Justice Lucas, in a dissenting opinion, noted that the lease in the Kendall case did not require a reasonableness standard. Nor had the Legislature enacted such a requirement. Justice Lucas found it improper for the court to imply a requirement of reasonableness when the Legislature had in fact specifically refused to do so and the parties had not contracted for it. Absent such legislative direction, the parties should be free to contract as they see fit. 40 Cal.3d at 508.
The Legislature's Statutory Scheme
In response to the Kendall case, the California Legislature weighed in on the debate with a comprehensive statutory scheme governing assignments of commercial leases.
In general, without an express limitation, a tenant's interest in a commercial lease is freely transferable. Civ.C. 1995.210. The common law, later codified by statute, also states that any ambiguity in a restriction on transfer of a tenant's interest in a lease shall be construed in favor of transferability. Civ.C. 1995.220. On the other hand, if the parties contractually agree, a party may absolutely prohibit transfer. Civ.C. 1995.230.
Consent of the Landlord
A commonly used provision in leases requires that the landlord's consent is required in order to transfer the tenant's interest. The Legislature also addressed this issue by finding that a restriction on a lease may require the landlord's consent subject to any express standard or condition for giving or withholding consent, including, but not limited to, either (a) the landlord's consent may not be unreasonably withheld, or (b) the landlord's consent may be withheld subject to express standards or conditions. Whether the consent was unreasonably withheld is a question of fact to be determined based on established case law. For example, as noted in the Kendall case, bases for good faith reasonable objection include inability to fulfill terms of the lease, financial irresponsibility or instability, suitability of premises for intended use, or intended unlawful or undesirable use of premises. 40 Cal.3d at 497.
In the event that the lease does not set forth any standards for giving or withholding consent, the restriction shall be construed to include an implied standard that the landlord's consent may not be unreasonably withheld. In the event that a landlord rejects an assignment, a tenant may make a written request for a statement of reasons for withholding consent. In the event that a landlord fails or refuses to respond, the court may find the assignment reasonable simply based on the landlord's failure to respond. In the event that a landlord provides reasons, it is a question of fact as to whether those reasons were reasonable. Civ.C. 1995.260.
Although the Kendall case stated that as a matter of law (versus a question of fact) a denial of consent solely on the basis of personal taste, convenience, or sensibility, and denial of consent in order that the landlord may charge a higher rent than originally contracted for, are not commercially reasonable (40 Cal.3d at 501), the Legislature rejected this absolute approach and instead made resolution of the issue a question of fact to be determined by the circumstances of the particular case. The comments to the statute specifically state that in some circumstances, it may be commercially reasonable for the landlord to require, as a condition for consenting to an assignment, that the premium received by the tenant for the assignment be paid to the landlord. (Referring to John Hogan Enterprises, Inc. v. Kellogg (1986) 187 Cal.App.3d 589).
Appreciation in Rents
A common reason (often unstated) for a Landlord's refusal to consent to an assignment of a lease is the desire to capture the appreciation in rent that has occurred since the lease was entered into. When the Supreme Court decided Kendall, it held that, in a lease in which the issue was not addressed, denying consent solely in order that the landlord may charge a higher rent than originally contracted for was an arbitrary reason which failed the test of good faith and reasonableness. 40 Cal.3d at 501. The court held open the possibility that the parties could contract for an allocation of increased rents, and the Legislature later codified the principal in Civ.C. 1995.240, stating that a restriction in a lease may include a provision that the landlord is entitled to some or all of any consideration the tenant receives from a transferee, in excess of the rent under the lease. However, if not specifically addressed in the lease, this section does not create a presumption that a demand for the increased rent, absent a contractual right to such an increase, is either reasonable or unreasonable. Whether such a demand is reasonable or not would be a question of fact and subject to the existing case law.
A landlord seeking to deny a tenant's request to assign the lease should consult with an attorney who can apply the law to the specific facts in drafting a statement of reasons for the tenant pursuant to Civ.C. 1995.260. An ounce of prevention is worth a pound of cure.
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