TITLE I of the CARES Act

TITLE I of the CARES Act – the “Keeping American Workers Paid and Employed Act.”

On Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law.

Among the many significant provisions of the CARES Act are the paycheck protection program and the terms and conditions for loan forgiveness included under Title I of the Act – the “Keeping American Workers Paid and Employed Act.”

The following summarizes these two significant provisions of Title I. This program, if executed efficiently and quickly by all of the stakeholders, should be a valuable resource for many businesses.

Paycheck Protection Program

The Paycheck Protection Program (“PPP”) will provide almost $350 billion in 100% federally guaranteed emergency loans to small businesses for payroll and cash-flow assistance. These loans will be administered by the Small Business Administration (SBA) and funded through SBA lenders.

More information for borrowers and the PPP loan application can be found on the U.S. Department of the Treasury’s website at: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses.

Who Qualifies to Apply and Application Deadline?

There is a list of types of businesses that qualify. Generally, all businesses with fewer than 500 employees can apply including sole proprietors and independent contractors.

Determining Eligibility

Lenders will determine whether the business was in operation on February 15, 2020 and had employees for whom the borrower paid salaries and payroll taxes, or paid independent contractors.

Loan Amount

Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.

Included Payroll Costs

Payroll costs include: (i) compensation (salary, wages, commissions or similar compensation, payment of cash tips or equivalent; (ii) payment of vacation, parental, family, medical or sick leave; (iii) allowance for dismissal or separation; (iv) payment for group health care benefits, including insurance premiums; (v) payment for retirement benefits; and (vi) payment of any state and local tax assessed on the compensation of employees.

Excluded Payroll Costs

Payroll costs do not include: (i) compensation to an employee in excess of $100,000; (ii) taxes imposed or withheld under chapters 21, 22 and 24 of IRS code during the covered period; (iii) compensation for employees whose principal residence is outside US; (iv) qualified sick leave wages and qualified family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

Use of Loan Proceeds

Payroll costs, including benefits; Interest on mortgage obligations, incurred before February 15, 2020; Rent, under lease agreements in force before February 15, 2020; and Utilities, for which service began before February 15, 2020.

General Loan Terms

The loan terms are extremely favorable. Very low interest rate (the last rate we have seen is 0.5%), no personal guarantees for entity borrowers, no payments for 6 months, repayment due within 2 years to the extent not forgiven. Portions of the emergency small business loans qualify for loan forgiveness if a borrower satisfies certain conditions.

Loan Forgiveness Terms and Conditions

In summary, borrowers will owe money when their loan is due if they use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Borrowers will also owe money if you do not maintain staff and payroll.

Summary

This program is emerging quickly so it remains to be seen how quickly funds will be advanced. This is intended as a general summary of the CARES Act. Please call any of our attorneys at (856) 427-4200 if you have questions. We look forward to assisting in these difficult times.

New Jersey Permit Extension Act Amended—Qualified Permits and Approvals Now Run Through End of 2014—More Permits Subject to Extension—Extensions Retroactive

In response to the economic challenges facing New Jersey when the recession hit in 2008, lawmakers passed, and then Governor John Corzine signed, The Permit Extension Act of 2008 (the PEA). Acknowledging that obtaining necessary permits and approvals can be time-consuming and costly, the PEA sought to reduce the risk that development projects that could substantially benefit New Jersey would be abandoned before the local and national economy had an opportunity to recover.

The original bill tolled the expiration date of all qualified permits and approvals to July 1, 2010. Unfortunately, the recession has lasted longer than the framers of the original statute anticipated. Accordingly, the bill has been amended twice, with the current termination date for qualified approvals and permits set at December 31, 2014, and a grace period extending until June 30, 2015.

In order to counteract significant opposition from community activists and environmentalists, the original act specifically excluded certain types of approvals or projects. A number of those exceptions still apply, including:

  • Permits or approvals in “environmentally sensitive areas”
  • State Department of Transportation permits, other than right-of-way permits
  • Permits or approvals subject to the provisions of the New Jersey Flood Hazard Area Control Act, except where a project was already underway
  • Permits or approvals issued by the federal government, or where the term of the permit is set by federal law

Areas that were originally excluded by the PEA, but where developers may now (and retroactively) obtain an extension include:

  • The Highlands planning area—A permit or approval may be extended for projects in this area as long as they are not located in State Planning Areas 4B or 5, have not been designated a critical environmental site, and are not in an area that has adopted a Highlands master plan element.
  • Municipalities listed in the Pinelands Commission comprehensive management plan that are not designated as a critical environmental site, or in State Planning Areas 4B or 5

Contact the Business and Real Estate Attorneys at Del Duca Lewis & Berr

Our lawyers bring more than five decades of experience and knowledge to businesses and business owners throughout southern New Jersey and the metropolitan Philadelphia area, handling a broad range of commercial and real estate matters. In recognition of the skill we offer our clients, attorney Damien Del Duca has been named a New Jersey Super Lawyer. To schedule an appointment to discuss your legal issues, contact our office online or call us at 856-427-4200.

What Permits and Approvals Are Not Covered by the Permit Extension Act?

When the recession hit New Jersey and the rest of the country in 2008, concerns that critical development projects would be abandoned before the economy could rebound led then Governor John Corzine to sign into law the New Jersey Permit Extension Act (PEA), keeping qualified governmental permits and approvals open until July 1, 2010. Two subsequent amendments to the statute have tolled the expiration date of these permits to December 31, 2014.

When the legislature first considered extending the termination dates for permits and approvals, it met with significant resistance from community activists and environmentalists. In order to garner the necessary support to pass the bill, sponsors had to agree that certain types of permits or approvals were not subject to extension. These include:

    • Permits or approvals in what are considered to be “environmentally sensitive areas.” Those locations qualifying as “environmentally sensitive areas” are specifically delineated in the 2012 amendment of the PEA. They include, but are not limited to, state planning areas, critical environmental and historic sites, and specific locations within the Highlands Region.
    • Permits or approvals within the State Pinelands Boundary, which are subject to the Pinelands Protection Act, if the extension would necessitate approval from the U.S. Department of Interior, or would violate state or federal laws or regulations.
    • Permits or approvals subject to the New Jersey Flood Hazard Area Control Act, except projects that were already underway when the PEA went into effect
    • Department of Transportation permits issued by the state of New Jersey, except right-of-way permits
    • All permits or approvals issued by the federal government, or any permit or approval with a duration or expiration date set by federal law

Contact Our Office

At the law office of Del Duca Lewis & Berr, we bring five decades of commercial real estate and business law experience to clients across southern New Jersey and the greater Philadelphia area. Attorney Damien Del Duca has been named a New Jersey Super Lawyer. To schedule a meeting to discuss your legal concerns, contact our office online or call us at 856-427-4200.

Protecting Your Commercial Real Estate Investment

A Due Diligence Checklist for Commercial Lending Transactions

Once you have negotiated acceptable terms for the purchase of commercial property, there are specific steps you need to take to minimize your risk and protect your investment. Here’s a checklist of the critical issues you need to address before you finalize the deal:

  • Any liens or encumbrances on the title—You should receive a title commitment, which will list any exceptions to clear title. There should be documents recorded for each exception. You want your lawyer to examine all underlying documents. Your lawyer should also address title insurance matters, including the type and extent of title insurance needed.
  • Environmental concerns—You want the property inspected for potential environmental problems by an reputable third party. The inspection should consider past, present and potential uses of the premises.
  • Potential zoning restrictions—Make certain you confirm what the current zoning is for the property, and that it allows the use you plan to make of the property. If not, you may still purchase the property, but will need to determine the likelihood that you will be able to get a variance or permit, as well as the cost of doing so. Your lawyer should also confirm whether there are currently any violations of zoning or land use ordinances.
  • Building code violations—A thorough building inspection should be completed, identifying any existing violations of the building codes, as well as issues that may affect the structural integrity of the buildings. The inspection should include any roof, all walls, HVAC, electrical, plumbing and fire/sprinkler systems.
  • Accuracy of the survey—A professional survey will help you properly evaluate many or all of the exceptions to title, such as easements or similar burdens on the property. A survey can also show encroachments or other uses that may not appear on the title commitment.
  • Current leases—If you plan to assume any leases currently on the property, you will need to verify the financial viability of tenants, as well as lease terms. You also want to ensure that all payments and expenses (including commissions due to real estate brokers) due under the leases are apportioned properly as of the time of closing.

Contact Our Office

At Del Duca Lewis & Berr, we bring more than five decades of commercial real estate and business law experience to clients throughout southern New Jersey and the greater Philadelphia area. Attorney Damien Del Duca is listed as a New Jersey Super Lawyer. To schedule an appointment to discuss your real estate or business law needs, contact us online or call our office at 856-427-4200.

Environmental Concerns in Commercial Development

An Overview of the State Environmental Permits Required in New Jersey

If you are a builder or developer seeking to initiate a project in New Jersey, one of your principal concerns should be environmental compliance. This blog post provides an overview of some of the more common environmental issues that may impact your potential development.

New Jersey Environmental Permits for Commercial Development

The state of New Jersey mandates that developers obtain permits if certain environmental conditions are applicable. These include:

  • The development of property in freshwater wetlands — Before any property can be developed, New Jersey law requires that the owner verify whether wetlands are present, and identify where the wetlands borders are. If there are wetlands on or within a buffer area around the project, the owner or developer will have to obtain a permit to build.
  • Projects that might increase the likelihood or intensity of flooding — The New Jersey Flood Hazard Control Act includes rigid standards for commercial developers with projects that have the potential to increase flow into rivers or streams. If an area has been designated as a flood hazard area, a commercial developer must obtain a permit.
  • Developments in coastal areas — The Wetlands Act of 1970 mandated the mapping of all coastal wetlands. A permit is required for any activity in areas delineated as coastal wetlands. The U.S. Environmental Protection Agency has delegated regulatory authority over New Jersey wetlands to the New Jersey Department of Environmental Protection.
  • Projects in zones or areas designated as tidelands — A tideland is any property currently or formerly within the mean high tide of a natural waterway, including a bay, lake, river, stream or creek. In New Jersey, tidelands are the property of the state, and their use is overseen by the Tidelands Resource Council. To use tidelands, you must get written permission for the Tidelands Resource Council, and must pay a fee.
  • Projects in the Highlands Region in New Jersey — The Highlands Region includes portions of Warrren, Morris, Hunterdon, Passaic, Bergen, Somerset and Sussex counties. If you plan a development in the Highlands Region, you may be required to obtain either an approval or an exemption from the rules governing certain types of projects.

Contact the Law Office of Del Duca Lewis & Berr

At the law office of Del Duca Lewis & Berr, we offer five decades of commercial real estate and business law experience to clients across southern New Jersey and the greater Philadelphia area. As a testament to our knowledge, skill, experience and effectiveness, attorney Damien Del Duca has been named a New Jersey Super Lawyer. To schedule an appointment, contact our office online or call us at 856-427-4200.

Commercial Losses as a Result of Hurricane Sandy

Seeking to Recover for the Different Types of Business Losses

If you own or operate a business in New Jersey, you may have experienced a wide range of losses when Hurricane Sandy swept through the East Coast last year. Your property may have been destroyed or flooded. You may have been unable to conduct business for weeks or months, or may still not be back in business. If, like most business owners, you have faithfully paid commercial insurance premiums, you may be anxious to know your prospects for recovering compensation for some or all of your losses.

Property Damage Suffered in Hurricane Sandy

As a general rule, physical damage to commercial buildings is covered by the provisions of a property and casualty policy. Your policy may insure you against “all risks,” in which case loss caused by any event not specifically excluded by the policy will be covered. Such policies can be expensive, so many business owners opt for policies that provide coverage for “named perils.” A “named peril” insurance contract provides coverage only for events or contingencies that are specifically identified in the policy.

Once you have determined whether you have an “all risks” or a “named peril” policy, you must then determine the cause of the damage, and will need to ascertain whether there are specific deductibles that apply in unique situations. It is not unusual for a policy to have a deductible that applies to a certain risk, such as a hurricane. You may also conclude that the damage to your property was the result of combined event, such as wind and water. If you have coverage for wind damage, but not water damage, you may also be subject to limits.

Business Interruption or Income Loss Coverage

Even if you don’t have coverage for physical damage caused by water or flooding, you may be able to seek insurance benefits for loss of income because you could not be open for business. Some insurance policies provide coverage for interruptions that result when the actions or order of a civil authority prevent you from going to your business.

You may be able to seek reimbursement of lost income if a covered peril prohibits access to your business. Even if you can get to and from your business, you may be entitled to insurance coverage for lost profits if you experienced an interruption of critical services, such as power or water, due to a covered peril.

Contact Del Duca Lewis & Berr

If you have concerns about insurance coverage for commercial losses suffered in Hurricane Sandy, you want an experienced, knowledgeable and aggressive lawyer to protect your interests. At the law office of Del Duca Lewis & Berr, we offer five decades of commercial real estate and business law experience to clients across southern New Jersey and the greater Philadelphia area. Attorney Damien Del Duca has been named a New Jersey Super Lawyer.

To schedule an appointment to discuss your real estate or business law needs, contact us online  or call our office at 856-427-4200.

Non-Conforming Uses Involving Commercial Development

Protecting Your Property Rights in New Jersey

A non-conforming use of property is one that was lawful under previous law, but is now prohibited by an amendment to zoning ordinances. In New Jersey, as a general rule, the owner of commercial property may continue a non-conforming use without repercussion until the use is abandoned, terminated or substantially destroyed. If, as a commercial developer, the non-conforming use is advantageous to your project, you must be diligent to actively and continuously maintain the use, or you may lose it.

Here are the ways that a non-conforming use can be lost:

Abandonment of the Use

Many municipalities in New Jersey have ordinances which provide for the abandonment of a nonconforming use with the passage of time. These ordinances may not be lawful without the consideration of other factors. A temporary period where the non-conforming use is not in place will not necessarily result in the permanent loss of the use. The courts tend to look at two factors when seeking to determine whether a non-conforming use has been abandoned:

  • Was there an intent to abandon the use?
  • Was there a specific act or failure to act that implies or indicates that the owner “neither claims nor retains any interest in the subject matter of the abandonment.”

The courts in New Jersey have held that both of the above factors must be present. In addition, replacing a non-conforming use with a conforming use is always considered to be the abandonment of the non-conforming use.

Termination or Cessation of the Use

Once you have started using the property for some other conforming use, you may not return to the non-conforming use. For example, if you had a non-conforming retail use, and converted to apartments (a conforming use), you cannot reestablish a commercial use without a variance.

Substantial or Total Destruction of the Use

The loss of structures or buildings subject to a non-conforming use will terminate that use. For example, non-conforming uses in buildings destroyed by Hurricane Sandy may likely be lost. Most zoning ordinances in New Jersey establish a percentage of destruction that constitutes “total destruction.”

Contact the Law Office of Del Duca Lewis & Berr

At Del Duca Lewis & Berr, we offer five decades of commercial real estate and business law experience to clients across southern New Jersey and the greater Philadelphia area. As a testament to our knowledge, skill, experience and effectiveness, attorney Damien Del Duca has been named a New Jersey Super Lawyer. To schedule an appointment to discuss your real estate or business law needs, contact us by e-mail or call us at 856-427-4200.

The New Jersey Permit Extension Act

An Overview of the Purpose and Provisions of the Act

In September, 2008, concerned about the growing economic and financial challenges facing business and commerce in New Jersey, then Governor John Corzine signed into law NJSA 40:55D-135.1 et seq., known as The Permit Extension Act of 2008 (The PEA). The principal function of the PEA was to extend the terms of qualified governmental permits and approvals to July 1, 2010. According to sponsors of the bill, the fundamental objective of the statute was to minimize the risk that development projects would be abandoned before the economy had a chance to recover from the 2008 recession. Since the original bill was signed, it has been amended twice, with the expiration period now running through December 31, 2014, with a grace period through June 30, 2015.

To obtain the necessary support for the law, developers had to strike a compromise with opponents, including community activists and environmentalists. As a result, certain types of permits may not be extended under the statute:

  • Approvals in “environmentally sensitive areas”
  • Permits governed by the Flood Hazard Area Control Act, unless work had already begun
  • Permits or approvals subject to the Pinelands Protection Act, if the extension would require approval from the U.S. Secretary of the Interior, or would violate federal or state statute or regulation
  • State DOT permits, except for right-of-way permits
  • Any permit or approval from the federal government, or any permit or approval that has an expiration date or duration established by federal law

The PEA is also inapplicable to approvals or permits in coastal centers, as set forth in the Coastal Area Facility Review Act, unless the developer filed an application for plan endorsement to the New Jersey State Planning Commission by March 15, 2007, and was in compliance with coastal zoning management rules.

Contact Del Duca Lewis & Berr

At the law office of Del Duca Lewis & Berr, we offer five decades of commercial real estate and business law experience to clients across southern New Jersey and the greater Philadelphia area. As a testament to our knowledge, skill, experience and effectiveness, attorney Damien Del Duca has been named a New Jersey Super Lawyer. To schedule an appointment to discuss your real estate or business law needs, contact our office online or call us at 856-427-4200.

Issues to Consider When Buying or Selling Commercial Property in New Jersey

Buying or selling commercial real estate is not the same as buying or selling a home. In most instances, the value of the property will be substantially higher than most residential transactions. Commercial real estate transactions can involve complex financing arrangements, and there may be environmental or other issues that have a significant impact on whether the deal will go through. In addition, unlike residential real estate sales, where consumer protection laws protect buyers by requiring certain disclosures, commercial real estate transactions are traditionally caveat emptor, or “buyer beware.”

Determining the Value of Commercial Property

There are a number of factors that affect the value of commercial property. The location will always have an impact on value. Other variables include the income potential of the real estate, including any established current or future income stream, as well as the overall health of the real estate market. To protect your interests, you want to retain a professional real estate valuation expert.

Title and Survey

As the new owner, you want to ensure that you are receiving title to the property free and clear of any exceptions that may adversely affect your use of the property. Such exceptions include restrictions and agreements that limit your use of the property as well as easements that give others the right to use the property. It is important to have experienced legal counsel review title to the property and the survey in order to properly advise you with respect to any exceptions that may affect the title to the property.

Land Use Approvals

It is essential to have a clear understanding of whether or not your intended use of the property will require the approval of any municipal or county planning boards or any state agencies. If any approvals are required it is essential that your purchase agreement have a well drafted approvals contingency that will provide you the time to obtain the required approvals and the ability to terminate the agreement if you are unable to do so.

The Impact of a Commercial Real Estate Purchase on Your Cash Flow or Liquidity

Make certain you have a clear sense of how the commercial real estate transaction will affect your liquidity or cash flow. If you have to put significant funds down, you may not have the liquidity you need to respond to market fluctuations. If some or all of the revenue from the property is in the form of rents paid to you, you may experience cash flow challenges if tenants fall behind. You may also incur legal expenses to protect your rights with tenants. If cash flow becomes critical, you may be unable to make payments and face foreclosure proceedings.

Who Assumes Liability for Any Violation of Law or Regulation?

Before you enter into a purchase agreement, you need to identify any potential legal issues, including zoning violations or environmental problems. If you need to rezone the property to use it, will you run into significant resistance, or will there be substantial costs to do so? What is the nature of any environmental violation? Does it require a cleanup? How long will that take? Will it have a significant impact on the profitability of your venture?

Contact Our Office

At Del Duca Lewis & Berr, our lawyers have more than five decades of commercial real estate and business law experience, representing clients throughout southern New Jersey and the greater Philadelphia area. In recognition of the high standards by which we operate our practice, attorney Damien Del Duca has been named a New Jersey Super Lawyer.

To schedule an appointment to discuss your real estate or business law needs, contact us online, or call our office at 856-427-4200.

Property Tax Appeals – Now is the Time to Review Your Assessed Value

Very few people are thinking about the assessed value of their property this busy time of year. The deadline for appealing your assessment is April 1, 2012, months away. However, now is actually the best time to discuss a reduced assessment with your tax assessor.

Municipalities are required to submit their “book” of assessed values for all properties no later than January 10 of each calendar year. As a result, the assessor is busy this time of year finalizing the information. You are much more likely to obtain a voluntary reduction in your assessment now, before the assessors finalize their values. If you wait until the Spring, your assessor will likely tell you that the value has been finalized and that you must file an appeal in order to challenge the assessment. This makes it harder to obtain a reduction without going to a full hearing before the County Board of Taxation or a trial in the Tax Court. The full appeal process is much more expensive and time consuming than approaching your assessor now about a voluntary reduction.

We at Del Duca Lewis & Berr will be happy to assist you in attempting a voluntary deduction in your tax assessment. We only require some basic property information and information concerning value (e.g. comparable sales). It is an inexpensive, efficient process and it is much more practical than filing a formal appeal.

If you think you may be over-assessed, now is the best time to approach your assessor with the least amount of expense.