coronavirus Archives - ARTAEV AT LAW PLLC

The economy is still uncertain, especially for business owners who rely on lease payments, land contract payments, promissory notes, or other installment-type payments for their income are in for tough month. Payees may very well be unable to make payments on time or at all. What are your options to protect your rights? It is a good time to find those documents and contact a business attorney to review your options. While every document is different, here is a general overview of some key provisions and concepts:

When is the payment actually due? More often than not, a payment clause in a note or lease has a built in “grace period” – usually between 3 and 10 days after the due date for the payee to “make up” any missed payment without penalty. Importantly, many agreements also require written notification that a payment is late or has been missed – it is critical to review the documents in question, determine exactly when a payment is considered late, and to send out notice to preserve your rights.
Document any modifications in writing. If you do agree to a reduced payment, different payment deadline, or some other modification with your tenant or debtor, make sure to document the agreement in writing. Most contracts (including leases) have provisions that require that any amendment be in writing. And, you don’t want to be accused of agreeing to something that you did not actually agree to later on. Further, a written record goes a long way from protecting you against any future argument of “waiver” or that you simply abandoned your rights by failing to insist on strict adherence to the contract.
Find out what happens if there IS a default. Despite your best efforts to work with a tenant or a note payee, there may come a situation where they simply cannot make the payment or refuse to agree to a reasonable modification of their obligation. In that case, you need to review the default provisions with your attorney and give prompt, written notice of default. Here are some special considerations:
- Promissory note: (a) determine whether there is a default interest rate that entitles you to higher interest in the event of default; and (b) if the note is secured by collateral, determine the status and location of such collateral. Talk to an attorney immediately if you think the collateral may be destroyed or otherwise impaired.
- Land contract: A land contract is unique because the seller retains ownership of the property and the deed until the land contract is paid in full. However, land contract forfeiture is not automatic – there is still a requirement that proper notice be given and the landlord go through the other steps required by Michigan law before actually retaking possession of the premises.
- Lease: Michigan law provides for summary proceedings to recover premises and evict non-paying tenants – a useful process where a landlord wants a paying tenant to take the place of a delinquent. Summary eviction is still available as a remedy – but a new tenant is not a given, judicial proceedings are delayed, and there may be other considerations to discuss with your attorney before filing those court papers.
However, you can still file a lawsuit to preserve your rights. You can still file a lawsuit to enforce a default on a note or lease. Remember, in addition to (or instead of) an order of eviction, you can get a money judgment for unpaid rent. Now it is more important than ever to retain qualified counsel to protect your rights in these uncertain times.

Contact attorney Dan Artaev today at dan@artaevatlaw.com or by phone or text at (269) 930-0254.

There is no doubt you are distracted by this coronavirus outbreak. Constant news alerts, supply shortages, government-mandated closures and cancellations make it all but impossible to also run your business. However, remember that your lawyers are available to assist you. For example, if you have questions about obligations to your employees, insurance coverage questions, contract responsibilities, or anything else related to your business, feel free to reach out. In the meantime, here are 5 legal tips to help your business through the crisis with minimal disruption:

Review your existing contracts for a “force majeure” clause. Do you have a contract with a supplier, distributor, or vendor? Has the coronavirus outbreak affected performance under the contract – for example, are payments being delayed? Are shipments delayed? Has demand dropped to the level where you are having trouble paying normal operating expenses? The reality is that a lot contracts were negotiated in “good times” without the threat of external forces disrupting business operations. This means not all contracts provide for what happens in times of crisis, and if they do, they are often generic provisions that may not even be applicable to the current situation. Nevertheless, some contracts have standard terms — known as “force majeure” or “Act of God” clauses — that allow for contract termination, modification, or delay in performance under certain extraneous circumstances. Importantly, even if your contract does have such a clause, it often includes notice obligations to the other party – so if you suspect that contract performance may be disrupted (either on your end or on the part of the other party), contact a business attorney for guidance on your rights and obligations.
Review your existing lease and make sure you know your rights and responsibilities. Leases are another type of contract that may be affected by the pandemic. In general, commercial leases are drafted in such a way that a tenant’s obligation to pay rent is absolute and non-excusable. If you are a business owner having trouble making rent payments due to decreased demand, you need to carefully review your lease for any possible options, including early termination. Alternatively, you should be prepared to discuss lease modifications with your landlord. If you are on the landlord side, reach out to your tenants and discuss any potential issues directly. While eviction is still available as a remedy, consider that finding a replacement tenant may be more difficult at this time, and you may want to conserve resources instead of spending money to evict someone. And as always, reach out to an attorney if you have any questions about your rights and obligations under any lease.
Purchasing or selling a business? Adjust your expectations or consider termination. Uncertainty is high, which means that many business deals that seemed profitable a few months ago may no longer be attractive to potential buyers. Whether you signed a letter of intent and are conducting due diligence, or you are at the purchase agreement drafting or even closing stage of the transaction, make sure you know your rights and responsibilities. Is there a specific time for performance and what happens if there is a delay? Is “time of the essence” to this transaction? Particularly, be aware of any penalties or liabilities that may be attached to termination of the pending transaction before closing. There may be a liquidated damages provision involved, or perhaps something more onerous, like an “actual damages” clause, including attorney fees. You should have an attorney representing you in any buy-sell transaction, and in the current situation, it is especially important to retain advice about your options.
Know that courts are still functioning, although in a diminished or delayed capacity. One of the reasons that it is critical to know your rights and responsibilities under your various contracts, is that you want to avoid business litigation. But you may think, aren’t courts closed? So how can I protect my rights? Most courts are actually operating in a “diminished” capacity, with civil litigation taking a back seat to criminal matters. However, a lawsuit can still be filed. And, if there is a need for emergency relief like an injunction against a former employee actively stealing customers, it is still available. Understand that even if the justice system is operating in a limited capacity, it is still operating. Litigation is a possibility – and expect that even when this pandemic is over, there will still be litigation fallout over breaches of contract and other business matters that arose due to business disruptions in this difficult time.
This is a perfect opportunity for “corporate catch-up.” Even if your business is currently slow or completely shut down, this time may be a great opportunity to talk to your lawyer about some business matters that you have been putting off. For example, have you trademarked your logo, slogan, or business name? Do you have a new business idea and need to incorporate a new business? Or, do you need to update your LLC’s papers to reflect the fact that you hired your niece as your new CFO? Are there old corporate entities out there (after an acquisition or merger) that continue to exposre you to personal liability? And ask yourself, is your business prepared for the 4 Ds — divorce, death, disability, and debt? Now may be the perfect time for “corporate catch-up.”

Have more questions? Contact Dan Artaev at dan@artaevatlaw.com or 269-930-0254 to set up your free initial consultation.