Add 'A Funny Thing Happened to my Ground Lease In Bankruptcy Court'

A-Funny-Thing-Happened-to-my-Ground-Lease-In-Bankruptcy-Court.md

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+[investopedia.com](https://www.investopedia.com/terms/c/condominium.asp)<br>Ground leases are a crucial - if somewhat uncommon - part of the real estate finance industry. Because they generally cover large costly residential or commercial properties like Rockefeller Center and The Empire State Building, to call 2, and last a long period of time (99 years and up to start) the possibility of something unforeseen or unexpected occurring is high. This probability increases significantly if, as highlighted listed below, one or both of the lease parties' apply for personal bankruptcy. Accordingly, property professionals must take note and take care when participating in any transaction including a ground lease.<br>
+<br>* * * *<br>[wikipedia.org](https://en.wikipedia.org/wiki/George_Condo)
+<br>Ground leases have been around given that the Middle Ages and bankruptcy laws have existed because a minimum of Roman Times. Given this long history, it is not a surprise that a lot of law has actually developed on the [interplay](https://leasingangels.net) of personal bankruptcy and ground leases. This is particularly so given that the introduction of the "modern" United States Bankruptcy Act in 1898 and the comprehensive modifications to title 11 of the United States Code executed to it in 1978, when Chapter 11 of the United States Bankruptcy Code (the "Code") was enacted. [1] In particular, Section 365 of the Code supplies unique rules for the presumption or rejection of a [ground lease-as](https://akarat.ly) well as its potential sale and transfer by a debtor to a 3rd party.<br>
+<br>Knowing these guidelines is crucial to any . Here are the fundamentals:<br>
+<br>A ground lease, sometimes described as a "land lease," is an unique system for the development of industrial realty, delighted in by those entrusted with establishing the Rockefeller Center and the Empire State Building, for instance. The plan permits prolonged lease terms often up to 99 years (with the option of renewal) for the landowner to keep ownership of the land and collect lease while the designer, in theory, may enhance upon the land to its advantage also. Both traditionally and currently, this irregular relationship in the genuine estate space produces ample discussion weighing the [structure's pros](https://cyppro.com) and cons, which inherently grow more made complex in the face of a ground lessor or ground lessee's bankruptcy.<br>
+<br>According to many courts, consisting of the Second Circuit, the threshold question in examining the abovementioned possibilities regarding a ground lease in insolvency court is whether the ground lease in concern is a "real lease" for the function of Section 365. Section 365 applies, making the ground lease eligible for, assumption or rejection, only if it is a "true lease." [2] While what precisely makes up a "real lease" will differ state by state, it is commonly accepted that "the proper questions for a court in figuring out whether § 365 [] governs an agreement fixing residential or commercial property rights is whether 'the celebrations planned to enforce commitments and provide rights substantially different from those occurring from the common landlord/tenant relationship.'" Intl. Trade Ad. v. Rensselaer Polytechnic, 936 F. 2d 744 (2d Cir. 1991). This "intent" is identified based upon that of the [parties](https://anyhouses.com) at the time of the lease's execution. In re Big Buck Brewery Steakhouse, Bkrptcy No. 04-56761-SWR, Case No. 05-CV-74866 (E.D. Mich. Mar. 9, 2006). Despite there being "a 'strong anticipation that a deed and lease ... are what they purport to be,'" the [economic compound](https://parvanicommercialgroup.com) of the lease is the primary decision of whether the lease is considered "true" or not, and in some states (like California), is the only proper element to weigh. Liona Corp., N.V. v. PCH Associates (In re PCH Associates), 804 F. 2d 193 (2d Cir. 1986) citing Fox v. Peck Iron & Metal Co., 25 Bankr. 674, 688 (Bankr. S.D. Cal. 1982). Generally, the additional away those "economic truths" are from the normal landlord/tenant relationship, the less likely a lease will be considered a "real lease" for the function of Section 365. Id. For instance, if residential or commercial property was bought by the lessor specifically for the lessee's usage or entirely to protect tax benefits, or for a purchase price unassociated to the land's value, it is less most likely to be a true lease.<br>
+<br>If the ground lease remains in fact determined to be a "true lease" (and based on court approval), the selected trustee or debtor-in-possession in a personal bankruptcy case might then either assume or decline the lease as it would any other [unexpired lease](https://elitehostels.co.ke) held by the debtor.<br>
+<br>However, exceptions apply. These heavily count on a debtor's "adequate guarantees" to the remaining parties to the arrangements. Section 365 of the Code offers that if there has actually been a default on a debtor's unexpired lease, the DIP may not presume the abovementioned lease unless, at the time of presumption, the DIP: (i) remedies or offers "sufficient guarantee" that they will in fact "immediately cure [] such default"