Real Estate Law Blog

Prohibiting Conceal Carry and Open Carry at Your Business

The State of Texas now allows licensed handgun owners to openly carry their handgun in a shoulder or belt holster in public. In the absence of notice otherwise (or a specific statutory exclusion), the new law, which went into effect on January 1, 2016, permits a license holder to carry her or his handgun openly or concealed on most private property. The new law has led many business owners to consider whether they will allow open carry on their premises. A gun owner violates the new law if he or she carries a licensed handgun on property after the property owner has provided proper notice that it is forbidden.

 

The following are guidelines on how a property owner may forbid handguns on their property or at their business.

Banning Open Carry Only:

Under Section 30.07 of the Texas Penal Code, an owner of property, or someone with apparent authority to act for the owner, may provide notice that entry on the property by a license holder openly carrying a handgun is forbidden by doing one of the following:

1. Orally communicating that open carry is forbidden.
   
   
2. Providing a card or other document that states, verbatim: “Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”
   
   
3. Posting a sign on the property that states, verbatim: “Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.” The sign must:
        (a) contain this exact language in both English and Spanish;
        (b) appear in contrasting colors;
        (c) contain block letters at least one inch in height; AND
        (d) be displayed in a conspicuous manner that is clearly visible to the public at EACH entrance to the property.

Banning Concealed Carry Only:

Under Section 30.06 of the Texas Penal Code, the owner of the property, or someone with apparent authority to act for the owner, may provide proper notice that entry on the property by a license holder with a concealed handgun is forbidden by doing one of the following:

1. Orally communicating that concealed carry is forbidden.
    
2. Providing a card or other document that states, verbatim: “Pursuant to Section 30.06, Penal Code (trespass by license holder with a concealed handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a concealed handgun.”
   
   
3. Posting a sign on the property that states, verbatim: “Pursuant to Section 30.06, Penal Code (trespass by license holder with a concealed handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a concealed handgun.” The sign must:
        (a) contain this exact language in both English and Spanish;
        (b) appear in contrasting colors (i.e. black and white);
        (c) contain block letters at least one inch in height; AND
        (d) be displayed in a conspicuous manner that is clearly visible to the public.
   
   Note, the required language for a 30.06 sign has changed slightly from prior requirements. All 30.06 signs must contain language identical to the abovementioned, and old 30.06 signs must be replaced.

Completely Banning Fire Arms:

In order to completely ban the carrying of handguns on private property, the property owner, or someone with apparent authority to act for the owner, must provide either oral notice as to both restrictions, provide a written card or document that complies with the requirements under 30.06 and another card or document that complies with the requirements under 30.07, or display both 30.06 signage and 30.07 signage. The 30.07 signage must be posted at every entrance to the property, no matter how little that entrance is used.

In Summary:

Displaying signage that complies with Section 30.06 and/or Section 30.07 provides the best evidence that a business owner has given notice that concealed carry and/or open carry on their property is forbidden. However, a business owner that is concerned about the signs’ cost, large size, or unsightly appearance may choose to provide notice by card or oral communication. Note, however, some business owners and employees may hesitate to approach someone carrying a handgun to inform that individual they may not carry on the property.

A business owner that chooses to post signs providing notice of the restriction must be especially careful to use signage that complies precisely with the statute’s requirements. Several websites have been created that map out and list businesses whose signs do not meet the statutory requirements, or 30.07 signs that are not placed at each entrance to the premises. The Department of Public Safety does not provide or sell 30.06 or 30.07 signs; rather, a business owner must print their own signs or purchase them from a commercial printing company.

Hotels must take additional steps to inform their guests of their firearm policy. Under Section 2155.103(a) of the Texas Occupations Code, a hotel must include its policy regarding the possession, storage, and transportation of firearms on its reservation website. If a guest makes a reservation over the telephone, the hotel must include information on how the consumer may review applicable guest policies, which must include the hotel’s firearm policy, on the written confirmation provided to the consumer. A hotel owner or keeper’s failure to comply with Section 2155.103 of the Texas Occupations Code is considered a misdemeanor offense, punishable by a fine of not more than $100.

Lauren Crouch & Laura McClellan
K&L Gates LLP
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Landlords Take Note: New Notice to Vacate Requirements

Landlords in Texas must adhere to new requirements when providing tenants notice to vacate prior to filing an eviction suit. The new requirements, which went into effect January 1, 2016, apply only to residential lease agreements entered into on or after January 1, 2016. The primary methods by which a landlord may properly give notice under Section 24.005(f) of the Texas Property Code remain unchanged. A landlord may:

• Provide notice in person by personal delivery to the tenant or any person residing at the premises who is 16 years of age or older;
• Provide notice in person by personal delivery to the premises and affixing the notice to the inside of the main entry door; or
• Provide notice by regular mail, registered mail, or certified mail, return receipt requested, to the premises in question.

A landlord may use an alternative method to provide notice if: (1) the premises has no mailbox and has a keyless bolting device, alarm system, or dangerous animal that prevents the landlord from entering the premises to affix the notice to vacate to the inside of the main door, or (2) the landlord reasonably believes that harm to any person would result from personal delivery to the tenant or a person residing at the premises or from personal delivery to the premises by affixing the notice to the inside of the main entry door.

In such case, the landlord may deliver notice to vacate by securely affixing to the outside of the main entry door a sealed envelope that contains the notice and on which is written the tenant’s name, address, and in all capital letters, the words “IMPORTANT DOCUMENT” or substantially similar language. Additionally, the landlord must deposit a copy of the notice to the tenant in the mail in the same county in which the premises in question is located, by 5 p.m. on the same day the notice is affixed to the tenant’s door. This alternative method for providing notice contains new, additional requirements, meaning a landlord can no longer provide notice by merely affixing the notice to the outside of the main entry door.

The amendment to Section 24.005 also clarifies that notice to vacate under this alternative method is considered delivered on the date the envelope is affixed to the outside of the door and deposited in the mail, regardless of when the notice is received by the tenant.

Laura McClellan & Lauren Crouch
K&L Gates LLP
Email Laura
Email Lauren

Fifth Circuit Decision Provides Lessons for Drafting Indemnity and Insurance Clauses

A recent Fifth Circuit case provides a useful tutorial for landlords and others seeking contractual indemnification and additional-insured coverage because it shows: (1) the different criteria for enforcing indemnification and insurance-procurement clauses; (2) why the indemnity is unenforceable, but the insurance clause is valid; and (3) how the "other-insurance" clauses in both parties' insurance policies may require the additional-insured's insurer to contribute to the defense and indemnity of a lawsuit, a result that is potentially troublesome.  This is a landlord/tenant case, but the insurance and indemnity issues apply with equal force to any other type of commercial contract.

 

My colleagues here at T&K have prepared a bulletin discussing the case and its implications. You can read the bulletin by clicking here. For more information, please contact David White at david.white@tklaw.com or any of the other attorneys identified in the bulletin.

Tuesday Roundup

This week's Monday Roundup comes a day late due to the Memorial Day holiday.

New Federal Legislation Affecting Tenants' Rights Following Landlord Foreclosure

On May 20, President Obama signed into law the Protecting Tenants at Foreclosure Act of 2009 (the "Act"), Title VII of a larger piece of legislation called the "Helping Families Save Their Homes Act of 2009." The Act provides new rights for tenants of foreclosed-upon residential property, which presumably includes single-family homes, multifamily properties, and residential condominiums. The buyer in such a foreclosure must provide at least ninety days' prior notice if the tenant is to be required to vacate the property. Furthermore, a tenant under a "bona fide lease" has the right, with a limited exception, to occupy its leased premises until the end of the then remaining lease term. The Act defines a "bona fide lease" as one that resulted from an arm's-length transaction in which the tenant is not the mortgagor or its child, spouse, or parent, and the rent is "not substantially less than fair market rent." The official version of the Act as signed by the President has not yet been released, but the full text of the enrolled bill (as approved by Congress and sent to the President for signature) is available by clicking here.

LandAm Subsidiary Sale Approved by Bankruptcy Court

The Richmond Times-Dispatch reported on Friday that U.S. Bankruptcy Court Judge Kevin R. Huennekens approved the sale of six LandAmerica Financial Group Inc. subsidiaries for $28.5 million. Two of the subsidiaries -- LoanCare Servicing Center Inc. and LC Insurance Agency Inc. -- will be acquired by Fidelity National Financial; the other four go to Georgia-based Buyers Protection Group Inc.

Commercial Mortgage Bond Spreads Narrow Following Announcement that "Legacy Securities" will be Included in TALF Program

The Fed's announcement that certain so-called "legacy securities" will be eligible collateral under the TALF program (see 5/22/2009 posting in this blog) seems to have help create a climate of optimism that has led to a drop in yields on commercial-mortgage-backed bonds. Citing data from Bank of America Corp., a recent Bloomberg report said that the spread on top-rated commercial-mortgage-backed bonds (relative to benchmark interest rates) narrowed 12.3% last week, bringing the spreads to the lowest number since November 5, 2008. Various industry analysts indicated that new "clarity" in the program has increased confidence that the TALF program will be effective in helping revive credit, one noting approvingly that announcements of program details such as applications deadlines (late July for "legacy" assets and June 2 for newly issued CMBS) assuage fears that the program "won't get off the ground."

Seminar Cancelled

I was advised today that the June 17-18 seminar on “Negotiating Commercial Leases: How Owners & Corporate Occupants Can Avoid Costly Errors,” mentioned in my first blog post, has been cancelled.

What Commercial Landlords Should Do When a Tenant Files Bankruptcy

The following was adapted from a portion of a client alert prepared recently by Ira Herman and Lynn Gray Ruvang, partners in our New York and Fort Worth offices, respectively. The full alert includes useful information about the impact of a tenant’s bankruptcy on the landlord/tenant relationship, how the bankruptcy process works, strategies that commercial landlords may employ to protect their interests once the tenant has filed, and protective lease provisions that landlords can include in their leases to reduce the financial consequences of tenant financial distress.  A copy of the full alert may be obtained by clicking here.

 

If a tenant files for Chapter 11 bankruptcy relief, a landlord should act expeditiously to protect its interests. Absent a compelling reason not to do so, the landlord, though its counsel, should file a Notice of Appearance and Demand for Notices with the bankruptcy court. This ensures that the landlord will receive notice of all important events in the bankruptcy case, including those that might affect the landlord’s interest, and will position the landlord to monitor the tenant’s case. Such monitoring enables the landlord to evaluate legal and financial developments during the administration of the case that might impact the landlord-tenant relationship.

At the earliest stages of a tenant’s bankruptcy case, the landlord should focus on the tenant’s access to funds to perform its post-filing-date obligations to the landlord and other creditors. In today’s environment, virtually all Chapter 11 filers will seek either financing in the form of a debtor-in-possession loan or authority to use the cash proceeds of a pre-bankruptcy lender’s collateral. Critically important to the tenant’s attempt to secure such financing will be a budgeting process; every request to obtain bankruptcy financing will require the tenant to disclose its proposed budget for periods that may be as short as several days or as long as six months or more. For a landlord, the tenant’s motion for financing is an opportunity to make sure that rent is included in the tenant’s proposed budget. The proposed budget also will provide the landlord with a “snapshot” of the tenant’s financial condition.

Another critical issue for a landlord at the earliest stages of a tenant’s Chapter 11 will be determination of whether the tenant’s interest in the lease is of value. The landlord should seek answers to some or all of the following questions:

• Can the tenant survive without occupying the leased premises?

• Is the lease rent above or below market?

• How much of the lease term remains?

• Does the tenant have any remaining term extension rights under the lease?

• Is there anything unique about the leasehold that will increase its value to the tenant or others (e.g., a unique location or market penetration issues)?

The leasehold’s value will be an important driver of the landlord’s strategy during a tenant’s Chapter 11 and, in particular, the decision of whether to try to recapture the leasehold or try to keep the tenant in possession.

Notwithstanding the Bankruptcy Code’s provisions that generally are favorable to a tenant’s interest in its bankruptcy case, a landlord can take steps to avoid what the landlord is likely to view as an overly harsh outcome. Procedurally, a tenant in bankruptcy is required to file a motion with the court when it seeks to assume, reject, or assume and assign an interest in a lease. Such motion practice provides the well-counseled landlord with an opportunity to respond and complain about a tenant’s overreaching, its failure to comply with the Bankruptcy Code regime, and the impact on a landlord’s rights of the tenant’s chose course of action (assumption, rejection, or assumption and assignment, as the case may be).

The landlord in this situation is advised to:

• Be familiar with and vigilant about the time periods governing assumption or rejection.

• Pay attention to assumption and rejection motions filed by the tenant that might not appear to directly involve the lease in question.

• Pay attention to events in the tenant’s case that will reveal information about the tenant’s plans for the future and its ability to finance its operations.

• Pay careful attention to deadlines for filing proofs of claim for “rejection” damages or estoppel notices with regard to monetary defaults to be paid as “cure” when a tenant’s interest is being assumed or assumed and assigned.

• Carefully review any plan of reorganization filed by a tenant, as the plan may purport to effect assumption or rejection and otherwise impact a landlord’s interests.

A tenant’s bankruptcy sets into motion a complex chain of events that has far-reaching effects on a landlord’s rights under its lease agreement with the tenant. Landlords with financially distressed or bankrupt tenants would be well advised to have an attorney assess what steps should be taken to protect the landlord’s interests, both before and after the tenant files for bankruptcy protection.

Opening a Dialogue

 

     Times are tough in the commercial real estate world.

 

     Not a particularly original observation, but the reality behind it is the impetus for this blog.  As a real estate lawyer I’ve seen mostly good times for my clients during the past ten years, but things have changed drastically in the last year or so.  The current economic difficulties have impacted every sector of the economy; commercial real estate is not exempt.  As capital sources have dried up, it has become increasingly difficult to get a transaction to the closing table.  Lenders who in past years have focused their time on originating and closing new real-estate-secured loans now spend much of their time dealing with existing loans that either are in crisis or are teetering on the brink of crisis.  Tenants facing a downturn in revenues approach their landlords with requests for rent reduction or other kinds of relief.

 

     As a lawyer, my role is to help clients accomplish their business objectives.  In the past, that has meant closing transactions – acquisitions or sales, loans, leases.  Today it more often means helping clients navigate the environment in the most effective and efficient way possible while minimizing losses arising from deals gone bad.

 

     In a difficult economy, with business down for everyone involved in commercial real estate, I know (because clients have told me) that business people hesitate to incur legal fees by picking up the phone to ask their lawyers questions.  At the same time, many younger professionals are facing issues that have not arisen before during their careers, because they entered the world of commercial real estate during a boom time.  At the risk of sounding self-serving, I suggest that now is a very good time for real estate professionals to rely more, rather than less, on the experience and expertise of their attorneys; a team approach may be the only way to maneuver successfully through this crisis.

 

     We at Thompson & Knight are working hard to help address our clients’ concerns and provide assistance and information on the issues that are arising daily in our clients’ business dealings.  As an example, several T&K partners are coordinating an upcoming PLI-sponsored seminar aimed at helping landlords and tenants understand the issues presented by today’s troubled business environment.  “Negotiating Commercial Leases: How Owners & Corporate Occupants Can Avoid Costly Errors” will take place June 17 & 18 at our offices here at Dallas.  The seminar’s sessions have been structured to provide invaluable information to all professionals involved in commercial leasing, including lawyers, real estate brokers, property managers, facilities directors, and appraisers.  I invite you to click here for a complete description (including additional days and locations) and registration information.

 

     In the meantime, I hope with this blog to open a dialogue among those professionals working in the commercial real estate trenches.  As I (and guest bloggers) add new postings in the weeks to come, your comments are invited, as are your questions.  If you would like to see a topic addressed here, please feel free to email me at laura.mcclellan@tklaw.com.