Transactional

By: Denise C. Werkley

If your business offers gift certificates or prepaid gift cards you need to be aware of a new law affecting those cards. In March 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 was enacted setting out certain restrictions on gift certificates, store gift cards and general-use prepaid-cards. That law requires the Federal Reserve to implement related rules and regulations. The Act and the rules and regulations go into effect August 22, 2010.

This new law and associated rules restricts the ability to charge fees, namely dormancy, inactivity or service fees. It also prohibits the sale of prepaid products with an expiration date of less than five years and imposes additional disclosure requirements. The rules apply to gift certificates, store gift cards, and general-use prepaid cards sold to consumers; specifically, those that are sold largely for personal, family, or household purposes. As always, exceptions are noted, such as certain products issued in connection with a loyalty, award, or promotional program, or that are reloadable and not marketed or labeled as a gift card or gift certificate.

Since many of your businesses may offer prepaid gift cards through a third-party provider or card sponsor, we recommend that you speak to your provider and discuss the steps they are taking to comply with the regulations so there is no delay once August 22, 2010 rolls around.

For more information contact Denise C. Werkley.

By: Denise C. Werkley

As a follow up to my March 26, 2010 post on the new Uniform Construction Code provisions in Pennsylvania that mandate sprinkler systems in new homes, the Pennsylvania Builders Association has set up a “Roll Back the Code” website. The issue appears not to be with sprinklers themselves, but the requirement and associated cost to include them, especially when hard wired smoke detectors are already mandated by the building codes. The Builder’s Association states that the installation of sprinklers should be the consumer. Whether you agree with the code changes or not, the site contains useful links to the new rule, the obligations builders now face and public commentary on the subject. You can find all the information here or contact Denise Werkley.

By: Denise C. Werkley

Today, April 22, 2010, the final portion of the Environmental Protection Agency’s Lead Paint Renovation, Repair and Painting Rule takes effect. All contracting firms performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must now be certified, use individuals with accredited training and must follow specific work practices to prevent lead contamination. To become certified, your firm must submit an application and fee payment to EPA and you must ensure that each of your employees working with lead paint is properly trained. In addition to the certification, the owner of the property must be provided with certain disclosures and you will need to properly document receipt. For more information on the new lead paint rules, please contact Denise C. Werkley.

The application and more general information about the Lead Paint Renovation, Repair and Painting Rule can be found at the Environmental Protection Agency’s website.

By: Nancy J. Glidden

Read my recent blog about real estate on “offer” vs. contract. For more information, contact Nancy Glidden.

By: Transactional Department

No matter what the lease says, the mere filing of a bankruptcy by a tenant does not terminate the lease or entitle a landlord to evict the tenant. That being said, if a residential tenant files bankruptcy they are always required to continue paying rent. If they stop paying rent the landlord usually needs to file a motion in bankruptcy court to be allowed to evict the tenant. However, the 2005 changes to the bankruptcy code created an exception to when the automatic stay is imposed for some residential lease matters. If the landlord has received a judgment for possession before the tenant filed bankruptcy, then the automatic stay may not apply and the landlord may be able to continue the eviction without leave of the bankruptcy court. In some instances the tenant will have the ability to file a certification and deposit with the bankruptcy court, which if done timely and properly, can impose the automatic stay for a period of 30 days. Within those 30 days the Debtor would be required to pay all delinquent rent to maintain the automatic stay and prevent eviction. However, if the judgment for eviction is based solely on the expiration of the tenant

By: Denise C. Werkley

After some delay, the Pennsylvania Association of Realtors has released its new 2010 form Agreement of Sale. You can find a sample of the PAR Standard Agreement for the Sale of Real Estate on the Pennsylvania Association of Realtors website.

If you have questions on the new form, please contact Denise C. Werkley in our West Chester office.

By: William J. Burke, III

Business owners form corporations, limited partnerships and limited liability companies to protect their personal assets from debts, claims and liabilities that can arise out of any business. Although the liability protection afforded by corporations, LPs and LLCs is real and worthwhile, it is far from absolute, and there are numerous exceptions.

Sometimes creditors attempt to “pierce the corporate veil” which is the subject of other blogs on this site which can be found here and here. In addition, representatives of an organization are potentially liable for acts or omissions in which they personally participate as representatives of the organization, under the so-called “participation theory” of liability.

Owners who receive distributions when the organization is insolvent or that render the organization insolvent, or who receive distributions in liquidation of the organization rendering it unable to pay valid claims, may be required to account for and disgorge funds distributed.

There are various state and federal laws that specifically impose liability for certain categories of claims. These include liability for unpaid wages under the Pennsylvania Wage Payment and Collection Law, and liability for “trust fund” taxes, which are taxes that the organization withholds from others and is required to pay over to federal, state or local taxing authorities, such as sales taxes and income, social security and Medicare taxes.

Observing corporate formalities, ensuring that the organization is adequately capitalized, and engaging in sound business entity housekeeping practices can and will bolster the liability protection the law affords. In addition, however, to avoid unexpected personal liability that can arise when a troubled business cannot pay all of its obligations, the owners and the officers are well advised to ensure that the types of claims for which personal liability can be asserted by law are paid in preference to other obligations for which personal liability is not present.

For more information, contact William J. Burke, III.

By: Daniel Dwyer

Read my recent blog about doing business with local government in Pennsylvania.

For more information, please contact Daniel Dwyer.

By: William J. Burke, III

Entrepreneurs starting a new business often want to protect their personal assets and avail themselves of liability protection afforded by various types of business organizations.

But what kind of business organization? There is an “alphabet soup” of entity types from which to choose: corporations (“S” Corps or “C” Corps), limited partnerships (LPs), limited liability partnerships (LLPs), limited liability limited partnerships (LLPs), limited liability companies (LLCs) and, within those categories, some variations depending on the nature of the business (such as professional corporations and restricted professional companies).

To add to the confusion and complexity, different tax elections are available for different organizations. LLCs may be “disregarded entities” (virtually ignored for income tax purposes) if they have one owner, treated as partnerships (if they have more than one owner), or taxed as corporations (either S corporations or C corporations) if they so elect.

There are “pros” and “cons” to each business organization and each tax option. Key considerations include the type of business activity, the number of owners, expected financial performance in the near and long term (will there be near-term losses that the owners may want to deduct?), the type of investment that the owners or partners intend to make, how the owners will be repaid their investment in the enterprise, whether there will be different classes of ownership, how the owners expect the organization to be managed and, tax considerations. Some entities (LLPs) only provide liability protection for certain categories of claims (such as tort claims), but not others (such as trade debts and contract claims).

Choosing the appropriate form of entity is one of the most important decisions a business owner can make, and should be given careful consideration in consultation with competent legal counsel and an accountant. Changing from one form of entity to another can be expensive or even cost-prohibitive for tax and other reasons. Please see a more depth look at: “How to Choose between an LLC and S-Corporation.”

For more information, contact William J. Burke, III.