14A — August 30 - September 12, 2013 — Mid Atlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
continued from page 2A Mastering the art of healthy business relationships . . .
“general economic condi- tions are the reverse of ont. from page 12A By Jason T. Shafron, Esq., Archer & Greiner, P.C. Commerical real estate litigation against . . . C
the poor grammar, it is quite insightful in its simplicity. Relationships that create posi- tive synergy through mutual respect and shared values are worth your investment. 5. Don’t repeat the past. The past should not define a person, and there is no reason to keep looking back. While previous events and actions might be a life lesson, the nature of every journey is to move forward. Don’t repeat those actions that did not produce the intended results; instead, focus on new choices that will “effect” a more desirable outcome. 6. Don’t be a “taker.” All rela- tionships involve give and take, so it is important to recognize when each relationship could use more of a giving spirit. When we think about what we can do for others instead of what they can do for us, we get to the very heart of healthy, successful interactions. In a strong relationship, both people willingly give far more than they take. 7. Don’t stay in an unhealthy relationship. Unfortunately, sometimes we make a poor choice and enter into relation- ships that will never be healthy no matter what actions are taken. Part of Relational IQ is knowing when and how to end a toxic relationship. If someone is not able to accept a change in the status or direction, is not loyal and stable under pressure or in the face of challenge, or had once been dependable but now is unreliable, these are strong clues that the relation- ship may not be worth saving. Whether it is a customer or client, a colleague, or your workplace, don’t let feelings of misplaced guilt or sympathy get in the way of making good personal choices. 8. Don’t lose personal power. There are situations in the work environment where healthy relationships with unhealthy people are necessary. Develop- ing a higher level of Relational IQ will help to identify those unhealthy people and har- ness personal power to not let those people hurt, disrespect, or transmit negativity such that you are affected by these attempts. Instead, personal power can be used to turn the tide on those unhealthy people and maintain your resilience and composure to stay the course. 9. Don’t forget who and what really matters. The most valu- able people aren’t always the most visible. People of true value bring fulfillment, not frustration. All too often, those taken for granted or overlooked
enrich your life. There are, in fact, fundamen- tal principles for interacting with others in the complex and ever-changing dynamics of today’s culture that, if adhered to, can best assure relational success in business. Choose not to and suffer the conse- quences. Naysayers might ask, “Is it really possible to master relationships?” The answer is an unequivocal “yes”—if you’re willing to learn skills and proactively apply tactical techniques, that is. To help kick-start your Rela- tional IQ so that you can better navigate, and begin to master, your own professional affili- ations, here are 10 pitfalls to avoid when seeking to develop and manage positive business relationships that will result in greater success and overall enjoyment in the work environ- ment: 1. Don’t hide: While secret identities might be fun in the movies, a person who harbors secrets, and hides their fears, and beliefs from others will never be able to enjoy an au- thentic relationship. Being real and authentic with oth- ers and even making yourself vulnerable from time to time can foster tremendous emo- tional connections, including all-important trust, and forge unbreakable bonds. 2. Don’t tweak the truth. Studies show that 10-30% of applicants admit to “tweaking” their resumes—that’s certainly no way to start an engagement with a new employer. Even small white lies will do nothing but undermine and compromise any relationship. Even slightly altering the truth is one of the most destructive forces that can permanently damage a person- al or professional relationship. Keep your work relationships transparent and honest to build trust with your superiors, col- leagues, and customers. 3. Don’t rush and miss criti- cal red flags. Understand that a relationship is a journey with changes in direction, twists and turns, and roadblocks along the way. It’s imperative to pass through certain experi- ences and navigate through difficulties to learn from these situations and create a healthy outcome. Resist the desire to take shortcuts or race through certain aspects of a relation- ship. Even if it is painful or bor- ing, embrace it, knowing that it offers a healthy purpose for the big picture of a relationship. 4. Don’t force it. There’s an old R&B lyric that says, “If it don’t fit, don’t force it.” Despite
notice of the equities where “the security value being in excess of the debt was derived not from the debtor, but from the creditor.” Thus, the court remanded the case for a defi- ciency hearing to determine the fair market value of the property at the time of the foreclosure sale. Likewise, in Resolution Trust Corporation v. Berman Industries, 271 N.J. Super. 56 (LawDiv. 1993), the trial court found that even a guarantor, as opposed to the principal obligor in Citibank, was en- titled to a fair market value hearing on equitable grounds where the lender purchased a property for a nominal amount prior to suing the guarantor on the note. The court specifically rejected the lender’s attempt to distinguish Citibank based on the primary obligor versus guarantor status of the de- fendant. The court found this to be “a distinction without a difference.” Thus, after the Resolution Trust case, it ap- peared clear that a debtor in New Jersey, whether the prin- cipal obligor or a guarantor, was entitled to a fair market value hearing and credit based on equitable grounds. Then, perhaps as a result of an improving economy or a partial change in the members of the appellate panel from that in Citibank, the Appel- late Division in Summit Trust v. Willow Business Park, 269 N.J. Super. 439 (App. Div.), certif. denied, 136 N.J. 30 (1994), remarkably found that where a commercial lender sued on the mortgage note prior to foreclosure, it had no duty to give the obligor a fair market value credit. In analyz- ing the prior cases, the court in Summit Trust found that none of those cases stood for the proposition that the lender on a commercial loan secured by a mortgage and personal guarantees must provide the guarantors with the property’s fair market value in a proceed- ing on the guaranty, thereby looking primarily to the prop- erty to secure a payment. In- terestingly, the Summit Trust court indicated that it was the debtor who had the choice to make. The debtor could choose to sell the property to pay off their debt, thereby not subjecting their personal assets beyond what might be obtained from the sale of the property, or if they choose not
to sell, and their personal as- sets were insufficient and the bank later chose to foreclose, the debtors at that later time may assert a right to a fair market value credit. What the court does not ad- dress in Summit Trust is the impact of either being required to pay the full judgment if the debtor’s assets are sufficient or being subject to execution under a judgment for the full amount where the bank has determined that it will not soon foreclose. It would appear that the distinction made by the Summit Trust court between a primary obli- gor and a guarantor does not rest on any strong equitable or legal grounds. Rather, the court noted that “it was the defendants, not the bank, who wanted to purchase and develop the property” and nothing in the prior case law should “warrant saddling the bank with the property as its primary source of security.” Some commentators on this subject have noted that the primary difference between the results in Citibank and Resolution Trust on the one hand, and Summit Trust on the other, may be the timing of the foreclosure action in rela- tion to the deficiency action. In the earlier cases that held that a credit should apply, the fore- closure action occurred before or contemporaneous with the deficiency action, whereas in Summit Trust, the deficiency action against the guarantor occurred before any foreclo- sure action. Thus, it would appear that a lender would be best served filing an action against a debtor, particularly a guarantor with assets, prior to foreclosing on the commer- cial real estate. Perhaps even more significant to a future appellate panel may be the existence of a lender appraisal that indicates a fair market value in excess of the alleged deficiency amount. Finally, the greatest influence on a future court considering the applica- tion of the non-statutory fair market value credit may be the state of the economy and its impact on the commercial real estate market. Jason T. Shafron, Esq. is a partner in Archer & Grein- er, P.C.’s commercial litiga- tion department in Hack- ensack, NJ, specializing in commercial real estate and broker litigation. n
those in the 30’s. Times are booming, m o r t g a g e loan funds for refinancing are plentiful and lenders are compet- ing f or in-
Jason T. Shafron
vestments. There is an active market for most for most kinds of real estate and judicial sales attract prospective purchas- ers who bid competitively for many properties.” Thus, the Court held that the defendant borrower was not entitled to a non-statutory fair market value credit in a deficiency ac- tion. Of course, the application of this analysis could leave a commercial debtor in a particu- larly difficult position where the bank chooses to pursue the personal deficiency action either prior to the foreclosure or contemporaneously with the foreclosure. Next, we fast forward to 1991, when economic condi- tions in commercial real estate were once again looking bleak. In Citibank, N.A. v. Errico, 251 N.J. Super. 236 (App. Div. 1991), the Appellate Division addressed the application of a non-statutory fair market value credit and found that the borrower was not precluded by the entire controversy doctrine from claiming a fair market value credit where it failed to object to the sale price in the foreclosure action. There, the lender had its own expert complete an appraisal prior to the foreclosure, who concluded the fair market value to be $9,500,000. After foreclosure, due to the bankruptcy filing of another of the principal obligors, the property was purchased at a bankrupt- cy auction by the lender for $5,900,000, and the borrower did not object to the auction price. The bank then sued the sole remaining individual ob- ligor on the mortgage note for a deficiency. In finding that a fair market value credit could apply, the court concluded that there is nothing in the statute which “precludes a court from applying equitable principles to impose a fair market value credit to prevent a windfall or where circumstances require equitable relief in the interests of justice.” The court also took
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